This blog has been written by Kate Fairhurst, Director at Henham Strategy.
It isn’t revolutionary to make the point that London’s universities make a powerful contribution to the UK economy. They produce skilled and highly-motivated graduates who are vital for businesses. They create clusters of academic and research excellence which help to underpin economic growth. They nurture huge networks of alumni every year who help project soft power abroad, as well as expand our global links and connections. They are also major local employers in their own right.
This is backed up in the numbers too. Universities UK estimates that London’s universities account for the greatest proportion of economic impact, contributing £27 billion worth of output and adding £14.8 billion in GVA, whilst supporting 125,800 FTE jobs (equating to 2.6% of total jobs in the region).
The economic picture for the UK more generally is dimmer. We have had several years now of sluggish growth and stubbornly low productivity. If London’s universities are so good for us, how can we harness them better to drive growth and encourage more inward investment?
- Greater collaboration with local businesses and policymakers
There are many impressive examples of universities of varying size and specialism working hand in glove with their local councils and local businesses, so that they can collectively identify an area’s growth sectors, the skillsets they need to capitalise upon them, and therefore formulate action plans to grow their regional economy.
At Henham Strategy, we work with many local organisations (councils, LEPs and pan-regional partnerships) and universities alike to develop collaboration and unlock an area’s growth opportunity. In our experience, when a university shows leadership with its stakeholders to analyse their local labour market and identify gaps and opportunity, they work together in lockstep to help local businesses to thrive.
Whilst there are pockets of real excellence, including universities leading the charge on developing specialist clusters, local skills partnerships and growth and innovation hubs, there is room for more universities to be ambitious in this space and seize the opportunity for them to be an integral part of local growth planning.
- Paving the way for greater foreign direct investment
In line with broader trends in research funding, we know that the South East of England and London both receive three times more Foreign Direct Investment than any other region, with universities laying at the heart of our national offer.
We recently contributed to a report with HEPI which championed the crucial role that universities play in attracting FDI to the UK, with an obvious route to increasing this role through greater collaboration between universities, local growth partners and government.
For example, we know that universities have enormous potential to utilise their R&D activity to attract greater levels of FDI, which are shown to contribute to successful local clusters being formed and gains in productivity. However, we also know that the local areas can fall short of understanding their full FDI potential, which in turn limits economic growth.
By incentivising universities to work closer together with their partners to attract FDI, more investment opportunities could be supported locally, with universities being able to make the most of their particular specialisms and fields of research expertise.
The Government knows the value of universities well, not least demonstrated through its Investment Zone policy which puts HE institutions at the very heart of these proposals. From a London perspective, the Investment Zone policy falls short, given its current focus is on 12 areas in the North of England and the Midlands. It has long been argued that London’s economic firepower is vital to the success of any Levelling Up agenda that this or any future Government would wish to execute. In the current economic climate, that remains true now more than ever.
Universities have the talent, skills, expertise, and reach to continue to play a major role in local economic growth; London’s institutions are in a unique prime position to grab this opportunity and run with it.
*Henham Strategy is a policy and public affairs agency, with particular specialisms in higher education, local growth, trade and investment, and energy and net zero. Its website can be viewed here.