The impact of universities on the UK & East Midlands economies

A big impact indeed


This Universities UK report from earlier in the year on the impact of universities on the UK economy really is a very interesting piece of work which covers the sector’s increasing impact in terms of output, contribution to GDP, job creation, and overseas investment. It also looks at the knock-on effects of expenditure by universities, their staff, and international students. The report finds that in 2011–12, the UK higher education sector:

• generated over £73 billion of output – up 24% from £59 billion in 2009

• contributed 2.8% of UK GDP in 2011 – up from 2.3% in 2007

• generated 2.7% of all UK employment and 757,268 full-time-equivalent jobs

• generated £10.7 billion of export earnings for the UK

• received less than half its income from public sources

The report also compares HE’s contribution to GDP to that of other sectors:

Higher education’s contribution to GDP (O) is clearly significant. Further analysis was undertaken to assess the impact of universities on GDP compared with a number of other UK sectors. As Figure 11 shows, the higher education institutional contribution to GDP (O) in 2011–12 was comparable to that made by legal activities, greater than that of office administration and less than telecommunications. The industry figures were sourced from the ONS Use Tables for 2010 and hence should not be regarded as a direct like-with-like comparison as the higher education figures are for the year 2011–12. However, Figure 11 is broadly indicative and is helpful in illustrating the relative position of universities in terms of their contribution to GDP. This is an industry-to-industry comparison (ie the secondary GDP generated by the universities or their students is not included).


HE v other sectors

It’s a really impressive piece of work and reinforces the critical place of higher education in the UK economy. The report is also accompanied by a set of more detailed reports which examine the impact of universities on the economies of the English regions.

Looking specifically at the East Midlands there is an important section reminding us of the huge impact of international students on the local economy:

The current strength of East Midlands higher education institutions in attracting students from further afield to study in the region also means that they are attracting additional money into the region and boosting export earnings.

• In 2011–12 the region’s universities attracted over 25,945 students from outside the UK. The fees paid by international students to the universities are captured in the university accounts and their impact is included in analysis of the overall institutional impact at sectoral level. (Non-EU students alone paid the universities £221 million in fee income in 2011–12.) Payments to the universities for halls of residence accommodation, or money spent in university cafeterias, bars etc are likewise captured in the institutional impact. However, in addition to any fees or other monies they pay to the university, international students spend money off-campus. This can be on private sector rental, food, entertainment, consumer goods, travel etc. In 2011–12 this off-campus expenditure of international students was estimated as £293 million.
• The off-campus expenditure of international students generated £440 million of output (of which £358 million was in the region) and over 3,719 full-time jobs throughout the UK (of which 2,975 were in the East Midlands). International student expenditure generated £204 million of GVA in the UK. (£147 million regional GVA.)

The summary of the economic output of universities in the East Midlands includes some pretty big numbers:

East Midlands Impact

East Midlands Impact

All very helpful and interesting.