Report

The Economic Impact of Universities in UK – Over £73.11 billion of output and 757,268 full-time- equivalent (FTE) jobs

The role of higher education in the economy and its potential contribution to supporting economic recovery and development continues to attract considerable attention in all developed countries. 2013 saw the 50th anniversary of the Robbins Report on Higher Education, which shaped much of today’s UK higher education system. Fifty years on, there is a renewed and extensive public debate about
the purpose and nature of higher education, the types of higher education institution society wants and, in particular, who should pay for the cost of a modern higher education sector. There is increasing divergence of higher education policy across the constituent nations of the UK. In England a new regulatory system for higher education has been announced and a new tuition fee system has been applied which has shifted the major burden for the cost of undergraduate tuition away from the public sector and onto the private individual. There have been variants of this shift in the tuition cost burden for institutions in Wales and Northern Ireland also, with Scotland continuing to support undergraduate tuition through the public purse. Other UK-wide political developments have impacted on higher education, with increased regulation of the international student market. Tighter government restrictions on the recruitment of international students have become an increasing challenge for universities to manage.

Through both direct and secondary or multiplier effects, the higher education sector generated over £73.11 billion of output and 757,268 full-time- equivalent (FTE) jobs throughout the economy. The total employment generated was equivalent to around 2.7% of all UK employment in 2011.

At the same time the importance of universities to supporting innovation and growth, particularly at a regional level, is coming under the spotlight again. The 2013 Witty Review of Universities and Growth explored the potential for better and stronger links between universities and their host regions, investigating how far universities can help regions develop their comparative strengths (particularly in the light of the EU Smart Specialisation Strategy1 for regions). The contribution of universities to the economy, through the education of graduates and through research and knowledge exchange,is the subject of much discussion and debate. However, it is sometimes overlooked that the higher education sector forms a core part of the economic infrastructure of the country. As large enterprises in themselves universities are major employers and they generate economic activity, attract export earnings and contribute to gross domestic product (GDP). The strength of the sector and its effectiveness in generating economic activity has been all the more important to the UK in the recent recession when other sectors of the economy have been contracting. Policy changes that impact on the sector have wider macroeconomic ramifications. This study presents a timely reminder of the very real, immediate and tangible impact made by the higher education sector in the UK economy.

This study presents key economic features of UK higher education in the academic year 2011–12 and those aspects of its contribution to the UK economy that can be readily measured. It does not include any assessment of the value of the sector’s collaboration with business or the impact of new ideas generated by universities or their graduates. These topics have been, and continue to be, the subject of many other studies. The sector is analysed as a conventional industry, highlighting major economic characteristics of UK universities, including their sources of revenue, employment created, output generated and export earnings attracted. Modelled estimates are made of the economic activity generated in other sectors of the economy through the secondary or ‘knock-on’ multiplier effects of expenditure by universities and their staff, as well as international students and visitors. Additional analysis is undertaken of the overall contribution of the higher education sector to gross domestic product (GDP) and its efficiency in generating impact is compared with a range of other sectors of the economy. This study is of 2011–12, the year immediately predating the introduction of the 2012 higher education reforms and the consequent increase in privately paid tuition fees in England and the prospective opening up of the sector to some for- profit providers. Hence it provides a record of the UK higher education sector immediately prior to the most radical higher education policy shift in recent times.

The study examines the key economic characteristics of universities and the impact generated by their activity. It also examines the impact of the off-campus expenditure of non-UK- domiciled students (that is, students from the rest of the EU as well as non-EU students) studying at UK universities.

Chosen excerpts by Job Market Monitor. Read the whole story at  Universities UK – The impact of universities on the UK economy

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