UK universities contribute to economic growth

23 July 2012

Universities in the UK contributed £3.3 billion to the economy in 2010-11 through services to business, including commercialisation of new knowledge, delivery of professional training, consultancy and services.

The University of Salford's Energy House is at the centre of a hub for knowledge exchange in low-carbon industries.

These comprise part of a much wider economic impact (Note 1).

Analysis by HEFCE of the eleventh annual Higher Education – Business and Community Interaction survey shows that the total value of the services (Note 2) which UK universities provide to the economy and society increased by 7 per cent in 2010-11, from £3.1 billion in 2009-10 to £3.3 billion.

Despite wider economic uncertainty, spending on university services by large business increased by 7 per cent, from £587 million in 2009-10 to £629 million in 2010-11. Universities are stimulating economic growth and contributing to public services and society.

The report, published today, finds encouraging signs of the rising value of UK knowledge exchange (Note 3). This is illustrated by increases in income to universities from facilities and equipment – such as wind tunnels or digital media suites – where income grew by 12 per cent over the previous year, to £129 million in 2010-11.

• In 2010-11 268 new businesses were set up based on the world-class research carried out by UK universities, bringing the total number of active spin-off companies to 1,262. These companies employed around 18,000 people and turned over nearly £2.1 billion during the year.
• UK universities formed one new company per £24 million of research funding during 2010-11. This far exceeds the record of US universities (one new company per £56 million).
• Graduates established over 2,800 new enterprises to capitalise on the knowledge and experience gained while studying. Universities support these enterprises by embedding enterprise in degree courses, and also by providing advice and facilities for graduates to set up and grow their businesses, and by putting them in touch with investors looking for opportunities.
• The direct application of knowledge to solving problems in the public and private sectors also grew, with collaborative research increasing by 16 per cent and contact research by 7 per cent.

 Sir Alan Langlands, HEFCE Chief Executive, said:

Universities across the UK are working with businesses of all shapes and sizes to help generate innovative, high-value products and services.

‘In challenging economic times, the HE sector is doing all it can to drive growth – in everything from the commercialisation of new knowledge, delivery of professional training and research with business, through to income from their equipment and services.’

‘The sector is clearly delivering on the Government’s ambition for university knowledge exchange income from external sources to grow by 10 per cent over the next three years (note 5): intellectual property licensing income, for example, has increased in England by 3 per cent to £47.5 million. In one year we have already seen external income grow in England by 5 per cent.’

‘Higher education in this country is world leading. It is a great national asset, something we should all be proud of.’

 David Willetts Minister for Universities and Science said:

‘Universities and industry working together are making a substantial contribution to the UK’s economic growth. The latest analysis shows that external income to the higher education sector from business and other users has continued to increase, despite the challenging economic environment, to over £3.3 billion.

‘Today’s increase in the number of new start-up companies by staff and recent graduates of higher education institutions also highlights the important role that universities have in creating a more entrepreneurial society.’

Key indicators from the HE-BCI survey – 2003-04 compared with 2010-11

Real-terms income from all sources (£M)
	2003-04	2006-07	2010-11
Collaborative research	645	736	872
Contract research	688	862	1,053
Consultancy	251	317	370
Facilities and equipment-related services	95	102	129
Continuing professional development and Continuing Education	352	534	606
Intellectual property (including sale of shares)	46	64	69
Outputs from UK HEIs	2003-04	2006-07	2010-11
Patent applications	1,308	1,913	2,256
Patents granted	463	647	757
Formal spin-offs established	167	226	268
Formal spin-offs still active after three years	688	844	999
% UK higher education institutions that provide:	2003-04	2006-07	2010-11
Short bespoke courses on client's premises	n/a	84%	84%
Distance learning for businesses	n/a	68%	83%

Source: 2003-04 to 2007-08 HEFCE HE-BCI collection and 2008-09 to 2010-11 HESA Finance Statistical Return collection: HE-BCI

Page last updated 27 July 2012