Drop in student numbers 'could cost economy £6 billion'

A drop in student numbers of 30,000 this year could cost the country more than £6 billion over the next 40 years, according to a new report.

January 17, 2013

The report by consultancy firm London Economics also finds that the Treasury gains £94,000 for every student that is educated to bachelor's degree level.

Once all the costs are taken into account, the Treasury reaps a 10.8 per cent net return on its initial investment in funding an undergraduate degree, it says.

Those students who take a master's degree provide a £62,000 return in future taxes paid to the Treasury - a 25 per cent net return, the reports claims.

The report, titled What's the value of a UK degree?, was published on 17 January by Million +, which represents a number of post-92 universities.

Based on an analysis of research commissioned by the Department for Business, Innovation and Skills, the report estimates the monetary impact to the UK economy of the fall in student numbers this year.

It says a reduction of 30,000 undergraduate students would cost the UK economy at least £6.6 billion over the next 40 years.

Patrick McGhee, chair of million+ and vice-chancellor of the University of East London, said the report showed why it was vital to continue investment in higher education.

"Government investment in higher education remains a remarkably good bet, even in these challenging economic times," said Professor McGhee.

"As well as opening up new opportunities for individuals, the Treasury reaps exceptionally high returns from its investment.

"If efforts to increase access to university are not sustained, these significant benefits could be eroded with longer-term consequences for the economy as well as individuals."

The report also estimates that the average net earnings benefit for graduates - otherwise known as the "graduate premium" - was £115,000 over a working lifetime.

A master's degree delivers an additional premium of approximately £59,000, the report says.

Additional "spillover effects" of higher education attainment on the wider economy, such as enhanced productivity and earnings achieved by other workers from working alongside graduates, could be as great as the direct effects of higher education, the reports says.

Higher education exports are valued at £8.8 billion, of which approximately £7.6 billion is associated with international students coming to study in the UK, the report adds.


You've reached your article limit

Register to continue

Registration is free and only takes a moment. Once registered you can read a total of 6 articles each month, plus:

  • Sign up for the editor's highlights
  • Receive World University Rankings news first
  • Get job alerts, shortlist jobs and save job searches
  • Participate in reader discussions and post comments

Have your say

Log in or register to post comments

Most Commented

Home secretary says government will support 'best' universities

Man handing microphone to audience member

Academic attainment of disadvantaged students can be improved if they can decide how they are assessed, study claims

Woman drinking tea from saucer

Plugging a multibillion-pound deficit exacerbated by June’s poll result may require ‘drastic measures’, analysts have warned

Italy's gold medallist

New measures to ensure universities are ‘not penalised’ for taking poorer students also outlined for next stage of TEF

Classroom, school

Higher education institutions can and should do more to influence education at a secondary school level, says Edward Peck