"In the midst of a global economic downturn, the research and scholarship that only universities can provide become even more important"
Thistle Hotel, Marble Arch
27 November 2008
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Good morning everyone. It’s a great pleasure for me to be able to take part in your conference today.
I’m sure that all of us here recognise the worldwide reputation for teaching excellence that UK higher education has earned. And I’d also be surprised if there was anyone here today who didn’t know that UK universities come second-only to the USA on any international index of research quality that you could name. To take just the best-known, the Shanghai Jiao Tong index places two UK universities in its top ten – the only non-American institutions to figure.
But it’s at times like those through which we’re now living that we’re most forcibly reminded that, besides their basic research and teaching, UK universities are increasingly major players in our national economy. Taken as a whole, the UK university system represents a business ten times the size of ICI, three times the size of the McDonalds Corporation and almost twice as big as the entire Hollywood entertainment industry.
A couple of years ago, UUK estimated the total economic impact of the sector at £45 billion a year. So higher education is certainly making its rightful contribution to increasing Britain’s national prosperity.
In the midst of a global economic downturn, the research and scholarship that only universities can provide become even more important. This Government has always sought expert advice from the higher education sector. But right now academic economists are helping the Government and the City to understand the forces that have caused markets and currencies to fall, and to navigate the economy towards safer waters. The most prominent of these is Professor David Blanchflower, who sits on the Bank of England Monetary Policy Committee. But I know the advice of many more is both sought and valued inside and outside Government.
The brochure that you should have received this morning underlines the speed with which the higher education sector has responded to the challenges posed by the economic downturn. It’s a response which is not only intellectual, but also practical.
I’ve had a chance to take a quick look at the brochure myself. I’m especially impressed by how many examples it contains of how higher education institutions of all sizes and ages are engaging with business up and down the country, contributing to the health of their local economies and the stability of their local communities.
Successes of this sort are being underpinned by financial support from the Government on an unprecedented scale. Public funding for higher education rose in real terms by 24 per cent between 1997 and this year. On current plans, it will have increased by over 30 per cent in real terms by 2010.
Even when the global economic climate is putting public spending under such pressure, we recognise the importance of continuing to invest in higher education. Because you help to drive a large part of our economy. And every extra pound of taxpayers’ money we put into higher education is a vote of confidence in what our universities are doing, and what more they can do, for Britain as a whole.
Only last Monday, Alistair Darling announced in his Pre-Budget Report that some £252 million of HEFCE capital funding would be brought forward from 2010-11. That will provide an extra £200 million in 2009-10 alone.
I know that HEFCE is already working on identifying which projects the £200 million will support next year. It anticipates that it will support around 50 building, refurbishment and green projects across sector. And it will be looking to support projects that are genuinely additional to that year's capital programme, make the most economic impact and are deliverable in year.
It’s not only at national but also at regional and local level that universities’ impact is being felt. Individual universities are key contributors to their local economies and local communities, too.
It’s a contribution that’s valued all over the country. I could, for example, point to the University of Hertfordshire, which has for many years has been arguably the higher education sector’s greatest innovator in finding ways to engage with business and the community. It’s even bought the local bus company.
Or I could name Warwick University, where the Warwick Manufacturing Group has now been championing and supporting manufacturing in the Midlands for almost thirty years now.
And it’s not only the commercial world that benefits from universities’ outward-looking activities. A couple of weeks ago, I was at Canterbury Christ Church University, which has established a particularly strong record of helping to meet the skills needs of the public services in East Kent.
I make no apology to anyone for acknowledging really positive contributions of this sort to our national and local life. They’re worth people celebrating. People ought to know that even when times are tough, the tremendous power of our higher education system is being deployed on their side and is working to help bring us through our difficulties and out the other side.
All of these things are reasons why I’m proud to be the Higher Education Minister.
But I want to talk in particular today about what universities are doing for small and medium-sized enterprises. 99 per cent of British companies are SMEs and, as the Prime Minister and Chancellor have both said, it’s therefore incumbent on us to protect them.
The contribution that universities are already making to this is substantial.
I’ll just give three examples of how individual universities are helping SMEs in their areas. They’re examples which prove that higher education can react quickly to changing circumstances in the short term as well as working for the long term.
One such is the University of Bedfordshire’s Knowledge Club for SMEs. This aims to engage employers and staff with accredited short course and continuing professional development within a flexible local framework. A similar scheme is also being run locally by De Montfort University.
A different but equally interesting approach, supported by HEFCE funding, is being taken by the University of Brighton. The university has developed ProfitNet, a learning network for owners and leaders of 500 SMEs in Sussex. ProfitNet has highlighted the skills needs of employers and successfully delivered short courses, but is now looking to accredit programme towards a Masters degree.
This is really important. According to recent research by the IFF, most of Britain’s small businesses are quite confident that they’ll be able to weather the economic downturn. Clearly, most aren’t thinking of expansion at the moment and many are cutting back on recruitment. However, a welcome 23 per cent plan to increase their training budgets.
Schemes like the ones I’ve mentioned are tapping into these needs and this market. They’re part of a model that we want to encourage not only the rest of higher education, but also the other parts of our education service to adopt.
The UUK brochure offers several more interesting examples of universities old as well as new which have found innovative ways to contribute to their local economies. This is evidence that universities are indeed playing their part in the sorts of activities that will help bring us out of the downturn sooner rather than later. And when the markets do turn upwards again, they’ll help British business to take full advantage of the opportunities to increase Britain’s prosperity that will come.
Increasingly, the engagement of universities with local SMEs and other businesses is not something that happens at random. Ten years ago, it was quite usual for universities to wait for businesses to approach them on a piecemeal basis. However, with help from the Higher Education Innovation Fund which this Government created, the whole sector has increased its capacity to take a more coherent and strategic approach.
And that doesn’t just apply to links with businesses. All over the country, universities are now going out and getting involved with local authorities, Regional Development Agencies, chambers of commerce and with bodies like Business Link. They’re sitting down at the table with the people whose job it is to take an overview of how best to support local economies through the current economic turbulence.
That is something that we should all really welcome. Because it means not only that the things universities can offer to business are in the shop window, but also that the higher education sector’s substantial expertise is being brought to bear on the decision-making process.
It means, in short, that universities are becoming an ever-more integral – and, indeed, indispensible – part of the economic supply chain.
It’s to encourage more of this that we published our high level skills strategy - Higher Education at Work – earlier this year, and also why HEFCE’s now offering new support for co-funding of courses between universities and employers. It’s why the Research Councils are now scrutinising the economic impact of the projects they fund. And it’s why the New University Challenge is going to bring a higher education presence and all it has to offer communities to parts of the country that have not previously benefited from one.
It’s against that backdrop that, today I want to call on all of you to do two things.
The first is to reinforce of what you have already been doing with such success. Get even more closely involved with the areas and regions of which you’re already such an important part. Focus your minds on what else your institutions can contribute to helping local employers meet the challenges of today and get ready to meet those of tomorrow.
And the second is not to hide your light under a bushel. This is the moment to demonstrate what the last ten years of investment in higher education is all about. To show that HE institutions are integral to Britain's success now and in the future. And I think ordinary men and women who’ve maybe never been near a university but who would be relieved to know how much you’re doing to safeguard their jobs and improve their and their families’ lives.
In doing that, you can take a leaf out of the US system’s book. US universities have long-since grasped the fact that a strong guarantee of the level of their public funding is public recognition of the worth of the things they’re doing.
I did a surf of US university websites the other day, and I couldn’t find one which didn’t make a great deal of its contribution to the local economy.
In fact, I didn’t find one institution that didn’t make much of its economic impact on its area.
For example, it didn’t take long to find out that in 2002, my old university, Harvard, generated $162 million in revenues for the Boston area. Similarly prominent was the fact that in 2004, Penn State University was the single largest contributor to the State's economy, generating $6.14 billion in economic impact and supporting more than 60,000 jobs. And that UCLA is the seventh-largest employer in greater Los Angeles, that its total economic impact is £9.3 billion, that it returns $15 dollars for every taxpayer’s dollar invested, and that a third of its students take part in community service.
I think you’ll agree that all that sounds pretty impressive. And it is. But my point is that most or all universities in Britain could say something very similar. And for my part, I think you ought to. Because universities aren’t just consumers of public money, they’re also producers of wealth and wellbeing from which taxpayers even without a direct connection to them benefit.
That has to be worth making that manifest at any time, and more than ever when a chill economic wind is blowing and so many ordinary, hard-working people are feeling the pinch.
I’ve talked mainly about the economic side of higher education today. Obviously that’s not all universities do. They’re institutions with great social, cultural and, indeed, moral impact, too. But that’s all for another time.
Today, I want to say loud and clear that our universities are helping us all through the economic downturn and towards the brighter prospects that will follow it.
The Government’s grateful for it. I’m grateful for it. And so should we all be.
Thank you.
