University income from firms grows as public spending stagnates

UK universities’ income from knowledge exchange activities such as contract research, consultancy and hiring out facilities grew strongly last year, but the sector is increasingly reliant on businesses as public sector spending levels off, a report has indicated.

In total, institutions received £4.2 billion in 2014-15 from these sources of income, up 6.2 per cent from the previous year, according to the annual Higher Education – Business and Community Interaction Survey, released by the Higher Education Funding Council for England.

Income from contract research, where academics are paid to do a specific study, nudged up slightly (1.5 per cent) to £1.2 billion. Income in this area from large businesses and small and medium-sized enterprises (SMEs) grew, but dipped slightly from public and third-sector organisations.

This reflects a broader stagnation since 2011-12 in income from public sector and non-commercial organisations after the introduction of austerity. As well as contract research, spending on training and consultancy from these sources has also flatlined.

But expenditure by large businesses has been increasing steadily since 2009-10, following a dip after the financial crisis. SME spending has also grown, albeit from a much smaller base, with contract research expenditure up 6.3 per cent in 2014-15 compared with the previous year.

However, despite repeated exhortations to work more closely with SMEs, since 2009-10 there has been a slight drop in the percentage of universities that have an enquiry point for SMEs – although the vast majority still offer these services.

The report also found that there has been strong revenue and staff growth in university spin-off and start-up companies. Spin-off companies with some university ownership now have a turnover of almost £1.1 billion, up from £930 million in 2013-14.

There are now also nearly 11,000 graduate start-up companies with a combined turnover of about £650 million. The year before, there were about 1,000 fewer, with a total turnover of £475 million.

The survey also looks at universities’ non-financial interactions with the wider community. Nearly 2.1 million people attended free public lectures in 2014-15, up 300,000 from the year before, with academics contributing more than 17,000 days’ work to put them on.   

There were also 13.7 million attendees at free exhibitions in university galleries and museums, some 4 million more than the previous year.

david.matthews@tesglobal.com