Universities are invaluable to the national economy and important anchor institutions in their regions. In 2021-22 around 285 higher education providers across the UK hosted 2.9m students and contributed £71bn to UK GDP
However, both the UK’s regions and our universities are facing times of change and challenge, leading to the question: can our universities make an even greater contribution to the places where they are based and strengthen themselves and their financial position in the process?
That question is at the heart of a new Lloyds Banking Group (LBG) and PwC project, which aims to find the brightest examples of university value propositions delivering positive local impact (here and overseas). We will identify prerequisites, lessons learned and success factors to unlock how initiatives can be scaled up. LBG has a banking relationship with over 70% of the UK Higher Education (HE) sector. PwC’s wealth of experience in the sector has seen us work with over a third of UK universities more recently. Both understand the complex and multifaceted challenges buffeting the sector, which have been exacerbated in this academic year by student numbers – especially international – that are significantly below plans for many institutions. This, combined with inflationary pressures, sees a large proportion of universities projecting a deficit this year. Therefore, the sector is justifiably reflecting deeply on financial sustainability and institutional risk.
But our conversations with Higher Education Institutions (HEIs) show a clear appetite to both improve their financial stability and deliver greater value for their cities and regions, through student outcomes and increasingly through broader economic impact. HEIs already, of course, deliver significant economic benefits both locally and nationally from those producing internationally excellent Research and Development (R&D), facilitating innovation and crowding in new investment, to others contributing to local regeneration and community wellbeing.
UK cities and regions are enjoying ever-greater devolution of resources and decision-making from Westminster. With Labour’s manifesto committing to widening and deepening English devolution and resetting the UK Government’s relationship with Wales, Scotland and Northern Ireland, this is set to continue. The change in government also brings the opportunity for places to develop local growth plans aligned with unique local values and heritage, business and community needs, existing industrial strengths and future growth opportunities. Universities can – and should – be central to shaping such strategies. Previous examples, like South Yorkshire Mayoral Combined Authority’s Plan for Good Growth, build on local history and strengths and seek to tackle long-term challenges to boost productivity including by better connecting the University of Sheffield and Sheffield Hallam University.
Historically, there has been an emphasis on monetising R&D by spinning out companies and commercialising IP as one lever for universities to generate income and support local economies. Considerable work has already been done on this, but opportunities remain for universities to better exploit such assets (like those highlighted in the Independent review of university spin-out companies). This opportunity is present whatever the R&D sectoral or thematic focus is.
Dundee University has recently risen to the top of the Octopus Ventures 2023 Entrepreneurial Impact Rankings, partly due to one of the largest ever UK university exits in Exscientia. By replicating their deep focus on high-growth-potential spinouts and university-linked start-ups and anchoring as many in the city as possible, other regions and cities can generate benefits for both the local economy and individual, institutional finances.
However, maximising and anchoring R&D value is just one path towards growing and diversifying university income streams while contributing to local economic growth. Others are less well-trodden. For example, Birmingham City University’s BCU Advantage programme supports local SMEs to grow, while the University of Derby works with Rolls Royce on projects like training nuclear submarine engineers, most of whom remain in the region. We also want to uncover the critical success factors for HEI collaborations with other anchor institutions (CLES’ Birmingham Anchor Network is an interesting model) and for cultivating effective dialogue with the private sector, including potential investors.
Lloyds and PwC held a HE roundtable in May at UKREiiF, the annual Leeds-based real estate, infrastructure and investment forum. Some interesting messages emerged, including the benefits of strategic local partnerships to transform estates to meet Net Zero and fit future educational needs. However, with such diversity across UK HE and local economies, one size doesn’t fit all. Different universities have different roles in different places.
With this project, we will showcase ideas and develop tools to support universities’ (continued) role at the heart of regional economies and communities. PwC will also shortly be sharing its “Framework for Growth” with insights from over 1,200 business leaders about priorities for improving growth and how we collaborate to achieve this.
Some questions we plan to explore are:
- What are the best models for strategic Higher Education collaboration and networks to drive growth and create efficiencies? Can they be scaled up?
- Which factors like specific infrastructure and relationships are essential to underpin successful university, regional and/or private sector collaborations?
- Can universities and their partners exploit and integrate emerging technologies being developed around the world to support innovation, drive business growth, increase public sector productivity and create high-quality jobs in local economies?
- How can universities balance the demand for graduates to meet local business and industry needs with other priorities and opportunities?
