» Economic benefits of accreditation valued at more than £600m a year

04 April, 2013

A new report ‘The Economics of Accreditation¹’commissioned by the Department for Business Innovation and Skills has assessed the economic benefits derived from the accreditation of certification, measurement and inspection services. Researchers from Birkbeck, University of London, surveyed a selection of businesses and other independent analysis to create the report. Its aim is to provide a financial evaluation of accreditation’s contribution to the UK economy, which it values at more than £600 million per annum.

A central element of the analysis is the multiplier effect of accreditation, indicating that the United Kingdom Accreditation Service (UKAS) and the other institutions in the quality infrastructure jointly amplify each other’s effects, so leading to an impact greater than the sum of the parts. This set of interdependencies and cross-amplifying effects combine to create a significant financial advantage for those using accreditation to distinguish their products and services.

In addition to the financial benefits, the report illustrates the role of UKAS accreditation in the key business areas of innovation, productivity and efficiency, procurement, reputation and winning new business.

Commercial benefits of accreditation
The report carries results from a specially commissioned survey² of businesses involved in delivering UKAS accredited services and products. 50% of respondents considered that accreditation provided a marketing and reputational advantage, while a further 16% felt that it was a requirement of their customers and nearly 20% reported benefits in efficiency and service quality from the assessment process.

The survey also showed that there is a widespread ‘willingness to pay’ a higher price for accredited services, reflecting the added benefits. Using these price premia, an estimate of market size and the proportion of services that are accredited, the benefits of UKAS accreditation, from this perspective alone, amounts to an estimated £295m.

The report also draws on survey data made available by the National Physical Laboratory to identify a further £320m gained from the contribution accreditation makes to the operation of the National Measurement System and its positive effect on innovation and productivity.

Despite these ground breaking results, the authors acknowledge that the report represents only part of the story. Other substantial benefits, such as the contribution UKAS accreditation makes to public health and safety, trade facilitation and error reduction in industry, remain unquantified. The total contribution made by accreditation to the economy overall is therefore likely to be considerably higher than the £600m identified.

Positive effects of accreditation on process, productivity and performance
The report confirmed that assessment for accreditation is connected with important learning and efficiency enhancing effects. Large service suppliers confirmed that the process of going through UKAS assessment resulted in gains in efficiency, for example in staff management and training. Economic analysis finds that higher intensity of use of the National Measurement System, supported by accreditation, is positively correlated with several types of innovation and directly with labour productivity and growth. Beyond the actual management processes covered by accredited systems, efficiency is also enhanced through the avoidance of costs, for example of waste and re-working arising from non-conforming measurement.

Assisting businesses to win custom
The research also confirmed that the quality infrastructure is a vital part of the UK economy. It is a key means of providing supporting evidence to the trading expectations between business and the trust demonstrated by consumers when purchasing goods and services. Even large service suppliers, who have the option of relying on their own reputation, reported that accreditation by UKAS confirms and enhances that reputation.

Paul Stennett, Chief Executive of UKAS, commented, “The results of this new research are extremely useful in providing, for the first time, a valuation of the benefits of accreditation to the UK economy. Whilst it is helpful to have an estimated value of £600m as a broad indicator of the annual financial value of accreditation, the report makes clear that this figure covers only those commercial benefits for which financial indicators could be derived. Once the unquantified trade, health and productivity benefits are taken into account, the total benefits must be even more substantial, possibly adding up to £1bn or more each year. This reinforces our belief that UKAS is playing an important role in the economy and providing a valuable service to business and government alike.”

A full copy of the report can be downloaded here.