“Support for universities means support for businesses and jobs, for key workers, and for levelling up the UK’s towns and regions.” (Universities UK)

Universities have long been positively associated with economic growth, not only for the regional areas in which they are situated but also for neighbouring regions as a result of spillover effects. The total income of the UK university sector has been estimated at around £40 billion per year – 1.8% of national income.

Many universities are important anchors in their local areas, supporting community activity in various ways and working in collaboration with smaller businesses. And they have played a vital role in the response to the current pandemic through medical research, sharing of resources and community wellbeing efforts. 

With widespread agreement over ‘building back better’ and ‘levelling up opportunities across all parts of the United Kingdom’, it is no surprise there have been calls to ensure investment in this sector is a central priority. In forecasting the potential impact of UK universities over the next five years, recent research from Universities UK suggests that a well-supported university sector could be key to the economic and social recovery from the pandemic.

Supporting people

The Universities UK report outlines the ways in which universities support people, including by providing a pipeline of key workers and enabling upskilling for new jobs. It is projected that by May 2026, more than 191,000 nurses, 84,000 medical specialists and 188,000 teachers will graduate from UK universities. And it is suggested that these are likely to be underestimates. If these forecasts are accurate, the potential for universities to help address the skills gaps and shortages that the UK faces is clear, particularly as nursing and teaching have featured on the hard-to-fill and skills shortage vacancies lists.

It is also projected that demand for higher level skills will continue rising into the late 2020s. In the shorter term, 79% of employers with more than 25 staff anticipate a need for upskilling in the next 12 months, rising to 84% for firms with over 100 staff. No region sees the need for upskilling fall below 60%. In addition to educating students, universities are responding to this need with training and upskilling programmes tailored to employers and the community. Forecasts for each of the UK nations include:

• universities in Northern Ireland will deliver the equivalent of 410 years of professional development training and education courses to businesses and charities in the next five years (and 90 years’ worth in the next 12 months)
• Scottish universities will provide 3,490 years of training by May 2026 (over 600 years’ worth in the next year)
• Welsh universities will deliver the equivalent of nearly 4,800 years of upskilling in the next five years (over 880 years’ worth in the next 12 months)
• universities in England will provide the equivalent of over 549 centuries (54,936 years) of training by May 2026, and 10,580 years’ worth in the next year alone

As has been argued, “part of the effect of universities on growth is mediated through an increased supply of human capital and greater innovation”. 

Local economic impact

The local economic impact of universities is widely recognised. Universities have consistently attracted funding for local regeneration projects with significant economic and social impacts and the report forecasts that these will have a value of over £2.5 billion in local places across the UK over the next five years.

It is suggested that many of these projects will also attract additional funding from universities and businesses, resulting in even greater local impact.

Universities also have a direct impact on their local economies as large employers. It is estimated that 1.27% of all people in employment in the UK work for a university. Other recent analysis suggests that universities typically support up to one additional job in the immediate local economy for every person they directly employ.

The impact of universities on local procurement is also emphasised, highlighting the example of the Leeds Anchors Network, which is looking at opportunities to direct spending locally.  The report suggests that if anchor institutions in Leeds shift 10% of their total spending to suppliers in the region this could be worth up to £196 million each year.

Collaboration and contributing to research

The report also considers the role of universities in partnering with business, including providing advice/training and enabling cutting edge research and innovation.

It is forecast that UK universities will be commissioned to provide over £11.6 billion of support and services to small enterprises, businesses and not-for-profits over the next five years, ranging from specialist advice, access to the latest facilities and equipment to develop innovative products, and conducting bespoke research projects. It is also expected that universities will attract national and international public funds to spend on collaborative research with businesses and non-academic organisations, estimated to be worth £21.7 billion over the next five years.

The report highlights that this research leads to impact in priority sectors. In the East Midlands, for example, over a third of competitive funding received by research organisations since 2014 was for clean growth and infrastructure projects with businesses, a higher proportion than any other region. In Yorkshire 85% of funding has been for manufacturing, materials and mobility projects, and 53% of funding in London has been in the area of ageing, health and nutrition.

Universities have also been shown to be effective in commercialising their research via spinouts, an area that has a great deal of potential to contribute to economic growth.

Despite all universities conducting cutting-edge research, there are regional disparities in research and innovation investment. And there has been historic underfunding in some regions which has led to inequalities in economic performance across the UK, putting the levelling up agenda at risk. The report therefore argues that “research and innovation policy needs to be designed alongside, and be closely aligned to, local economic development policy.”

Of course, the higher education sector hasn’t been immune to recent financial cuts and the expected losses for the sector are “highly uncertain” as highlighted by the Institute for Fiscal Studies.

And the recent announcement of the 50% cut to university arts funding will come as a big blow to the already suffering creative industries sector. The decision, made in a bid to redirect spending to subjects considered a ‘strategic priority’ by the government such as medicine and STEM, is a concern if it is to have a detrimental impact on the arts industry talent pipeline.

Final thoughts

Depending on the losses the university sector experiences, it may be that the five year forecasts presented in the Universities UK report do not come to fruition.

However, as the intention of the government is to ‘level up’ and create a ‘place strategy’, surely universities have to play a central role given their huge economic and social potential. And that means investment, not cuts. As the Universities UK report highlights:

“World-class innovation and research assets need support. Training highly skilled people requires investment. Ensuring the benefits of both of these are felt equally around the UK will depend on robust policy and funding decisions.”

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RESEARCHconnect is the Idox group’s specialist research funding database providing information on thousands of funding opportunities dedicated to the UK research community. It supports universities, research institutions and research-intensive companies across Europe in identifying and disseminating R&D funding. In the current economic climate, there is increasing pressure to exploit alternative funding sources and RESEARCHconnect ensures that global funding opportunities will not be missed. 

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