UK Civil Society Almanac 2012 /
How big is the voluntary sector compared to the rest of the economy?

Voluntary sector contribution to the economy

The contribution to the economy of different industries is measured by calculating their gross value added (GVA); which is an estimate of production or output, similar to Gross domestic product (GDP). Voluntary organisations are included in Office for National Statistics (ONS) estimates, but ‘Nonprofit Institutions Serving Households’ (NPISH) are not synonymous with the voluntary sector. It is important to note that contribution to GDP or GVA is not simply turnover, a mistake frequently made. NCVO developed a method in the early 2000s to estimate the voluntary sector’s contribution. We acknowledge that this method has its limitations, and will develop and refine this method in the future, with advice from the ONS.

Using this method, we estimate that the voluntary sector contributes £11.7 billion to UK gross value added, equivalent to 0.8% of the whole of the UK GVA.[24a] The voluntary sector makes a contribution to the UK economy comparable to other sectors: for example, the GVA of agriculture is £8.3 billion.

Method for calcuating voluntary sector GVA
Staff costs£14.0 billion
Expenditure on goods and services£17.8 billion
Income from sales of goods and services-£20.1 billion
Voluntary sector's gross value added£11.7 billion

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What is the contribution of volunteers to the economy?

The measure of gross value added used above only includes the value of paid work. To get a full picture of the contribution of the voluntary sector to the economy, the extensive output of volunteers should be taken into account. In question 72, we suggest the value of this output for the whole of the UK (the number of volunteer hours times the median wage) is £23.1 billion.[24b]

What is the relative size of the voluntary sector workforce?

The voluntary sector is a major employer. An estimated 765,000 people work in voluntary sector organisations. This is 2.7% of UK workforce, and compares with 25% who work for public sector employers, and 72% who work for private sector employers. The voluntary sector paid workforce is roughly the same size as the number employed in restaurant and catering in the UK (around 770,000).

The relative size of the voluntary sector workforce, 2010
Bubble chart showing the relative size of the 765,000 voluntary sector workforce compared to the UK workforce of 27.9million

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Source: NCVO / TSRC / Skills-Third Sector

The State and the voluntary sector

After more than 10 years in the making, the first consolidated, whole of government accounts were produced for 2010.[24c] We can now compare all government expenditure to similar income categories found in the accounts of voluntary organisations to measure their contribution to public services.

Total government expenditure in 2009/10 was £666 billion, of which £13.6 billion (2%) is estimated to have been spent on voluntary organisations. However this tends to under-estimate the contribution of the sector, since much of the total expenditure is transfer payments such as the state pension and tax credits, as well as the cost of employing public sector staff to deliver services directly.

Several sub-categories are of particular relevance to voluntary organisations. Of grants and subsidies totalling £66.2 billion, we estimate £3.1 billion was received by voluntary organisations, 4.7% of the total. This figure includes lottery grants as well as grants made by central government departments and local authorities. The remainder consists of substantial payments to other parts of civil society such as universities, and payments to private companies, for instance to subsidise privatised rail transport.

For expenditure on goods and services, a separate figure is provided for central government (including the NHS) and local government. Central government contracts delivered by the voluntary sector amounted to £4.4 billion, 5.3% of the total of £83.7 billion. The voluntary sector accounted for a larger share of local government procurement, 8.8% (£6.1 billion worth of contracts out of the total of £68.9 billion). This reflects the part the voluntary sector plays in the provision of services at a local level, across the whole population, from child protection to care for the elderly.

For now, we only have one year’s data but future years’ accounts will enable us to track trends over time, in particular the ‘Big Society’ aspirations for voluntary sector organisations.

Government expenditure on the voluntary sector, by spending category, 2009/10
Bubble chart showing the relative size of voluntary sector grants and contracts compared to similar categories from the Whole of Government Accounts.

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How much is £36.7 billion anyway?

The combined income of all 164,000 voluntary organisations in the UK, is of a similar magnitude to the UK revenue of Tesco (£38.6 billion for 2009/10).

Selected private and public sector activities, 2009/10 (£ billions)
Bubbles showing the relative size of some large billion numbers, ranging from £65.9billion which is the annual cost of the state pension, to £6.4billion, the UK contribution to the EU budget.

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Source: NCVO, various sources

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ONS (2011) United Kingdom National Accounts – The Blue Book, 2011 Edition
It should be noted that these estimates take no account of the costs of volunteer development or management.
HM Treasury (2011) Whole of Government Accounts, year ended 31 March 2010 (pdf)
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UK Civil Society Almanac 2012 / The Voluntary Sector /Finance: the big picture

Published: 17-02-2012 / Tagged: |