The country’s 25 sector skills councils (SSCs) are worth an average of pound;105 million each to the economy annually in terms of their contribution to training and employer competitiveness, says a report commissioned by the Alliance of Sector Skills Councils.

Yet, on average, SSCs survive on funding of just over pound;5m a year from both government and industry sources, says the report by Baker Tilly, the accountancy and business advisory firm.

Launched at this week’s Alliance UK conference in Solihull, it says: “When viewed together, this indicates an average `amplification value’ of at least 20 times the original investment.”

Baker Tilly worked out that the four SSCs it sampled are worth more than pound;700m to the economy. This is based on a calculation by the Institute for Fiscal Studies that a 1 per cent increase in training creates a 0.6 per cent rise in productivity. The company calculated the gross value added (GVA) to the economy of the four sampled SSCs at pound;120bn, meaning that a 0.6 per cent increase in productivity would be worth pound;720m.

The Government would like to see a substantial reduction in the number of separate SSCs as part of its drive to reduce administration and bureaucracy. The UK Commission for Employment and Skills (UKCES), which licenses SSCs, also said in its paper “Towards Ambition 2020: skills, jobs, growth” that it expected a reduction in the number of councils.

The report’s author, Jim Clifford, head of charity and education advisory services at Baker Tilly, said there was considerable scope for greater collaboration between SSCs and other public and third-sector organisations.

But he said: “It puts down a clear marker that to reduce SSC funding would be damaging.”

The four sampled SSCs were Cogent (chemicals, pharmaceuticals, oil, gas and nuclear industries); Energy and Utility Skills (gas, power, waste management and water); People 1st (hospitality, leisure, travel and tourism) and Skills for Health (UK health sector).