12.1 In Chapter 5 we identified one of the purposes of higher education as:

‘to serve the needs of an adaptable, sustainable, knowledge-based economy at local, regional and national levels’.

12.2 While many institutions are national and international in their outlook, they have also developed an importance in a local and regional context that could not have been foreseen at the time of the Robbins report. This is not simply a consequence of the much increased scale of higher education: it also reflects the centrality of higher education to the future economic and social wellbeing of communities, and the changing structure of the economy.

12.3 In this chapter we examine:

  • attempts to measure the local and regional impact of higher education;
  • how institutions are actively engaging in their localities and regions;
  • how this role might be encouraged and enhanced so that institutional engagement is both more systematic and more powerful.

12.4 We commissioned a report on ‘Higher Education and the Regions’ (Report 9), which examines the issues in some detail. In this evidence and elsewhere we found different perspectives in the United Kingdom (UK) about the significance of the region. For some, the region in England is a geographical area which, often for historical reasons, has a real identity. For others, the word refers to the government administrative regions of England, with regional offices but with no roots in history. For people in Wales, Scotland and Northern Ireland it refers to their home territory. For the institutions themselves, the identification with the three national regions is strong. In England regional identification varies from one part of the country to another, being strong, for example, in the North East, but less so in the Midlands. Throughout the UK, however, there is a widespread recognition of the importance of higher education institutions to local communities, of the contribution they make to them and of their growing mutual interest.

12.5 In this chapter we are concerned with those aspects of higher education to which locality and proximity are important. Some of these activities will be at a very local level, others will be more geographically dispersed. In England, we have found that these activities seldom take place within defined administrative boundaries. In Scotland, Wales and Northern Ireland, while there is activity at a local level, the national region is a natural focus for much activity. To avoid confusion, in this chapter we have adopted the phrase ‘local and regional’ as a generic term to cover the range of activities we are describing. We use the term ‘region’ to describe the administrative regions of England, ‘locality’ to refer to smaller areas and ‘national region’ to describe Scotland, Wales and Northern Ireland.

12.6 The evidence points to a growing realisation of the importance of higher education to the locality of which it is part. Professor Robert Reich, the former US Secretary of Labor, has suggested:

‘the skills of a nation’s workforce and the quality of its infrastructure are what makes it unique and uniquely attractive in the world economy ... so important are these public amenities, in particular the university and the airport, that their presence would stimulate some collective symbolic analytical effort, even on a parched desert or frozen tundra. A world class university and an international airport combine the basic rudiments of global symbolic analysis: brains and quick access to the rest of the world’.1

12.7 The evidence from the UK suggests that the extent of the local and regional involvement of institutions is currently patchy, but that it needs to turn to active and systematic engagement. While throughout this report we advocate institutional autonomy and diversity, with institutions free to identify for themselves the balance between consciously local, national or international roles, we are clear that each locality or region needs the engagement of higher education. The form of this will rightly differ from institution to institution. We exemplify below the ways in which institutions are already engaged and conclude with recommendations which will help institutions enhance the effectiveness of their local and regional engagement to the mutual benefit of themselves and their localities.

Measuring the local and regional impact of higher education

12.8 In recent years, as we have suggested, there has been a growing emphasis on the local and regional role of higher education, to the extent that over three-quarters of institutions now refer to local and/or regional objectives in their strategic plans. At the same time there have been a number of attempts to measure the impact of higher education at local and regional level.2

12.9 These studies have shown that higher education providers make a significant economic contribution simply by their existence in a locality, whether or not they adopt an explicit mission to generate local or regional economic activity or to play a part in the cultural life of their locality or region. This reflects their size, both relative and absolute, in the local and regional economy, and is enhanced by the multiplier effect which they exert (ie the additional economic activity generated for every unit of expenditure by the institution). A recent study by the Cardiff Business School found that total spending by Welsh higher education institutions in 1995/96 exceeded half a billion pounds including 280 million on wages for over 14,000 staff and 100 million on Welsh goods and services. The total impact on the Welsh economy of this expenditure, including the multiplier effect, was estimated at just over 1 billion. The study also estimated that the multiplier effect of this spending, acting through local sourcing and local income effects, created or supported a further 10,500 jobs in Wales.3

12.10 There is debate about some of the assessments that have been made in the past of the impact on local economies of higher education institutions. Professor Goddard of Newcastle University and his team, in their report for the Committee of Vice Chancellors and Principals, cast doubt on some of the more ambitious calculations made from time to time.4 Others have drawn attention to some of the burdens institutions inevitably place on a local economy in terms of road congestion and their use of other services. But the evidence is clear that higher education is now a significant and sometimes a major element in local and regional economies. Professor Goddard’s report suggests that expenditure by higher education staff and students alone is responsible for an extra one per cent of local employment. The range of its contribution is in fact very wide, extending to support through research and consultancy, attracting investment and providing new sources of employment, meeting labour market needs, supporting lifelong learning, and as centres of culture contributing to the quality of life in their localities.

Active engagement by institutions in their localities and regions

12.11 In addition to being substantial sources of economic activity, higher education institutions make a proactive contribution to local and regional economies. Some commentators place these kinds of activity at the heart of global economic change:

‘the shift to knowledge-intensive capitalisation goes beyond the particular business and management strategies of individual firms. It involves the development of new inputs and a broader infrastructure at the regional level on which individual firms and production complexes can draw. The nature of this economic transformation makes regions key economic units in the global economy ... the new age of capitalism has shifted the nexus of competition to ideas ... regions must adopt the principles of knowledge creation and continuous learning; they must in effect become learning regions.’5

12.12 Others consider such analyses to be exaggerated. But all the evidence we considered suggested that there is a powerful mutuality of interest between higher education and society and that there is much to be gained by fostering the active engagement of institutions with localities and regions.

Research and consultancy
12.13 As centres of research and scholarship, the potential for institutions to contribute through providing research and consultancy services to local companies is clear. The responses to our employer consultation (Appendix 4) confirmed that many of them use higher education for these services, and our staff survey (Report 3) showed that many staff see consultancy as one of their roles. Institutions actively seek research contracts from companies, and welcome company sponsored research students who address a specific industrial problem with support from the institution. Many institutions have established science parks and incubator units designed to attract and support research-based industry and commerce, and also to provide opportunities for their own researchers to become research-based entrepreneurs. In spite of the often inevitable difference in the purposes and timescales of research in higher education institutions and in the world of commerce, there has increasingly been a mutual recognition of the advantages of partnerships, and a will on the part of higher education to seek them.

12.14 In Scotland, Wales and Northern Ireland the development agencies established to foster industrial and commercial regeneration have explicitly promoted the commercial development of academic research, as illustrated in the following examples:

  • a ‘commercialisation’ hub at Edinburgh University based on the CONNECT model in California, which aims to provide a single focus for researchers from across Scottish institutions, investors and businesses;
  • the MediCentre at the University of Wales College of Medicine, in which industrial partners work alongside academic departments which are developing new approaches to treating diseases and delivering healthcare, thereby helping small and medium sized enterprises take advantage of research findings;
  • QUBIS Ltd at the Queen’s University Belfast, which identifies and exploits commercially viable research through the formation of new companies.

12.15 In England, in the North Eastern region, which is probably typical of the more proactive clusters of higher education institutions, there has been a distinctively regional as well as local approach to research and consultancy support for industry. In response to an analysis of the region’s needs, its universities have established a European Process Industry Competitiveness Centre, a Centre for Achievement in Manufacturing and Management, a Centre for Low Volume Engineering, and a Northern Informatics Application Agency. To provide an easy point of access for small firms to all the universities of the North East they have established a ‘Knowledge House’, which is financed by the universities of the region, the Open University and the European Regional Development Fund (ERDF).

12.16 There are other notable examples in the North West and London, which provide incubator units, and bridges between employer needs and the traditional research and consultancy services of institutions. The longest established exemplar in the UK is probably the cluster of largely scientific companies known as the ‘Cambridge phenomenon’, where an exceptional number of companies have formed themselves as spin-offs of the university either by using university research or by involving academics. In Cambridge, ‘the presence of the University and associated research institutions lies at the root of the Phenomenon. The long history of internationally leading research has resulted in a concentrated accumulation locally of skills, knowledge and facilities, which were the initial foundation on which high technology enterprise became established in the area’.6 Most recently, Microsoft is reported to have been in discussion with Cambridge University about setting up a research base in the area.

12.17 In all these examples, which do not comprise an exhaustive list, there is:

  • an attempt to provide a common point of contact for otherwise scattered or diffuse companies to find their way into the complex organisation of the higher education institution;
  • provision of a semi-sheltered environment in which concepts can be proved, risks can be moderated, expertise shared and support given on a sufficient scale to make the investment worthwhile and viable;
  • careful investigation of the respective requirements and strengths of the academic and industrial partners to ensure real mutual interest and generate added value.

Attracting inward investment
12.18 The attraction of overseas inward investment has been one of the core elements of economic development in the UK in the 1980s and 1990s. The UK attracts about 40 per cent of investment from the United States of America (USA) in the European Union, and it has long been one of the leading locations for overseas investment from all parts of the world. The cumulative value of inward investment increased from $28 billion in 1978 to over $200 billion in 1995.7 Foreign owned companies account for some 40 per cent of UK manufactured exports, and inward investment is estimated to have created 500,000 jobs in the last decade. But the context for inward investment is changing rapidly, as other countries compete more vigorously for initial inward investment, and the UK needs to compete strongly to retain the inward investment it has attracted and to continue its past successful record. The provision for education and training can be crucial to success.

12.19 This is further illustrated by USA experience. The area around Spartanburg and Greenville, South Carolina, has become home to more than 215 companies from 18 countries, 74 of which have their USA headquarters there. While these cities make an unlikely centre for international industry, they have the highest diversified foreign investment per head in the USA. South Carolina’s principal attraction is the competence of its workforce, heavily sponsored by the state, which offers free, customised technical training of prospective workers and supervisors of companies that bring new investment.8

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