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Why the Higher Education Innovation Fund is more important than ever before

26 October 2015
Julie Tam

Julie Tam

Deputy Director of Policy
Universities UK
London financial buildings


The International Monetary Fund (IMF) recently highlighted how low productivity growth since the economic crisis has persisted. 

University-business collaborations are crucial in unlocking research discoveries to benefit productivity and the wellbeing of everyone in the country. Which is why, in the Comprehensive Spending Review, it will be vital that government remembers the importance of the Higher Education Innovation Fund (HEIF).

Amidst a rather complex landscape for funding innovation, HEIF provides a stable base of funding that universities in England can use to maintain and develop their expertise in collaborating with businesses and the wider community – activity known as ‘knowledge exchange’. This expertise is crucial in fostering strong relationships which will have real and substantial impacts. It is also crucial to enable universities to make high quality bids for project-based knowledge exchange funding, and ensuring that these funds are allocated to projects that make the most significant contributions to growth and productivity

The UK remains fourth in the world for university-industry collaboration in the latest rankings by the World Economic Forum. However, long-standing barriers to university-business collaboration remain. Dame Ann Dowling’s Review showed that one of the biggest for universities was limited resources. In spite of the £160 million that HEIF provides per year, both universities and businesses also rank lack of funding as one of the biggest barriers.

HEIF has a long track record of success, highlighted by research published by HEFCE today, which shows that every £1 of HEIF spending delivers an estimated £9.70 in benefits for the economy and society. Indeed the impact of HEIF is so great that in our submission to the spending review we argue that the fund should be increased to £250 million per year. Such an increase should be used for smaller institutions to effectively support regional growth across the UK.

For university-business collaboration not only underpins economy-wide productivity and growth, it also drives local growth. HEFCE’s research shows that HEIF helps universities to strengthen their local economic development infrastructure, to work constructively with SMEs, and to develop regional clusters of businesses. Just over half the universities in HEFCE’s study said they had contributed to the overall economic performance of their localities.

Universities and the focus on regional knowledge exchange activities



Respondents could select more than one option; so percentages in any column may sum to more than 100
Source: PACEC Interviews with University staff        

At a time when unprotected government departments have been told to model 25 to 40% budget cuts, government will no doubt be asking if universities could cope without HEIF altogether – could they fund knowledge exchange activities without any help from government at all?  Earlier research shows that nearly 90% of institutions already reinvest their knowledge exchange income, so it is hard to see how much more of their own funding they could find. Faced with cuts to HEIF, some institutions might seek to fund their knowledge exchange activities by raiding their research funding or philanthropic sources, or turn to borrowing. None of these are sustainable, long-term solutions; in time, it would damage the quality and effectiveness of the work they do with business. In turn, this would harm the UK’s overall productivity and growth prospects.

As Neil Carberry of the CBI said in a recent blog​​, as the government carries out its Spending Review, there is no better time to be talking about the value of university-business collaborations. There is also no better time to consider how government can best support and incentivise these collaborations, to strengthen the UK’s long-term productivity and growth performance. HEIF should continue to play a significant role in the UK’s economic success.

This is the sixth in a series of blogs commenting on some of the issues discussed in Universities UK’s submission to the government’s Comprehensive Spending Review.​​​

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