Universities in the UK at the moment are broke and unloved. In these circumstances, the temptation is going to be to withdraw to “core business” – teaching students, and for research intensives, doing the kind of research that pushes the institution up the international league tables, to attract the overseas students whose fees prop the whole system up. In a period of retrenchment, it might be tempting for managements to see supporting the role of universities in their communities as a dispensable luxury. I think this would be a profound mistake.
This isn’t to understate the difficulty UK universities find themselves in. Around three quarters of them are expected to be in deficit next year, and about a hundred are now actively restructuring or making staff redundant. This follows a 40% real terms erosion in fees for home students, and a business model, reliant on growing overseas student numbers, which has become both politically unpopular and exposed to geopolitical risk. The latest proposal – of a levy on international student fees – is both another financial blow, and a symbol of the way universities find themselves on the wrong side of culture war discourse. What’s quite clear is that, whatever recognition there might be in government of the university sector’s troubles, the sector is simply not a high priority for a government facing difficult issues on all sides.
Meanwhile the UK’s slow-burning economic crisis continues. At the root of this is the UK’s weak productivity growth since the GFC or before; productivity is now about 25% down on what it would have been if the pre-GFC trend had continued. This is the direct cause, not just of the very weak wage growth seen in the last 15 years, but also of the fiscal difficulties recent governments have faced, and the resulting pressure on public services. Much of what’s gone wrong with politics and economics in the UK can be put down to this productivity problem.
There’s a big regional dimension to the productivity problem. In contrast to most developed countries, the UK’s big second tier cities aren’t drivers of national productivity; instead their productivity is lower than the UK average. And beyond the big cities in the North and Midlands, there are very weak peripheral economies in in deindustrialised areas and coastal towns. In these places, local government services are under huge pressure, having received the brunt of the 2010’s austerity, while remaining legally obliged to maintain increasingly costly services like social care and supporting children with special educational needs and disabilities.
Thinking about these two factors together, it should be clear that no good will come of universities just asking the government to hand over more money, to carry on doing the things they’ve always been doing. However bad the crisis in universities is, the larger economic problems, and the constellation of social problems that follow from those, mean that universities are just too far down the list of priorities for the government.
Instead, universities need to lean in to a national effort to deal with the country’s economic and social problems, with a particular emphasis on the problems of the places where they are located and the communities that live in those places. Many universities are already doing good work in this area, but upping the intensity of these activities probably does mean that universities will have to do some things differently. Already, a letter from the Secretary of State to University leaders, sent last November, has identified 5 priorities, two of which are highly relevant here: “Make a stronger contribution to economic growth” and “Play a greater civic role in their communities”.
The two are closely linked. UK universities are institutions with international reach, but they’re still located in specific places and that’s where their influence is greatest. What can they do for the towns and cities where they are located? To our citizens, perhaps the most tangible impact of universities on their towns and cities is in the professionals they train – the teachers who teach their children, the nurses, doctors and health workers who treat them and their families. University research can provide an evidence base to inform policy for local and regional governments. Student and staff volunteering can support charities and community groups. The cultural institutions associated with universities, and outreach activities in schools and communities can support the cultural vitality of places.
We do, though, need to face the fact that, for many of the communities which neighbour our universities, the fundamental problem is that they are in materially poor places. If we are to be serious about asserting the economic value of our universities and the research they do, we need to demonstrate that, by supporting efforts to make communities more prosperous. This means supporting places in attracting and growing the kinds of businesses that produce tradable goods and services; this in turn will bring money into those places, and support higher wages for people with all levels of skills. In short, universities need to support inclusive economic growth in their towns and cities.
This will require universities to think differently. We’ve focused a lot on a relatively narrow, linear model of knowledge exchange, where university academics do research leading to protectable intellectual property, which then is used to produce spin-out companies. This remains important – though we do need to think about how such spin-out companies can be encouraged to scale-up in the UK to the point at which they produce material economic impacts on communities, rather than just making a few founders and venture capitalists wealthy (important though that is for creating the right incentives). But we need to take a much broader view of the innovation economies of our places.
Taking this wider view of our innovation ecosystems, increasing the number of spin-outs – both from students and staff – is important, as is the need for them to scale. But universities need to think hard about how they support the existing business base – not just big, technologically sophisticated firms that are accustomed to working with universities, but also the small and medium size enterprises who often find the labyrinthine structures of universities impossible to penetrate, and find it difficult to access financial support from government agencies. SMEs are important, but we do need to recognise the power of multinationals operating at the technology frontier in building manufacturing and innovation capacity in those parts of the country where productivity is lagging. Cities and regions are always anxious to attract inward investment, but this needs to be targeted on those firms whose presence can most effectively drive up a region’s wider innovation capabilities.
A key problem for many places with low productivity is a lack of skilled people. This is often framed as a supply problem – so, it is argued, simply increasing the supply of skilled people will help solve the productivity issues in weak regional economies. But the problem could equally be one of demand – in a town with few opportunities for high-skilled work, for people who don’t want to leave, there isn’t the incentive to put time and money into increasing their level of skills. Towns with weak economies are often locked into a low skills, low productivity, low innovation bad equilibrium – and to break out of that equilibrium, both halves of the problem need to be addressed. Existing businesses need to be supported in their innovation ambitions and new and innovative businesses need to be attracted, while those businesses need to be assured that the higher skills they need will be available to them. We need to link up the skills and innovation agendas.
This leads us to think about geographies. The excellent research facilities that our big civic universities have may seem a long way away from businesses in a town or suburb on the other side of the city centre – particularly given the poor state of transport in our cities outside London. So universities need to think hard about how to maximise their impact, not just on their campus and its immediate environs, but across whole city regions, and beyond.
This means working in partnership. The different HE institutions in a city region should work together, bound by civic university agreements, that commit them to concrete actions in support of their place. For example, the expertise of technology transfer offices can be shared across a city, the business schools could collaborate to provide management training to local SMEs, there can be a single approach to widening participation, and lifelong learning. Institutions could collaborate to develop initiatives for translational R&D and innovation diffusion focused on regional business.
These collaborations should go beyond HE institutions. Further education has a huge role to play in a joined up approach to innovation and skills; in many left-behind towns FE colleges are the anchor institutions, with strong employer networks. Partnership with businesses is crucial, and here business sector groups can be invaluable in articulating the collective needs of businesses in places. Strong relationships between universities and their local and city-regional governments are crucial. Universities should be working together with local and city-region authorities in developing and implementing local industrial strategies and growth plans.
My own work in the University of Manchester, as VP for Regional Innovation and Civic Engagement, has been guided by these principles. We’ve established a Civic University Agreement, supported by GM’s five universities and endorsed by the Mayor, and developed a collaborative body, Innovation GM, which brings together the HE sector with business sector groups and the GM Mayoral Combined Authority. We were awarded one of the pilots in the Innovation Accelerator programme, which we’ve used to support innovation diffusion in key sectors like digital and AI, and specifically to support the materials and manufacturing sector in Northeast Greater Manchester (Bury, Rochdale and Oldham), which remains one of the most economically and socially disadvantaged part of the conurbation, and forms a priority growth location through the “Atom Valley” Mayoral Development Zone. Collaborations with the FE sector have been growing, helped by the increasing coordination of GM’s nine FE colleges through the GM Colleges Group; Innovate UK’s very welcome Further Education Innovation Fund have allowed us to directly connect the FE colleges with GM’s innovation ambitions. Within the University, we’ve established a new unit, Unit M, with a specific mandate to own and drive our regional innovation agenda. I’m delighted that the government announced, in the June Comprehensive Spending Review, a Local Innovation Partnership Fund, which will build on the Innovation Accelerator pilots, extending them to 10 city-regions in the UK.
Finally, it’s worth coming back to money – and the current financial difficulties of the HE sector. It would, I think, be wrong to think of these civic activities as big sources of new funding, establishing new profit centres. Universities do need to be resourced to do new things, but this isn’t going to be an immediate boost to their bottom lines. What these civic activities will do, though, is give us a social licence to operate – and, in many cases, reconnect with the original purposes of our institutions.