The independent school sector saves UK taxpayers almost £4 billion a year, the equivalent cost of establishing hundreds of new free schools, a major new report claims.

The government saves an estimated £3.9 billion a year from parents who choose to pay for their child to be educated, enough to build 590 free schools at an average costs of £6.6 million each, the analysis says.

The research, compiled by consultants Oxford Economics, estimates that UK private schools contributed a total of £11.7 billion to the UK economy and provided 275,000 jobs.

The 1,205 schools in the Independent Schools Council (ISC) alone, which educate 470,000 pupils, generate £9.5 billion, more than the city of Liverpool or the BBC, according to the report.

It is the first time the ISC has commissioned research of this kind, which also looks at the financial, cultural and educational impact of its schools on their local communities.

The publication of the data comes after a barrage of criticism about private schools of not contributing enough to state education. Last year, Ofsted chief inspector Michael Wilshaw accused independent schools of being “marooned on an island of privilege”.

Meanwhile, education secretary Michael Gove has condemned the continuing dominance of the privately educated in the upper echelons of society, even criticising the government’s habit of employing Old Etonians in top positions.

The research, which reveals that the ISC group of schools alone generates £3.6 billion in tax revenues for the Exchequer, may also be aimed at fending off critics of the £100 million a year in tax breaks they are afforded through their charitable status.

Barnaby Lenon, chair of the Independent Schools Council, told TES that heads had always been aware that their schools had an impact on the local economy. “But we had no idea what the national picture was at all,” he said. “It seemed like a good idea to do this research.

“We weren’t expecting any particular result, it was not devised as a marketing tool in any way, we thought it would useful information to have. It is extremely interesting.”

He said that in some small towns, such as Uppingham, local private schools had “a big impact” in terms of employment, the economy and social and cultural life.

But he denied the publication of today’s research was a strategic move. “Publishing this data is not meant to be defensive, researching what our schools are up to is one of the things we do,” he said.

Matthew Burgess, general secretary of the ISC, added: “While our schools have been long recognised for their educational excellence, we can now see how important our schools are in stimulating growth and employment, in contributing our fair share of tax and supporting local economies and communities across the country.”

David Hanson, chief executive of the Independent Association of Prep Schools, added that the report supported his call for parents choosing private education to be given tax relief.