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New report reveals key role universities play in boosting growth and productivity across the UK
Intro
For the first time, new data reveals the full scope of the economic impact of the UK’s higher education sector. In their latest report, 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.
- Every pound of public money put into universities across the UK generates £14 of economic impact
- UK higher education and research makes a total net contribution of £265 billion to the economy
- The economic impact on the UK economy associated with the UK higher education sector’s teaching, research and innovation activities combined was estimated at approximately £158 billion
- The public purse makes a profit on each graduate of, on average, £75,000, even after the costs of subsidising their studies are taken into account because of higher tax and national insurance contributions
- Higher education in London makes a net contribution of £60.9 billion to the UK economy*
Main body
The latest figures show 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 just under one million (906,000) domestic students who started higher education in 2021-22.
It also shows huge positive returns to the public purse of funding students’ higher education, with the Treasury seeing a benefit of £75,000 per graduate, even when considering the cost of subsidising their education through loans and grants.
Professor Dame Sally Mapstone DBE FRSE, Principal and Vice-Chancellor of the University of St Andrews and President of Universities UK said:
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.
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. With a new government at the helm, it’s imperative now more than ever to acknowledge the key role HE can play in unlocking the full potential of the economy both locally and nationally.”
On a regional level, universities make a substantial economic contribution. This includes £60.9 billion in London, highlighting the key role HE plays in boosting growth and productivity across the entire country.
Vice-Chancellor and President of the University of West London Professor Peter John CBE said:
The West London area has a combined value of more than £75 billion with more than 100,000 businesses housed in the region. It also has the largest proportion of start-up and micro companies in the capital. As part of this dynamic eco-system, the University of West London will ensure that our many stakeholders in the region will be involved in helping us deliver high-quality outcomes for students while bringing added value to the economy.”
The London Economics report also calls out a body of evidence showing the range of wider benefits, to both graduates and society, of a university education. These include increased work productivity for both the graduates and their co-workers, improved health outcomes and a lower chance they will be involved in crime.
Professor Dame Sally Mapstone DBE FRSE added:
It is clear we are at a fork in the road. We can choose to act to ensure our universities thrive, or we can allow them to slide into decline. For me, the latter path would be unconscionable. The figures released today will inform work underway by a leading group of experts within and outside higher education, exploring how universities can address the UK’s greatest priorities and challenges, especially around growth, opportunity and supporting delivery of the Government’s missions. Our blueprint, which will be published in the coming weeks, will set out plans for a 're-set' of the university sector including a re-balancing of responsibility for funding in England to recognise the significant benefits to the Treasury generated by graduates."
Universities UK’s ‘blueprint’ - with contributions from Lord Peter Mandelson and the CBI’s Chief Executive Rain Newton-Smith - will be published this autumn.
- Read the full report via the Universities UK website.
*Source: London Economics, The economic impact of higher education, teaching, research and innovation (2024).
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