Goldmines right under the noses of locals

Universities revitalise local economies, providing jobs and bringing students and their cash to town. The THES reports on their impact worldwide

Warwick University, along with its science park and student union, is one of the top five employers in Coventry.

It employs nearly 4,000 people and the science park more than 2,000. Warwick has the largest performance and visual arts complex of its kind in the UK outside of London, attracting some 225,000 visitors a year to 1,600 events. Its conference business hosts 3,100 events a year and its business school and Warwick manufacturing group work with a number of local companies.

But the importance of universities for local economies is only just being recognised.

In June, Universities UK published a report on the impact of higher education institutions on the economy. It concluded that the sector, which generates £35 billion a year and employs 562,000 people (nearly 3 per cent of UK employment), was neglected.

"The reality of higher education as a major industry in the UK, measured in conventional terms of income, expenditure and employment, remains to be fully realised by government, by politicians, by the public at large and often by the higher education institutions themselves," says the report, written by three Strathclyde University economists.

Richard Marsh, one of the three, now works for DTZ Pieda, a consultancy firm that has undertaken a number of studies on the regional impact of higher education. "The higher education sector has been one of the fastest growing areas of our economy since the mid-1980s with a stability in core markets that many in industry would envy," he said.

Paul Wheelhouse, another economist with DTZ Pieda, lists the economic impact of further and higher education. "Institutions generate direct and indirect employment, contribute student spending power and enrich cultural activities, influence the local property marketI and improve the profitability of the region through commercial spin-offs."

Government and regional agencies increasingly acknowledge this. When the University of Northumbria at Newcastle published a report on its impact on the local economy it noted: "ONE NorthEast (the development agency for the region) places universities 'at the heart of regional economic development'."

Recently, the Higher Education Funding Council for England directed substantial funds to build links between universities and local businesses and communities, called "Third Leg" activity.

In 1999-2000, the Higher Education Reach Out to Business and the Community scheme was launched, now being taken forward in the Higher Education Innovation Fund. In 2002 Hefce established the Higher Education Active Community Funds to support volunteers working in partnership with not-for-profit organisations in disadvantaged areas.

Late last year the Higher Education Regional Development Association, South West - set up by the 14 local universities and colleges to ensure that they contributed to and shaped the regional economy - published research on the contribution of higher education to the Southwest economy.

It found that higher education in the Southwest received £8 million from the government to support business relations in 2000-01, rising to £13 million this year. Universities and colleges generated £1.3 billion locally and supported 57,000 jobs, and 80 per cent of students who studied in the Southwest stayed there for their first job.

In 2000-01 at Bristol University eight new companies were set up by staff, 44 patent applications were filed and technology transfer licence agreements signed.

But Mr Marsh said: "There is no reason to assume that the beneficial effects of higher education will be distributed evenly throughout the UK."

The top five universities where employees accounted for the greatest share of local employment are St Andrews, Cambridge, Oxford, Loughborough and Bangor.