Regional growth

Regional growth and universities – a link that's more than academic 

With investing in the regions a priority for successive governments, what role could universities based in the Midlands play in revitalising the economic fortunes of their communities?

International students are worth millions of pounds to regional economies. 

Photograph: Alamy Stock Photo 

Struggles for control within Westminster, and between Britain and the European Union, have been so dramatic recently that plans for a different kind of power shift have gone relatively unnoticed. 

The former chancellor George Osborne announced in 2014 greater devolution of power to the regions, with new metropolitan mayors and targeted investment. First came his vision of a “northern powerhouse” with billions of pounds of investment in science, transport and infrastructure. Then, two years ago this month, he announced his intention to make the Midlands “an engine for growth”.

Osborne may have fallen victim to Brexit and Conservative party politics but the Midlands Engine Strategy survives. In March, the new chancellor, Philip Hammond announced £392m of government investment in skills, connectivity and growth in the region.

Whether universities could do more to power this engine was the subject of a roundtable discussion, hosted by the Guardian and supported by HSBC at Birmingham University. The discussion involved senior leaders from higher education, government and business.

Sir David Eastwood, the University of Birmingham’s vice-chancellor, said universities’ economic impact on the region was already considerable. His university contributes £3.5bn a year to the local economy, with every eight international students worth £1m. “Leave aside the intellectual benefit, leave aside the importance of international students to the kind of global educational community we are, just look at the multiplier,” he said.

Universities provide jobs

Prof Robert Allison, vice-chancellor of Loughborough University, said his institution was the single largest provider of jobs in the East Midlands, while Prof Geoff Layer, vice-chancellor at the University of Wolverhampton, said his university worked hard to make its students – 80% of whom came from within a 25 mile radius – entrepreneurs, ready to set up their own businesses and generate economic growth.

Daniel Howlett, head of large corporate banking at HSBC, said one reason his organisation had chosen to open its new national headquarters in Birmingham was the concentration of universities in the area, providing a diverse set of graduates and apprentices. HSBC recognised education as “a true differentiator”, he said, able to have genuine impact on driving the regional economy.

But the participants agreed the potential of universities to power the Midlands Engine was not just financial.

Andrew Carter, chief executive of the thinktank Centre for Cities, said if economic impact was enough then simply doubling the size of institutions would do the trick. “Having a conversation that just describes a set of assets doesn’t address the question of what prevents them from doing more,” he said.

For Prof Alec Cameron, vice-chancellor of Aston University, collaboration between universities, civic leaders and business was vital. Maria Machancoses, director of the Midlands Engine and Midlands Connect, which brings together local authorities, local enterprise partnerships and other key partners, highlighted the importance of partnerships and collaborations between different sectors and players.

Participants also agreed that universities played a key role in raising aspiration.

Layer said the aspirations of young people and their families was “not the highest” in the Midlands’ Black Country – an area with a high proportion of adults with no qualifications. “We need to address how we raise the aspirations of a whole raft of younger people and their families, but also how we address skills issues that successive governments have failed to acknowledge.”

This was important because the world was likely to change radically, said John Hawksworth, chief economist at PwC. He predicted that many current jobs would not exist in 20 years’ time, while demand would increase in areas such as health and social care because of the ageing population. This would demand retraining and a renewed focus on employability, blending work experience and education.

Universities also needed to consider the wider cultural contribution they could make, said Anita Bhalla, chair of the Creative City Partnership, set up to support job creation and growth in the creative industries. International students in particular influenced quality of life in a region, she argued.

Ian Curryer, chief executive of Nottingham city council, felt universities were important for a region’s schools, influencing pupils through campus visits.

Sponsoring schools

One of the policies pushed by the last government was the idea of universities sponsoring schools. But Eastwood said his university had been able to draw on its longstanding resources to establish the University of Birmingham School, a free school, run by a trust set up by the university. When (former) No 10 advisers had asked what proportion of universities he felt could follow Birmingham’s example, he estimated only between 20% and 25%. “We have to understand the different roles and capabilities of universities,” he said.

Allison said that if his university was required to open a nearby school, another school somewhere else in Loughborough would close: “In that case, we are the pariah.” On the other hand, he said his university could work with teachers to improve maths teaching more widely across the region, encouraging pupils to enjoy maths, and perhaps in future consider careers such as engineering.

If there was uncertainty about exactly what future government policy would be on the relationship between schools and universities after the election, it was as nothing to that caused by Brexit.

“The impact is going to be somewhere between bad and disastrous,” said Maddalaine Ansell, chief executive of the University Alliance.

But she said the government clearly saw Brexit as an opportunity for a more radical industrial strategy and she was encouraged by its approach towards research and development.

She understood that universities that collaborated with businesses and civic authorities on plans likely to have a positive economic impact in the short and medium term were likely to receive most research and development funding, with those integrating research and development with developing students’ skills probably most favoured.

But David Docherty, chief executive of the National Centre for Universities and Business, warned that getting too distracted by Brexit would be a mistake.

“I just don’t want us to get caught by two years of debate around Brexit and forget that actually the world moves on outside of our small island,” he said.

For instance, he predicted that 99 % of due diligence work – often an entry level job for undergraduate lawyers – would be done by artificial intelligence in a few years time, as would about a third of audit jobs.

Universities tended to put skills into the local economy. If jobs demanding those skills disappeared universities would have to work out, alongside business and government, what the next thing was likely to be. Some cities would thrive but others would decline because they guessed wrong.

Howlett suggested that US universities had proved more adept at anticipating and making the most of these kinds of changes.

For Eastwood, this was because “failure is an option in the US in a way that failure is a more difficult cultural option here”. Universities needed to get used to the idea that some of the skills they thought they were creating would turn out to be redundant and to get students used to “excitement, entrepreneurship, stumbling, beginning again”. Universities were “messy institutions” and that messiness was important, he argued.

Mess was useful in some areas agreed Mark Jefferies, chief of university research liaison at Rolls-Royce, but “if you are flying in one of our engines you don’t want it built in a messy environment”. Rather it was important to create an environment that generated a trusted exchange of ideas.

UK universities had always been among the elite in terms of producing talent but plenty of others were now in competition with them, he warned. “We have a big shift coming and if we don’t keep build an environment where people can thrive we stand some risk.”

But Cameron argued that in driving the Midlands Engine there needed to be reasonable expectation about what academics could do and what was up to others. Above all, government needed to remove impediments to collaboration. It wasn’t enough to power the engine. Someone also needed to oil the machine.

At the table

Richard Adams (Chair) Education editor, the Guardian

Prof Robert Allison Vice-chancellor, Loughborough University

Maddalaine Ansell Chief executive, University Alliance

Anita Bhalla OBE Chair, director, Creative City Partnership, Greater Birmingham and Solihull LEP

Prof Alec Cameron Vice-chancellor, Aston University

Andrew Carter Chief executive, Centre for Cities

Ian Curryer Chief executive, Nottingham city council

David Docherty Chief executive, National Centre for Universities and Business

Prof Sir David Eastwood Vice-chancellor, University of Birmingham

John Hawksworth Chief economist, PwC

Daniel Howlett Head of large corporate banking, UK & regional head of client coverage for Europe, HSBC

Mark Jefferies Chief of university research liaison, Rolls Royce

Prof Geoff Layer Vice-Chancellor University of Wolverhampton

Maria Machancoses Director, Midlands Engine, Midlands Connect