UK universities contribute to economic growth

23 July 2012

Universities in the UK contributed £3.3 billion to the economy in 2010-11 through services to business, including commercialisation of new knowledge, delivery of professional training, consultancy and services.

The University of Salford's Energy House is at the centre of a hub for knowledge exchange in low-carbon industries.

These comprise part of a much wider economic impact (Note 1).

Analysis by HEFCE of the eleventh annual Higher Education – Business and Community Interaction survey shows that the total value of the services (Note 2) which UK universities provide to the economy and society increased by 7 per cent in 2010-11, from £3.1 billion in 2009-10 to £3.3 billion.

Despite wider economic uncertainty, spending on university services by large business increased by 7 per cent, from £587 million in 2009-10 to £629 million in 2010-11. Universities are stimulating economic growth and contributing to public services and society.

The report, published today, finds encouraging signs of the rising value of UK knowledge exchange (Note 3). This is illustrated by increases in income to universities from facilities and equipment – such as wind tunnels or digital media suites – where income grew by 12 per cent over the previous year, to £129 million in 2010-11.

  • In 2010-11 268 new businesses were set up based on the world-class research carried out by UK universities, bringing the total number of active spin-off companies to 1,262. These companies employed around 18,000 people and turned over nearly £2.1 billion during the year.
  • UK universities formed one new company per £24 million of research funding during 2010-11. This far exceeds the record of US universities (one new company per £56 million).
  • Graduates established over 2,800 new enterprises to capitalise on the knowledge and experience gained while studying. Universities support these enterprises by embedding enterprise in degree courses, and also by providing advice and facilities for graduates to set up and grow their businesses, and by putting them in touch with investors looking for opportunities.
  • The direct application of knowledge to solving problems in the public and private sectors also grew, with collaborative research increasing by 16 per cent and contact research by 7 per cent.

 Sir Alan Langlands, HEFCE Chief Executive, said:

Universities across the UK are working with businesses of all shapes and sizes to help generate innovative, high-value products and services.

‘In challenging economic times, the HE sector is doing all it can to drive growth – in everything from the commercialisation of new knowledge, delivery of professional training and research with business, through to income from their equipment and services.’

‘The sector is clearly delivering on the Government’s ambition for university knowledge exchange income from external sources to grow by 10 per cent over the next three years (note 5): intellectual property licensing income, for example, has increased in England by 3 per cent to £47.5 million. In one year we have already seen external income grow in England by 5 per cent.’

‘Higher education in this country is world leading. It is a great national asset, something we should all be proud of.’

 David Willetts Minister for Universities and Science said:

‘Universities and industry working together are making a substantial contribution to the UK’s economic growth. The latest analysis shows that external income to the higher education sector from business and other users has continued to increase, despite the challenging economic environment, to over £3.3 billion.

‘Today’s increase in the number of new start-up companies by staff and recent graduates of higher education institutions also highlights the important role that universities have in creating a more entrepreneurial society.’

Key indicators from the HE-BCI survey – 2003-04 compared with 2010-11

Real-terms income from all sources (£M)    
 2003-04 2006-07     2010-11
Collaborative research 645 736 872
Contract research 688 862 1,053
Consultancy 251 317 370
Facilities and equipment-related services 95 102 129
Continuing professional development and Continuing Education 352 534 606
Intellectual property (including sale of shares) 46 64 69
Outputs from UK HEIs 2003-04 2006-07 2010-11
Patent applications 1,308 1,913 2,256
Patents granted 463 647 757
Formal spin-offs established 167 226 268
Formal spin-offs still active after three years 688 844 999
% UK higher education institutions that provide: 2003-04 2006-07 2010-11
Short bespoke courses on client's premises n/a 84% 84%
Distance learning for businesses n/a 68% 83%

Source: 2003-04 to 2007-08 HEFCE HE-BCI collection and 2008-09 to 2010-11 HESA Finance Statistical Return collection: HE-BCI


  1. In terms of its wider economic impact the HE sector generated over £59 billion of output. ‘The impact of universities on the UK economy’ University of Strathclyde report for UUK, 2009’.
  2. The report ‘Higher Education – Business and Community Interaction survey 2010-11’ (HEFCE 2012/18) is available.
  3. Services provided by universities to business include: consultancy, training, use of facilities and equipment, contract and collaborative research as well as Intellectual Property and very highly skilled people.  
  4. Data for the HE-BCI survey were collected by the Higher Education Statistics Agency (HESA). The survey is analysed and published annually by HEFCE on behalf of the UK Stakeholders Group and the Department for Business, Innovation and Skills. The raw data were published by HESA in May; this publication provides further analysis of the data including a longer time series.

Page last updated 27 July 2012

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