Higher education is an indispensable part of the national economy. But many universities also play a hugely important role within local economies, as major employers and consumers of local goods. Universities attract tomorrow’s highly skilled workforce to local economies, and act as magnets for exogenous private investment.
In ‘The Real Deal: Pushing the Parameters of Devolution Deals’, researchers from the Sheffield Political Economy Research Institute and the Centre for Local Economic Strategies argue that higher education funding and powers should be partially devolved as part of a more ambitious and progressive approach to decentralisation. Devolution can therefore help to ensure that universities’ role in supporting local economic development and resilience is realised in full.
As it stands, there are two main barriers to enhancing the role of universities in local economies. Firstly, higher education funding is skewed towards London and the surrounding areas. In 2013 research council funding in London, the South East and Eastern region was £74, £72 and £68 per person respectively. Funding in every other English region was below £30 per person. This bias is partly due to the greater concentration of research-led universities in the south.
The UK’s withdrawal from the EU is likely to have a significant financial impact on all universities as access to EU research funding is restricted and EU student numbers fall, but the knock-on impact for local economies of this will be greater in areas where universities employ a greater proportion of the local workforce. Large parts of the north of England are much more reliant on universities for employment than much of the south, where there is more highly-developed private sector employment.
Secondly, despite the work that many universities do to forge links with national and international enterprises within their local area, the absence of industrial policy mechanisms at the local level in the UK (symptomatic of the general neglect of industrial policy) serves to curtail opportunities for local economic development that might arise. In many places, networks between universities, local policy-makers and businesses are relatively strong, but mostly informal.
Some universities already work closely with local authorities and Local Enterprise Partnerships in providing advice, but universities’ research strengths are seldom integral to strategic local economic needs. Universities are beginning to play a more strategic role within sectors such as advanced manufacturing, but such initiatives are too often only loosely integrated into local development agendas.
Of course, it is precisely their independence from government that allows universities to play such an indispensable role within the UK economy, investing in science even where the long term financial benefits are not immediately apparent, and teaching the analytical skills that will be transferable across a large number of occupations and industries. This autonomy must not be jeopardised – indeed the move of higher education policy across Whitehall from BIS back into DfE must be a means to enhance autonomy. Devolution must not simply be a means to micro-manage universities at the local level.
Yet this does not mean that devolution cannot help us to rethink the way that higher education institutions relate to local economies. Currently, central government has an important role controlling how universities are funded, principally through regulations related to tuition fees and the allocation of research funding. Such powers could be partially localised, whilst still retaining a national framework for higher education regulation and national-level resources for research funding. Local authorities should be given the power and resources to directly fund tuition in subjects deemed strategically important to the local economy, with grants perhaps linked to conditions around retaining the skills developed within the local economy and preventing ‘brain drain’ to other areas.
Furthermore, the UK’s research councils and UKRI should operate at local as well as national levels, with funding dedicated to supporting scientific expertise within specific local economies as well as projects of strategic value to the national economy. These powers could be underpinned by allowing local authorities to establish new research-led universities within their areas.
The most effective way of encouraging universities to play an enhanced role within industrial policy locally would be to strengthen industrial policy nationally, and the new Prime Minister has pointed in just this direction. Academic experts could be invited to participate in the oversight of local industrial policy as key stakeholders and delivery partners. Such mechanisms might range from regional research and innovation councils (where local authorities and universities might collaborate to attract investment to a local area), to the creation of local investment banks with universities represented on their boards.
Universities can be empowered to do a lot more in their localities, but asking them to do more without thinking holistically about how we fuel local economic development would be asking too much.