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1 April 2009

Report shows public investment in higher education benefits the economy and society

An evaluation published today by HEFCE(1) shows that the money put into higher education institutions in England for working with businesses and the community has yielded benefits worth many times the investment over the past seven years.

The evaluation calculates for the first time the value for money achieved by long-term public investment in higher education institutions (HEIs) working with the economy and society(2). The evaluation states that nearly 600 million has been put into higher education (HE), primarily through the Higher Education Innovation Fund (HEIF)(3), and estimates that this has generated a minimum of between £2.9 and £4.2 billion in value.

The report states that the total value generated is likely to be much higher than that, however. These wider benefits include social impacts not best captured in monetary terms (for example, working for free with their local communities), increased engagement between industry and HE research, teaching and other activities (new avenues of research or improved employability of students), as well as other activities that are presently not well measured (encouraging public engagement, the value of high-tech spin-off companies).

In 1999 HEFCE set out a vision to change the culture for higher education to engage with the wider world in its programme of 'third stream' funding(4). The importance of such a permanent third stream of funding through HEIF to support this agenda has been highlighted in a number of government reports, including most recently the Sainsbury Review and Innovation Nation(5). This evaluation concludes that significant progress has been made toward this goal. There is still further to go, particularly in encouraging more academic staff to engagement in third stream activity, but the current tide would be hard to reverse.

Progress has been achieved through:

  • funding from HEFCE and the DIUS Science Budget
  • long-term, sustained and prominent support and encouragement by Government
  • visionary, dynamic and supportive leadership in universities and HE colleges.

The report concludes that the HE sector has delivered economic and social impact without displacing or impairing HEIs' core activities of research and teaching. However, the report suggests that academics are still constrained by time to engage fully in third stream activity.

David Sweeney, Director, Research Innovation and Skills, said:

'Higher education has stepped forward dramatically now to help business and individuals in the economic downturn. This rapid response has been possible because of the long years of sustained public support for the infrastructure for engagement with business and the community through HEIF. In these difficult times, it is vital that we demonstrate that taxpayers get good value for money. I am therefore immensely pleased that this evaluation shows clearly that HE has delivered such a substantial return back to the economy and society.'


1.   'Evaluation of the Effectiveness and Role of HEFCE/OSI Third Stream Funding: Culture Change and Embedding Capacity in the Higher Education Sector Toward Greater Economic Impact' was conducted by PACEC consultants and the Centre for Business Research, Cambridge.

2.   This includes only activities that generated income and have been calculated in periodic surveys of universities and HE colleges.

3.   The Higher Education Innovation Fund (HEIF) is designed to support and develop a broad range of knowledge exchange activities which result in economic and social benefit to the UK. It started in 2001.

4.   The HEIF built on the previous third stream of funding initiated by the Higher Education Reach-out to Business and the Community (HEROBC) Fund.

5.   The 'Innovation Nation' White Paper (March 2008) set out the Government's aim to make the UK the best place in the world to run an innovative business or public service. Sainsbury Review of Science and Innovation (October 2007) examined the role of science and innovation in ensuring the UK remains globally competitive.