The value of universities

Posted on September 22, 2011 by

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The Higher Education Funding Council for England (HEFCE) – the body that distributes money to English universities to support teaching and research – has been taking a look at how our universities exchange knowledge with the rest of us. This exchange covers businesses and charities funding research in universities, collaborating with university researchers, businesses being set up based on university research, teaching and professional development.

The Higher Education – Business and Community Interaction survey quantifies how much money all this activity pumps into the UK economy – £3 billion – how many spin-outs this creates – 273 – and how much money intellectual property makes – an 88% increase  since 2003-04. And charities are one of the major investors in UK universities; AMRC members consistently invest over 80 per cent of their funds in UK universities. Some really interesting numbers…

Background

For the past ten years, HEFCE has surveyed business and community interaction – looking at the exchange of knowledge (they refer to it as Knowledge Exchange or KE) between higher education institutions (HEIs) and the wider world of business and the community.

Knowledge exchange is a good thing – lots of collaboration in research and development, turning ideas into new products and services. The activity we need to grow and make money.

This ongoing survey has allowed HEFCE to track trends and see how this interaction is developing, helping inform policy-makers who are looking for ways to increase this exchange of knowledge and foster more growth in the UK. (they have recently changed how they have collected the numbers though so there is some caution about the robustness of some of the stats)

What did the survey find?

The big exciting headline is that the amount of knowledge exchange going on between universities and all the rest of us is continuing to increase, and this is making money for the UK – £3 billion in 2009-10.

  • The data from 2009-10 shows that there has been a continuing increase in the overall exchange of knowledge between UK HEIs and the public, private and third sectors.
  • The total value of UK knowledge exchange has increased by 4 per cent from £2.97 billion in 2008-09 to £3.09 billion in 2009-10.

Large businesses are working less with HEIs, but small and medium-sized enterprises and charities are spending more – on research, consultancy and other other services provided by universities..

Spending by large business fell overall, while small and medium-sized enterprises (SMEs) increased their total spending on engagement with UK HEIs; although, as in the previous survey, the most significant increases have been with non-commercial partners such as those in the public and third sectors, charities and social enterprises etc

(figure 1 has a nice illustration of this showing the investment from public and third-sector organisations steadily rising over the past ten years – we’re now the largest investor)

On investment in research:

i.e. where businesses come to universities to ask them to ask the experts to solve problems, charities invest in research into conditions they want exploring etc… Investment in collaborative research in universities has increased over the past year by about 2 per cent. And investment in contract research, largely by public and third sector organisations has increased by 5 per cent.

Figure 3 shows university income and where it comes from and nicely illustrates the amount coming from charities and public sector organisations. It also includes a column showing income from intellectual property. Charities funding research are developing new ways to handle intellectual property – we’re holding a workshop exploring this in October and we’ll be publishing a report soon.

In fact, on intellectual property, the report has an interesting finding:

26.   Income from intellectual property grew by 88 per cent over the period 2003-04 to 2009-10, soundly challenging the historic assumption that the UK is not improving at turning its world-class research into social and economic benefits for the nation.
273 new businesses were set up based-on intellectual property stemming from research in UK universities which is a big increase (last year it was 191). But there is a note of caution about how we read this, starting up is a bit touch and go and not so many survive the first three or more years…  although there is still an increase in the ones that are surviving that long.
  1. A more stable indicator of the success of new IP-based enterprises is the number of companies that have survived three or more years. However, this indicator has dropped for the first time due to the impact of the recession, with 969 three year-old or older companies reported (a drop of 1 per cent from 982). However, the total number of active firms has increased by 1 per cent to 1,340.
New businesses not based on intellectual property but started up by university staff and recent graduates have increased:

28.   New enterprises (start-ups) that are not based on IP have increased since 2008-09, with 65 new companies started by HEI staff and 2,357 by new or recent graduates, up 23 per cent and 12 per cent respectively in 2009-10. Start-ups active for three or more years also increased in 2009-10, by 12 per cent and 15 per cent for staff and recent graduates respectively.

How does this compare internationally?

There is a great number quoted in the press release:

UK universities formed one new company per £23 million of research funding during 2009-10. This far exceed the record of US universities (one new company per £56 million).

What next?

It’s interesting to see that income from intellectual property has been increasing and the value of public and charity investment in UK higher education institutions. All good stuff to inform our ongoing discussions about how we invest, new collaborative models for funding research etc.

Posted in: Policy