Sector's income outshines ads and pharmaceuticals

UUK report shows that universities play a vital role in British economy. Melanie Newman reports

November 5, 2009

Higher education is more important to the UK economy than the pharmaceutical and advertising industries, according to a report by Universities UK.

The Impact of Universities on the UK Economy sets out the sector's income and expenditure, as well as its wider economic impact.

It comes in the same week as the long-awaited framework for higher education, in which the Government spells out the academy's "vital role" in contributing to Britain's prosperity.

The UUK report, launched on 3 November, states that the higher education sector's income was £23.4 billion in 2007-08, a rise of £6.5 billion, or 39 per cent, since 2003-04.

The pharmaceutical industry earned less than £15 billion in the same period, while the advertising sector's gross output was about £22 billion.

However, less than 24 per cent of the rise in university earnings over the four-year period was due to an increase in revenue from the private sector. Within this total, income from endowment and interest payments accounted for just 4 per cent.

Some 61.7 per cent of the additional £6.5 billion came from the public sector and 14.5 per cent from international sources, the report adds.

"This is very similar to universities' overall income profile and is evidence that they can leverage additional funds from the private sector and from international clients to keep pace with increased public-sector support," the report says.

Universities' total income is comparable to that earned by the gas- distribution industry, but less than the publishing and printing and legal sectors, which each earned £26 billion.

In 2007-08, just under half of universities' total earnings came from funding council grants and state tuition-fee payments. In total, £14.3 billion was contributed by the public sector.

Income from UK private sources amounted to £6.1 billion (26 per cent of total income), while overseas sources, including the European Union, provided £2.9 billion - 13 per cent of income.

The sector generates about 2.3 per cent of the UK's gross domestic product and directly employs more than 372,400 people, which equates to 1.2 per cent of the country's workforce.

The report shows that universities spent £22.9 billion in 2007-08, almost the same amount that they earned. Of this, £19.5 billion was used to purchase goods and services produced in Britain.

Expenditure by universities, students and staff generated additional revenue and employment across the country, the report claims.

UUK also says that personal off-campus expenditure by international students and other visitors to British universities from overseas amounted to £2.3 billion in 2007-08.

For every 100 full-time jobs within the higher education sector, more than 100 "knock-on" full-time jobs were created, the report adds.

UUK also calculates that an additional £32.4 billion of secondary output is generated outside the university sector as a result of its expenditure.

Steve Smith, president of UUK, said that the information shows that "the higher education sector is one of the UK's most valuable industries".

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