New study demonstrates huge local economic impact of universities

Universities typically support up to one additional job in the immediate local economy for every person they directly employ, according to a new analysis by Hatch Regeneris for UCU.

Universities are often among the largest local employers, with 19 UK institutions directly employing more than 5,000 people, and 10 of these accounting for at least 5% of all jobs in their local authority area.  

The positive effects of universities on local employment are compounded where cities host more than one institution. The review modelled universities in 25 cities and looked at the number of jobs they support and how they bolster local economies.

It estimates that 22,000 jobs in Manchester, 150,000 in London, 18,000 in Birmingham, 22,000 in Glasgow, 29,000 in Edinburgh and 15,000 in Cardiff are dependent directly or indirectly on their universities.

The study also showed the critical importance of single institutions to smaller towns and cities. The researchers cite St Andrews where students make up a third of the local population and the university supports over 4,000 jobs.

Universities bring relatively high wages to these areas as well as associated skilled jobs across a range of occupations including construction, engineering and entertainment. This includes places such as Plymouth, Middlesbrough, Stoke and Swansea where at least 5% of local jobs are linked in one way or another to the local institution.

In the North-East, there are more people directly employed in higher education (20,000) than there are in car manufacturing (9,000). These jobs are at a range of skill levels, but, on average, they are high-quality and well-paid. The average salary at the University of Sunderland, for example, is more than a third higher than the average for all jobs in the city. 

The review analysed 74 existing studies of institutions' impact and modelled a further 90 in order to produce the comprehensive picture of UK universities' role in their local economy. It produced detailed analysis of 25 cities highlighting the number of jobs universities support and measuring their economic contribution.

The analysis looks at goods and services produced locally through universities' supply chains and the money spent by employees and students. The figures show how universities are often among the single largest contributors to the local economy.

UCU general secretary Jo Grady said: 'This review shows that universities are a very significant factor in many local economies. Allowing universities to fail because of the health crisis will mean the economies of many of our towns and cities will also fail. Universities are vital in providing educational opportunities, but they also have a huge impact in creating local jobs, supporting local businesses, and attracting business to the area.

'With every university job leading to another job in the local area, it is now vital that instead of talking our universities down the government protects them. The Welsh government has led the way and the Westminster government now needs to come up with a comprehensive financial support package to ensure that no institution will fail.'

Hatch Regeneris director Tim Fanning said: 'The evidence from this review implies that areas hosting institutions that are vulnerable to contraction could be exposed to a wider economic shock - even before we consider the effect on access to university, local labour markets, and research and innovation.

'From the point of view of the government's levelling up agenda, the data also shows that places that are lagging behind economically are sometimes especially dependent on their local university.'

Recent YouGov polling for UCU highlighted how people recognised the importance of their local university on jobs and the economy. Two-thirds (66%) said they feared that there would be a negative impact on the local economy if student numbers dropped as a result of the Covid-19 crisis. While three-quarters (75%) feared a negative impact should a local university go bust. 

A third of those in work (33%) said the local university was important to their own job. While over two-fifths (42%) said they knew someone who studied or worked at a local university, or whose employment depended at least in part on the university.

A report from UCU in April warned of a £2.5bn loss in income for universities from a drop in student numbers, which would result in a £6bn hit for the economy. While a report from the Institute for Fiscal Studies earlier this month predicted that the pandemic would leave some universities struggling to survive.