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Executive summary


1.   The Higher Education – Business and Community Interaction (HE-BCI) Survey is in its eighth year and is an essential source of information on knowledge exchange in the UK. The exchange of knowledge takes place between higher education institutions (HEIs) and the wider world of business and the community (although, of course, knowledge is also shared and transferred between academics and HEIs as part of normal academic work). Data reported here provide invaluable intelligence for knowledge exchange practitioners and policy-makers alike. The report also provides an in-depth commentary on the extent of and trends in knowledge exchange activity in the UK.

2.   This report builds on previously published HE-BCI surveys, the most recent of which analysed 2006-07 data and was published in July 2008 (HEFCE 2008/22)1. In this latest survey, HEIs provided financial and output data for academic year 2007-08. The data reported under strategic/infrastructural questions are a snapshot of the position at 1 April 2009.

3.   HE-BCI covers a range of activities, from the commercialisation of new knowledge, through the delivery of professional training, consultancy and services, to activities intended to have direct social benefits. Business in this context refers to private, public and third-sector2 partners of all sizes and sectors, with which HEIs interact in a broad range of ways. Community in this context is taken to mean society as a whole outside the HEI, including all social, community and cultural organisations and individuals.

Key points

4.   Total income to HEIs from knowledge exchange activities in the UK has risen from £2,641 million in 2006-07 to £2,812 million in 2007-08, an increase of 6.5 per cent in cash terms. This income is made up from a variety of channels where knowledge is shared and exchanged between HEIs, private, public and third sectors through activities such as research, consultancy, training and the exploitation of intellectual property (IP).

5.   The increases in income suggest the continuation of a trend where HEIs become increasingly engaged with external partners across public, private and third sectors. Data presented here cover academic year August 2007 to July 2008, where UK Gross Domestic Product (GDP) growth was flat for the last quarter. This change in economic conditions may explain the slowing of the rate of growth in HE-BCI indicators described in this survey.

Figure 1 Total income by partner 2003-2008 (real terms)


Source: HE-BCI Part B Tables 1, 2, 3 and 4c

Note: 'Other' contains income from a variety of public and private sources where data are considered too complex to fully disaggregate within reasonable burden limits, such as 1a Collaborative Research3.

6.   Collaborative research income (defined as HEI plus public funder plus other external partner) has risen by 4.2 per cent since 2006-07 to over £697 million, with the largest increase seen in projects where the EU is the public funder (alongside Research Councils, Government departments and others; see Annex C for further detail). Contract research (considered to be more of a direct transaction than collaborative research) has risen by 6.6 per cent since the previous survey to £835 million; the most substantial factor here is income from large business (10.6 per cent), including a reasonable increase (4.7 per cent) from public and third-sector partners while income from small and medium-sized enterprises (SMEs) dropped slightly (a fall of 1.8 per cent).

7.   Where existing knowledge is applied to new problems the income is returned predominantly as consultancy. This activity often provides swift access to the knowledge in HEIs and is especially popular with SMEs. Total income has increased from £287 million to £335 million (a 16.4 per cent rise) with a corresponding 11 per cent increase in the number of interactions, suggesting the average value of contracts has also increased. The largest proportion increase was income from SMEs at 25 per cent, although income from SMEs is still significantly less than that from other external partners (see Figure 2).

8.   HEIs also have a wide range of equipment and facilities as part of their teaching and research activities, from particle accelerators to performance space. Use of such facilities is often the first step in building relationships with business and community partners. Overall income from facilities and equipment has risen by 11.6 per cent since 2007-08 to over £103 million, with broadly similar proportions coming from SMEs, large business and public and third-sector partners. The number of interactions, however, rose by 13.2 per cent, suggesting average values are falling – an opposite trend to consultancy.

9.   Access to education remains the highest overall economic priority of UK HEIs but institutions increasingly support learning beyond completion of an undergraduate or postgraduate qualification. Continuing professional development (CPD) is increasingly relevant in most sectors of the economy. HEIs have reported an increase of nearly 11 per cent in 2007-08 with total income approaching £540 million.

10.   Regeneration income usually comes from public sources but its funded activities are likely to be beneficial across much of the economy and society. Regeneration projects are often large in scope and scale and allocated across a number of years, but for HE-BCI purposes, HEIs return only the income attributable to the survey year. Total income has dropped by just over 10 per cent, but disaggregating this reveals that reductions were predominantly from European sources while the UK’s devolved administrations and the Regional Development Agencies actually increased funding for HEIs by nearly 18 per cent. The total value of regeneration activity for UK HEIs – a proxy for the knowledge they apply to these activities – is nearly £240 million.

11.   Invention disclosures and patent applications decreased by 3.6 per cent and less than 1 per cent respectively in 2007-08. There was a reduction of nearly 10 per cent in patents granted but a substantial increase in the cumulative portfolio of patents. It may be that moves towards 'open innovation'4 are also affecting these data, but further investigation is needed.

12.   Licences to use IP from universities, including – but not limited to – patents, are divided into software and non-software categories. Software licences are usually of lower value and shorter lifespan than others. Income from SMEs fell across all forms of licence while that from larger business increased across the range; public and third-sector partners increased their spending only on non-software licences. Overall, income from licensing increased by 11.3 per cent to £45 million in 2007-08. Of this figure, around £5 million was generated from within the respective HEI’s home region/nation while just under £8 million was from outside the UK. There was a slight increase (1.9 per cent) in spending on IP protection by UK HEIs – reaching just over £21 million for this survey year.

13.   Where the results of research produce products or services that have a high chance of creating wealth, HEIs may opt to 'spin off' the invention, by forming a new company. In such cases the HEI may maintain a stake in the company, depending on what is seen as being the best route for the company to succeed. A total of 219 such spin-off companies were formed in 2007-08, with the HEI maintaining a stake in the majority (167). The formation of such companies is usually a long time after the original research was conducted (15 or more years) and more time will pass before they become established. Hence HE-BCI collects data on the number of companies that have survived for three or more years. In 2007-08, 923 such companies were reported, compared with 844 in 2006-07 even though there were more new spin-offs that year (226). Performance data for spin-off companies is notoriously hard to capture because they are, by definition, externalised from the HEI. But data suggest that HEI spin-off companies employed nearly 14,000 people and had a combined turnover of over £1.1 billion which is a substantial increase from the previous year even with the caveat regarding data completeness.

14.   Staff and students of HEIs also seem to be becoming more entrepreneurial by creating businesses. These companies are referred to as 'start-ups' because they are usually based on more traditional business models, rather than directly on IP as is the case with spin-off companies. These figures can also be hard for HEIs to capture accurately and there appear to have been considerable changes since 2006-07 with 41 companies started by staff and 1,977 by students respectively (2006-07 saw 62 companies formed by staff and 1,508 by students). However, the numbers of start-ups in existence for three or more years have risen in 2007-08 for both staff and students, to 155 and 1,322.

15.   Although spin-off companies may be one of the most pronounced economic impacts of HEIs, every year millions of people benefit from social, community and cultural programmes offered by HEIs – often at little or no cost to the beneficiaries. Three-quarters of a million people attended free public lectures at UK HEIs in 2007-08, an increase of 15 per cent, with academic staff devoting over 16,000 working days to providing the events. There was a 22 per cent increase (to 1.7 million) in attendees at performance events (music, dance and so on) where admission was not free; this is substantially higher than attendance at free performance events (585,544).

16.   Indicators for strategy and infrastructure developments also show continued growth with 93 per cent of HEIs providing an enquiry point for SMEs (a rise of 2 per cent) and bespoke courses away from their campus (a rise of 4 per cent).

Figure 2 Income by activity and partner 2007-08


Source: HE-BCI Part B Tables 1b, 2 and 4c

Figure 3 Selected strategy and infrastructure indicators 2000-2009 5


Source: HE-BCI Part A Questions 11 and 29 (data for 2002-03 and 2003-04 are assumed – see paragraph 21)

Figure 4 Selected HE-BCI income streams 2003-2008 (real terms)


Source: HE-BCI 2003-2007 Part B Tables 1b, 2, 3 and 4c

Action required

17. This report is for information. No action is required.


  1. All HEFCE publications may be read on our web-site.
  2. The 'third sector' refers to charities and non-profit-making enterprises.
  3. The category titles used in the report refer to those used in the survey.
  4. Open innovation – a model of firms using external and open ideas, as well as their own internal and confidential sources, to advance commercial applications and technologies.
  5. Not all data are available from 2000, many are only presented from 2003-04 onwards.

Date: 1 July 2009

Ref: 2009/23

To: Heads of HEFCE-funded higher education institutions

Of interest to those
responsible for:

Links with business and the community, Research, Continuing Professional Development, Workforce development, Funding, Planning

Enquiries should be directed to:

Adrian Day, tel 0117 931 7428, e-mail