Universities generate £100 billion, one million jobs

UK universities now generate a knock-on impact of nearly £100 billion (US$131 billion) for the UK economy and support close to a million jobs throughout the United Kingdom, according to new figures published by Universities UK.

The vice-chancellors’ body’s latest study on the impact of the higher education sector on the economy – produced for Universities UK by Oxford Economics – found that universities now support more than 940,000 jobs in all parts of the UK, equivalent to 3% of all employment. In total, UK universities, together with their international students and visitors, generated £95 billion of gross output in the economy in 2014-15.

The gross value added contribution of universities’ own operations to gross domestic product or GDP, at £21.5 billion (US$28 billion), is larger than that made by a number of sizeable industries. It is 22% greater than that produced by the entire accountancy sector and almost 50% more than the contribution of the advertising and market research industry.

In terms of annual turnover, universities now generate larger turnover than the UK’s legal sector, the advertising and marketing sector and air- and spacecraft manufacturing.

Professor Janet Beer, president of Universities UK and vice-chancellor of the University of Liverpool, said: “This study highlights the huge and increasingly significant impact that universities have on the UK economy and jobs. This puts the UK's university sector above many other established sectors in terms of economic impact and regional job creation.”

University leaders have, however, warned that this contribution to the economy and jobs should not be taken for granted, as UK universities face increased global competition and uncertainty over Brexit negotiations and government policy on immigration and tuition fees in England.

The report examines three channels of spending which stimulate economic activity:

• • Universities’ direct impact reflects the operational expenditure they undertake to supply the teaching and research, residence and catering, sport and other activities;
  
  
• • The indirect impact occurs as a result of universities’ expenditure on inputs of goods and services from UK suppliers. Additionally, international students’ subsistence expenditure and the spending of their visitors;
  
  
• • The induced impact arises as universities and the firms in their supply chains, and firms in the supply chains of businesses providing the consumer goods purchased by international students and visitors, pay their staff wages. These workers spend a proportion of this income in the consumer economy, mainly at retail and leisure outlets. These impacts then ripple out across these outlets’ UK-based supply chains.

The report finds that in 2014-15, the UK university sector:

• • Generated over £95 billion of gross output, an increase of 15% in real terms between 2011-12 and 2014-15;
  
  
• • Employed large numbers of people across all the UK’s nations and regions. They supported more than 940,000 jobs in the UK, equivalent to 3% of all employment in the UK;
  
  
• • Contributed £21.5 billon to GDP, representing 1.2% of the UK’s GDP;
  
  
• • International students (on- and off-campus spending and that of their visitors) generated a total of £25.8 billion in gross output, and supported 250,000 jobs. Every international student generated £22,000-£35,000 gross value added or GVA, and £5,000-£9,000 in tax revenue;
  
  
• • Received less funding from UK public sources; less than one third (31%) of income came from the UK public sector.

Janet Beer said universities are often the largest employers in their area and, through links with businesses and in attracting students from overseas, they bring in significant investment from around the world to all the UK’s nations and regions.

“The knock-on impact of universities on local businesses and jobs has supported the regeneration of many deprived towns and cities.”

However, she also said that although the influence on jobs and the economy is important, universities are fundamentally about transforming students’ lives through education and skills and the production of life-changing research. They also enrich communities by giving local people the chance to take part in arts, music and sports activities on campuses.

“There are few sectors in the UK that can be described as truly world-leading, so it is important that the success of higher education is not taken for granted.

“Universities face many challenges, including increased global competition, uncertainty over student funding and the potential impact of Brexit. This report is a timely reminder to policy-makers of the increasing economic, social and cultural impact of universities on their local communities.”