Dear Yvette,

The Universities UK President, Professor Rick Trainor of Kings College, London, and I would value the opportunity to talk to you before the Budget about the important ways in which universities are both contributing to the economy and to helping the country get out of recession.

We want to explain how public investment in the higher education sector, in the short and medium terms, may be able to shorten the duration and reduce the effects of the economic downturn, and how universities can help maintain the internationally competitive position of the UK’s knowledge-based economy in order to extract the maximum benefits and advantages from global economic recovery. Specifically, our universities are:

• Vital for the future economic prosperity of the UK in an increasingly competitive, global marketplace, by acting as drivers of research, innovation and business development;
• Essential to the achievement of key Government targets for knowledge creation and up-skilling of the workforce;
• Key to the health, social and cultural well-being of UK society in an ever-more uncertain and challenging world.

Contribution to “UK plc”

In 2008 universities contributed £45bn (directly and indirectly) to the economy, an increase of £4bn over 4 years. They employ about 1.2% of the UK workforce, generate an additional 300,000 jobs in the wider economy, and for every £1 spent on universities, a further £1.50 is generated in the wider economy. Overseas student fees contribute £3.5bn to UK exports, and student and graduate recruitment overall remains strong despite the economic downturn. Also, universities are major contributors to the economy in their own right, both as employers and purchasers of goods and services.

Contribution to economic recovery and increased competitiveness

The university sector has been highly successful and innovative in securing additional funding from non-public sources, but public funding underpins their core activities. Universities, therefore, rely on the Government to maintain secure, sustained levels of public funding through the economic downturn and beyond. The quid pro quo to the UK for this public investment is a unique, world-class resource that drives forward innovation, knowledge generation and transfer, and underpins a successful, knowledge-based economy by providing a resilient, highly-educated, highly-skilled, flexible workforce. These attributes will allow the UK to respond rapidly to opportunities and challenges as the global economy recovers, with the aim of strengthening the UK’s competitive position over the medium term.

Value of public investment in higher education during the economic downturn

It would be unwise to underestimate the increasing threat to the university sector from better-funded, overseas competitors. Any real-term reduction below current levels of funding will enable other nations to seize a major competitive advantage that the UK may be unable to retrieve in the future, with potentially very serious implications for our economy, society, and standing in the world. Despite the current economic downturn, there is a strong strategic case for public investment in the UK’s universities to be increased, in line with major overseas competitors.

For example, the Australian Government has recently injected over $1bn into Australia’s universities, to “stimulate the economy, create jobs and facilitate the role of Australia’s universities in sustaining economic growth”. A new learning and teaching capital fund will “support the student learning experience and deliver top quality, skilled graduates for Australia”.  The American Recovery and Reinvestment Act 2009 seeks to allocate $8.8bn through the State Stabilisation Fund for “high priority needs” including the “modernisation, renovation and repair” of facilities at higher education institutions.

Value of investing in higher education compared with other sectors

When Government comes to consider competing cases for funding each sector will have strong and convincing funding cases to make, and it would be tempting to treat universities as just another sector in the decision-making round.  We contend that this would be a mistake.

By virtue of its overarching importance to all of the other sectors competing in the Budget round, and because of its unique and distinctive contribution to the UK’s current and future success and well-being during and after the economic downturn, we urge you to consider the university sector on a different basis when Budget decisions are being made by Government. This is especially important in the current economic climate, when pressures to reduce levels of public funding will increase. Any reduction in the levels of public funding for universities would have disproportionately serious and widespread impacts across other public sectors and could seriously affect the success of the private sector, damaging the UK’s economy and society now and into the future. The return on investment to the Government and wider society from funding for the higher education sector is enormous. Sustained, or increased, levels of funding for the sector should, we urge, be a top priority in the forthcoming Budget discussions.

That’s why we need to come and see you, and I hope you will agree to a meeting. I look forward to hearing from you.

Kind regards,

Diana Warwick