In a report by nef consulting (the consultancy arm of the New Economics Foundation), which was commissioned by the National Union of Students, the immediate value of students to the UK economy is valued at £80 billion.
The study, titled Student contributions to the UK economy, published on 25 September, says students support just over 430,000 jobs directly and almost 834,000 jobs in total – roughly 2.8 per cent of all jobs in the UK economy.
Scotland was even more reliant on higher education, with 109,000 jobs or 3.8 per cent of posts related to student expenditure, the report says.
The research also highlights that the University of Birmingham generates 2.2 per cent (£460 million) of the extra income created in the city – about 0.5 per cent of the West Midlands economy. In that area, students support almost 12,000 jobs with more than 3,000 created from student spending alone, it says.
“It’s time that the simple value of students living within a community is recognised,” said Toni Pearce, president of the NUS.
“Locally, regionally, or nationally, students are instrumental in creating a stronger economy and a fairer, more prosperous society.”
The report also says the economy receives more than £3 for every £1 invested in higher education.
Each student receives almost £25,000 of state funding on average and would have contributed about £16,250 in taxes if they had worked instead of studied, the report calculates using OECD data.
But this is dwarfed by the £110,230 in extra taxes paid by graduates, while lower unemployment payments to graduates save the taxpayer almost £5,000.
Add the average social contribution of higher education – just over £23,000 per student – then the total benefit is £133,199 or a net benefit of £95,322, the report says.
“We know a great deal about the wider benefits that investment in education brings – to both society and the individuals themselves,” said Ms Pearce.
“But this report demonstrates the very day to day benefits that students bring to local, regional and national economies and the enormous employment figures that student subsistence supports.”
The report is designed to highlight the economic implications of cutting student numbers in many areas across the country, particularly those which serve the UK’s most deprived areas.
“The economic impact of students is especially important in those parts of the country where the arrival of a new wave of young people each year provides a stimulus to regional economies,” said Graham Randles, managing director of nef consulting.
“This is particularly the case in the less prosperous regions of the country where students can play an irreplaceable role in supporting economic activity and jobs,” he said.