Higher education contributes £33 billion to economy
by Kylie MacLellan

Reuters    Translate This Article
5 November 2009

LONDON (Reuters) - The higher education sector contributed more than 33 billion pounds to the British economy it was revealed on Wednesday just hours after Business Secretary Peter Mandelson said it needed to do more to contribute to growth in the future.

Mandelson on Tuesday outlined the government's plans for higher education over the next decade, saying it needed to make an even bigger contribution to growth.

But a study of 166 universities and colleges, published on Wednesday, showed they contributed more than 33 billion pounds to the British economy in 2007/2008, and generated jobs for nearly 3 percent of the workforce.

The study, produced by the University of Strathclyde for industry body Universities UK, found that through both direct and secondary effects the higher education sector generated more than 59 billion pounds of output, up from 45 billion five years ago.

'Universities are critical to this country's economic performance,' said Business Secretary Peter Mandelson. 'This importance will only grow over the next decade.'

The scale of economic activity generated by universities is now larger than each of the pharmaceutical and advertising industries in the UK, the report said.

Universities contributed 31 billion pounds to the UK economy, while off-campus spending by their international students and visitors added a further 2.4 billion pounds, making the total contribution equivalent to 2.3 percent of UK GDP in 2008.

While universities directly employed about 372,400 people, total employment dependent on higher education expenditure was more than 668,500 full-time equivalent jobs, it said, around 2.6 percent of full-time equivalent employment in 2007.

FUTURE GROWTH

Setting out the priorities for higher education over the next decade, Mandelson said the government wanted universities to make 'an even bigger contribution to Britain's economic recovery and future growth.'

He said as a result it would be giving greater priority to programmes that meet the need for higher level skills, such as science, technology, engineering and maths, a move that would be encouraged by making access to new funding more competitive.

Universities would also need to devise new sources of income, he said, adding that employers should be more involved in the funding of university programmes.

Income from private sources accounts for 26 percent of all higher education income, according to the Universities UK report, while 61 percent comes from the public sector.

Higher Education Minister David Lammy said the government would also make an announcement about the structure of tuition fees shortly.

The fees, which were brought in by the Labour government in 2004, are currently capped at around 3,000 pounds a year, pending a review this year.

(Editing by Avril Ormsby)

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