Sustainable funding needed to protect higher education and the communities and jobs that depend on it

University leaders gather as new report reveals UK higher education has a £130bn economic impact

The new President of Universities UK (UUK) has used her inaugural speech to celebrate the role of universities in driving social change, generating jobs and tackling the UK’s biggest challenges, but called on government to back universities and protect the transformative benefits of higher education.

As 300 senior university leaders gathered at the University of Manchester for UUK’s Annual Conference, a new report by London Economics shows that in 2021/2022, universities had a positive economic impact of £116 billion, and supported 760,000 jobs. Nearly half (382,500), are indirect, employed by local businesses such as restaurants and retailers who benefit from the economic stimulus universities create. Taken alongside existing evidence showing a single cohort of international students generated £14.8bn, it brings the total economic impact from UK universities to over £130bn in 2021/22.

But Professor Mapstone— Principal and Vice-Chancellor of the University of St Andrews—warns that this positive activity cannot continue without the right support, and highlighted that funding is at its lowest point in 25 years, with tuition fees in England to be worth only £5,800 in 2011-12 prices by 2025-26.

Arguing that “this situation must not persist”, she said that universities need a sustainable funding model to reverse the long-term decline in funding for teaching, ensure a greater proportion of research is covered by public grants and to better support innovation.

Professor Dame Sally Mapstone said:

“We need to be upfront about what is required: increased public investment, and in teaching funding a potential rebalancing of who pays for the costs of higher education, retaining but reforming the income contingent loan system in England. Higher education and research is neither a wholly public nor private good and its funding model must carefully balance this.

Reflecting on the wider climate of fiscal tightening, Professor Dame Mapstone spoke about the role universities must play in stimulating stronger economic growth.

She said:“It is clear that the UK economy has a growth problem….As a nation we must address this challenge, I believe our universities can and should play a key role.We know that increased levels of higher education have been the main factor making a positive and consistent contribution to productivity growth in the UK in recent years. And when it comes to research, every £1 invested to help businesses and academic partners collaborate on research and development reaps a benefit of £7 to £8 of net Gross Value Added.”

Professor Mapstone also called on the university sector to be ‘realistic’ as it seeks to gain increased public investment:

“To gain the increased investment we need, we must help earn it. We cannot ask for increased public investment in the current context unless we have done everything we can to ensure our universities and the ways they operate are as efficient and innovative as possible. We must make absolutely sure that we are delivering value for money and high-quality education to our students.

“I believe that it is imperative that we face head-on the question of whether and how we are delivering quality education to our students. If we don’t, we run the risk of undermining not just our hope of sustainable funding but also our reputation as institutions that are here to serve and act in the best interests of others.”

The London Economics report – commissioned by UUK – is published alongside a series of case studies, outlining how universities are transforming local communities, meaning people up and down the UK benefit from our world leading higher education sector, whether or not they have a degree.

Commenting further on the announcement earlier today that a deal has been reached on association with Horizon Europe, Professor Mapstone warmly welcomed the agreement and said:

“We know that international collaboration with our closest partners is fundamental to our future success and to the government’s ambitions for us as a global science superpower. Horizon Europe has been the basis of scientific collaboration for over 30 years … Horizon lets us do things that would not be possible without that scale of collaboration.”