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15 September 2011

UK universities contribute 3 billion to economic growth; SMEs play vital role

Analysis by the Higher Education Funding Council for England (HEFCE) of the tenth annual Higher Education Business and Community Interaction survey shows the total value of UK knowledge exchange increased by 4 per cent from 2.97 billion in 2008-09 to 3.09 billion in 2009-10.

The analysis, published today (15 September 2011), shows encouraging signs of the rising value of UK knowledge exchange (Note 3). This is shown by increases in the volume of collaborative research and income from turning ideas into new products and services.

Although there are clear signs of the recent economic contraction (especially in spending by large businesses), spending by small and medium-sized enterprises (SMEs) on research, consultancy, and other services provided by universities is growing.

Universities are putting their best efforts into stimulating economic growth and contributing to public services and society, in challenging global conditions:

  • In 2009-10 273 new businesses were set up based on the world-class research carried out by UK universities making the total number of active spin-offs 1,340; these companies employed around 17,000 people and turned over nearly 1.8 billion during the year.
  • UK universities formed one new company per 23 million of research funding during 2009-10. This far exceeds the record of US universities (one new company per 56 million).
  • Over 2,000 graduates established new enterprises to capitalise on the knowledge and experience gained while studying. Universities support these enterprises not just by embedding enterprise in degree courses, but also by providing advice and facilities for graduates to set up and grow their businesses, and putting them in touch with investors looking for opportunities.
  • The direct application of knowledge to solving problems in the public and private sectors also increased, with collaborative research increasing by 2 per cent and contact research by 5 per cent.

Universities and Science Minister, David Willetts, said:

'It is vital for our future economic growth that business and universities work closely together. These data show that income to UK higher education institutions from business and other users has continued to increase, despite the challenging economic environment. This vote of confidence from business shows that our universities have a key role to play in our future economic growth and that is why we set up the review under Professor Sir Tim Wilson to see how much further we can go.'

Sir Alan Langlands, HEFCE Chief Executive, said:

'These figures demonstrate the continuing successful expansion of knowledge exchange, now a match for any other country including the USA. Universities are committed to exciting new start-ups, to increasingly entrepreneurial graduates and to working more with SMEs, all of which will contribute to economic recovery and growth. Set alongside their continuing engagement with major companies, universities are engaged with all sectors of the economy, an approach strongly endorsed by the Government's commitment of funding up to 2015. In a challenging economic environment, this report shows that universities are working hard to help across the economy and society.'

Key indicators from the HE-BCI survey 2003-04 to 2008-09

Real-terms income from all sources (000s)
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Collaborative research 630 602 661 719 729 747 749
Contract research 671 700 722 841 872 957 983
Consultancy 245 255 268 309 350 338 362
Facilities and equipment-related services 93 86 100 100 108 113 115
Continuing professional development and Continuing Education 343 429 447 522 561 570 580
Regeneration and development programmes 251 236 252 285 249 176 213
Intellectual property (including sale of shares) 44 65 64 63 69 127 84
Outputs from UK HEIs 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Patent applications 1,308 1,648 1,536 1,913 1,898 2,097 2,012
Patents granted 463 711 577 647 590 653 827
Formal spin-offs established 167 148 187 226 219 191 273
Formal spin-offs still active after three years 688 661 746 844 923 982 969
% UK higher education institutions that provide: 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Enquiry point for SMEs n/a 89% 90% 91% 91% 92% 94%
Short bespoke courses on client's premises n/a 78% 80% 84% 83% 84% 87%
Distance learning for businesses n/a 66% 66% 68% 68% 75% 82%
Required contracting system for all consultancy n/a 66% 68% 73% 75% 72% 77%

Sources for table: 2003-04 to 2007-08 HEFCE HE-BCI collection; 2008-09 to 2009-10 HESA Finance Statistical Return collection: HE-BCI. Real-terms values calculated using GDP deflator figures at 28 June 2011 ( applied to monetary values using academic year 2009-10 as base.


  1. The report 'Higher Education Business and Community Interaction survey 2009-10' (HEFCE 2011/25) is available in full on the HEFCE web-site.
  2. 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.
  3. The report sets out the definition of knowledge exchange and describes policies on knowledge exchange in England, Scotland, Wales and Northern Ireland. For England, HEFCE has set out new directions for knowledge exchange as a major part of its recent strategy statement ('Opportunity, choice and excellence in higher education', HEFCE 2011/22, see the HEFCE web-site).
  4. The Higher Education Funding Council for England (HEFCE) promotes and funds high-quality, cost-effective teaching and research to meet the diverse needs of students, the economy and society. Our responsibilities are to develop policies, distribute funds, safeguard quality and assure the proper stewardship of public money. We work closely with universities, colleges and other partners to achieve excellence and impact in education and research, and to provide opportunities for all those who have the ability to benefit from higher education. For the academic year 2011-12, HEFCE will distribute 6,507 million of public money to 130 universities and higher education colleges, and 124 directly funded further education colleges.