From the TUC

University Challenge

06 May 2011, by in Public services

Yesterday the independent think tank Centre for Cities launched a short report looking at five facts about universities and local economic development. It finds that by far the biggest impact that universities have on the local economy is through the students they attract and the people they employ.

The report shows that although universities do have some interaction with the local business base, these impacts are much smaller than the effect of employment by universities and the spending of their students on everything from housing to retail. For example, the two universities in Coventry account for over 10% of total jobs in the city. And undergraduate students spend £267 million per year in Stoke, £350 million in Plymouth and £410 million in Cambridge.

As the debate about university fees continues, this analysis poses questions about the impact that the new fee structure will have on city economies.

The £9,000 fees that students will have to pay at Cambridge University is unlikely to dampen the clamour for places. But the impact that the £8,500 fees will have on the demand for places at the University of Teesside, where students currently spend an estimated £290 million per year, is much less clear. Other universities, such as Oxford Brookes, are taking an active decision to levy higher fees and attract fewer students in order to change the profile of the institution – decisions that will have an impact upon the local economy.

So it is important that cities understand that decisions made by universities about fees, students and staff will have implications for local economies, and they should talk to their universities to understand their plans. It is undeniable that university finance needs reform at a time of limited public funding, and the fee structure that universities go for is for those institutions to decide. But any changes in university funding will have an effect on cities. Our research suggests that more co-ordinated working between universities and cities on how to attract prospective students could help improve the offer of these institutions and potentially offset some of the impact that changes to fees are likely to have on the local economy.

GUEST POST: Paul Swinney is the author of the report “Starter for ten” and an Analyst for Centre for Cities, researching private sector growth, enterprise and labour market issues. Before he joined the Centre for Cities team in 2009, he worked on macroeconomic issues at PricewaterhouseCoopers. His recent work has focused on estimating the impact of the Government’s forthcoming spending cuts on city economies, looking at the impact of cuts to welfare spending and public sector jobs for Britain’s cities.