How much does a lack of maths skills cost?

13 March 2014

"Mike Ellicock, chief executive of National Numeracy, says 78% of working-age adults have maths skills below the equivalent of a GCSE grade C - and that half only have the maths skills of a child leaving primary school. [...] An accompanying economic analysis said that a lack of maths skills cost the UK the equivalent of 1.3% of GDP or £20bn per year."

BBC News, 12 March 2014

The Government made improving the basic skills of the general population a key priority to help the UK have a competitive modern economy. But just how big, and costly, is the problem when it comes to numeracy?

It's true that a recent government survey found that half of working age adults had primary school level numeracy skills, while 78% had numeracy skills below the equivalent of a GCSE grade C.  But how much this is costing us is a more difficult calculation - even for economists. The £20bn cost estimate reported relates to the potential costs associated with poor numeracy skills in the UK: although researchers said the true estimate could lie anywhere between £6.7 billion and £32.6 billion.

Counting adult skills

We recently took a look at the skills gap among jobseekers, using findings from the government's Skills for Life survey published in 2011. The same survey tells us about the skills of the overall population in England.

Its findings confirm the reports that 78% - or 26.7 million working age adults - in England, had numeracy levels at Level 1 or below, with only 22% scoring any higher. Level 1 is the equivalent of a GCSE grade D to G and this percentage encompasses those with skills at three further 'entry levels' below this.

Looking at just the 'entry level' skills, which correspond to what's expected of pupils aged up to 11, just under half (49% or 16.8 million working age adults) had skills at Entry level 3 or below.

These results are based on a 25 minute assessment of skills ability. The very basic Entry Level 1 involves things like simple subtraction, while Level 2 (GCSE A* to C equivalent) involves using fractions and percentages.

Costs 'associated with' poor numeracy

The estimated cost of these gaps in the public's numeracy skills came from research conducted by economists for the charity National Numeracy.

The research attempted to calculate the overall cost to individuals, companies and to the public purse of 'low numeracy' skills (the entry level skills equivalent to primary level). They did this by calculating the cost of things like money spent on unemployment benefits, money lost to the individual in wages, profits lost by employers and net tax receipts lost.

But, the report states:

"our findings should be regarded as broad brush indicative estimates only. Costs refer to the poorer outcomes associated with low numeracy: we have not established a direct causal connection between lower numeracy and costs."

The reason they can't say for certain if the costs are entirely caused by lower numeracy skills is because there's not enough research out there to single out the exact impact of low numeracy skills on outcomes.

The report put the estimate of these 'associated costs' at £20.2 billion, but said the costs could lie anywhere between £6.7 billion and £32.6 billion. This depends on adjustments for things like the extent to which higher numeracy alone causes better outcomes and whether wages associated with better numeracy would change if all adults improved their skills.

It's not the first time that an estimate such as this has been attempted. Previous research, conducted by KPMG in 2009, estimated that failure to master basic numeracy skills in primary school was costing the public purse up to £2.4 billion every year. This was estimated using a different measure, based on the lifetime costs of one cohort of Year 7 primary school children with numeracy difficulties.


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