Key role Universities play in boosting growth and productivity across the UK

Universities in the UK play a critical role in driving economic growth, innovation, and productivity across the country. London Economics analysed the impact of the UK higher education (HE) sector’s teaching, research, and innovation activities on the UK economy, focusing on the 2021-22 academic year.

New data reveals the UK higher education sector’s teaching, research and innovation activities had an economic impact of £158 billion. When combined with previous London Economics analysis of the direct spending by the sector and the economic benefit of international students, the total impact across UK HE in 2021/22 was £265 billion. Comparing against the public cost of these activities, London Economics found a cost to benefit ratio of 14 to 1. This means for every £1 of public money invested into UK universities, £14 of economic benefit is generated.

Commissioned by Universities UK, which represents 141 universities, the report focuses on the just under one million (906,000) domestic students who started higher education in 2021-22.  Universities have always been a driving force for boosting growth and opportunity whether directly or indirectly. This latest report reveals for the first time the full scope of the impact of universities and clearly demonstrates the importance of the sector to the economy and society at large.

However, these figures make a strong case for viewing universities as another part of the UK’s growth infrastructure, and one which can deliver economic and social benefits more quickly and effectively than others. Unlike other sectors, the influence of higher education is felt in communities along the length and breadth of the country and by people of all backgrounds.

Key role universities contribute to these areas:

1. Research and Innovation

• Universities are central to cutting-edge research across various sectors, including science, technology, healthcare, engineering, and social sciences.
• The development of new technologies, products, and processes from university research contributes to industrial innovation, boosts productivity, and creates new markets.
• Collaboration between universities and businesses through research partnerships often leads to commercialization of innovative ideas and strengthens the competitive edge of industries.

2. Skilled Workforce Development

• Universities are a major source of highly skilled graduates, who are essential for the workforce in a modern economy. Their education and training in specialised fields enhance workforce productivity.
• Higher education institutions equip students with both hard skills (technical expertise) and soft skills (problem-solving, critical thinking), both of which are vital for a productive economy.
• They offer lifelong learning opportunities and reskilling programmes to ensure that people can adapt to changing economic needs.

3. Entrepreneurship and Startups

• Universities act as hubs for entrepreneurship by providing resources such as incubators, business accelerators, and access to venture capital for startup companies.
• University spin-offs and startup companies often result from research and innovation within universities, contributing to local economies and job creation.
• Programs like entrepreneurship training and competitions stimulate students and staff to consider business ventures, contributing to job growth and economic dynamism.

4. Regional Development

• Universities often serve as anchors of local and regional economies, attracting investment, businesses, and talent to the area.
• They can be a focal point for improving local infrastructure and boosting demand for services and products in the surrounding areas.
• Universities also encourage collaboration across sectors and bring in international expertise and diverse perspectives, improving the region’s global competitiveness.

5. Collaboration with Industry

• Partnerships between universities and industries, including knowledge transfer and joint research projects, are key drivers of growth in many sectors.
• Universities offer businesses access to the latest knowledge, technology, and skilled professionals, leading to enhanced productivity and innovation.
• The skills gap in certain industries is also addressed through tailored academic programmes developed in collaboration with businesses.

6. Attraction of International Talent

• The UK’s universities are highly regarded globally, attracting talented international students, researchers, and academics. This diverse talent pool enhances the overall productivity and competitiveness of the economy.
• International students contribute to the UK economy through tuition fees, accommodation, and other spending, while also bringing in global perspectives and creating valuable networks.

7. Policy Influence and Thought Leadership

• Universities are at the forefront of providing evidence-based policy advice and thought leadership on key issues such as economic development, sustainability, healthcare, and technology.
• Academic experts provide valuable insights that shape public policy decisions, ensuring they are informed by the latest research and knowledge.

8. Social and Cultural Impact

• Universities contribute to social and cultural cohesion, fostering creativity, diversity, and innovation. This helps create a more vibrant economy with a better quality of life.
• They promote a culture of continuous improvement and critical thinking, key ingredients in driving productivity and adapting to an ever-changing global economy.

In short, universities serve as catalysts for growth and productivity in the UK through their research, talent development, industry collaboration, regional impact, and global engagement. Their role is critical in ensuring the UK remains competitive on the global stage while addressing the evolving needs of the economy.

Source: Universities UK