New report reveals key role universities play in boosting growth and productivity across the South-East and wider UK
New data has revealed the full scope of the economic impact of the UK’s higher education sector – and the immense role universities play in boosting growth and productivity from a local to national level.
The report by London Economics, which was commissioned by Universities UK, a body representing 141 universities, 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.
Focusing on the just under one million (906,000) domestic students who started higher education in 2021-22, the latest figures show the UK higher education sector’s teaching, research and innovation activities had an economic impact of £158billion. 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.
On a regional level, universities make a substantial economic contribution. This includes £36.2 billion in the South East, highlighting the key role HE plays in boosting growth and productivity across the entire country
The report 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.”
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."
University of Hertfordshire Vice Chancellor Professor Quintin McKellar said:
“While hugely welcomed, this data - showcasing the immense economic impact of higher education to UK’s economy - comes as no surprise whatsoever. Our own, recent economic impact report showed that the University of Hertfordshire alone generated £730m for the UK economy in 2021 and £330m for Hertfordshire, proving our career-focused strategic approach is working; our teaching and support services are relevant, valuable and effective; our research is ground-breaking and that the opportunities here at the University are vast.
“Universities are institutes of skill, knowledge, innovation and enterprise. They’ve been developed to be able to respond quickly and effectively to our nation’s ever-changing challenges, and drive productivity, growth and progress as a result. My hope is that this new report from UUK and London Economics will further support universities being recognised for the significant role they play in local and national economic development and regeneration, and that they become more readily called upon for providing the ideas, skills, perspectives and solutions to drive progress and help transform the wider country’s economic, social and cultural future.”
Universities UK’s ‘blueprint’ - with contributions Lord Peter Mandelson and the CBI’s Chief Executive Rain Newton-Smith - will be published this autumn.