Memorandum submitted by The Royal Society
1. As part of its science base and innovation
policy work the Royal Society is exploring the regional dimension
of universities and their impact on local economic activity. This
programme of work is still in its early stages, and this interim
note on some of the issues has been prepared at the invitation
of the Committee. It is submitted as very much work in progress.
2. As background to the work, we have drawn
together various statistics, some of which are tabulated at Annex
A. Many of these originate from the regional chapter of the annual
ONS Regional Trends, and appear in other compilations such as
DTI and RDA publications. However, while these statistics provide
a general picture, they are not in themselves in sufficient detail
to provide a firm basis for policy decisions. For example, universities
have regional, national and international impacts, and it is not
easy to try and disaggregate these. Similarly, while many businesses
could benefit from more innovative activity, including research
and (particularly) development, different business areas require
different levels of research intensity. Table 2 of Annex A shows
the Gross Added Value (GVA) by various activities within each
region, and the variations in the manufacturing component varies
from 11% in London to 26% in the East Midlands.
3. All regions of the country have areas
of high unemployment and deprivation. There are, for example,
clearly major problem areas within the apparently generally relatively
prosperous South East, such as the North of Kent. However, some
regions have a higher proportion of declining industry, where
the urgency to move to a more knowledge based economy requires
a more widespread change in culture, skills base and general underpinning
infrastructure. Universities are one of the key agents for this
change, well beyond the narrow focus on the exploitation of the
new ideas emerging from their research laboratories through spin-out
companies and licensing agreements to existing businesses. For
example:
(a) they are a major employer and their overall
activity can be a significant contribution to the local economy;
(b) they provide graduates who may wish to
stay in the locality, and provide courses to local business;
(c) the staff are a source of advice and
access to the world-wide pool of knowledge on a wide range of
issues, ranging from the technical to, for example, information
on the culture and language of potential foreign customers;
(d) the academic standing of the university
may attract or retain investment in high tech businesses including
foreign investment;
(e) the cultural effect of universities can
have a major impact on quality of life in the surrounding areas.
This is set out well in the One North East (North
East RDA) document "Realising our Potential"
"Universities and colleges play a key
role in the positioning of regions in a knowledge based economy.
They play a central position in the upgrading of the regional
skills base—the provision of labour with specialist high
level skills and the provision of a rounded education for generalist
managerial positions and the workforce as a whole. They assist
in the modernisation of the industrial and knowledge intensive
service base through their role as research organisations and
their support for knowledge transfer. They also enrich the cultural
life of the North East through their facilities and students,
contributing to social inclusion and the vitality of the Region.
Other more specific and specialist contributions can be identified
but these are the generic components."
4. A widely quoted table shows the importance
of local universities, particularly to small businesses, but also
to those with national or even international customers—(this
interpretation of this table assumes that firms size varies roughly
with the location of largest market from local to international):
Table 1
IMPORTANCE OF LOCATION OF UNIVERSITY WITH
SIZE OF FIRM
| Firm's largest market
| Location of University
|
| | |
|
| Local | National
| Overseas |
| Local | 88 | 12
| 0 |
| Regional | 47 | 53
| 0 |
| National | 37 | 47
| 16 |
| International | 26 | 48
| 26 |
| All | 36 | 46
| 18 |
| |
| |
Source: Community Innovation Survey (UK), DTI/ONS
2001
5. While a local non-research intensive university may
not provide significant research or even consultancy input to
a neighbouring multi-national business, it may still be an important
source of in-service training for the staff.
6. Another important factor is the maintenance of expertise
in areas of academic activity within each region. Here the increasing
level of selectivity by the English Funding Council may be causing
problems in certain subjects, especially as universities are finding
it increasingly difficult to retain departments that fail to achieve
significant research funding from the Funding Council. Even departments
that are rated 4 in the RAE, with significant amounts of research
of international excellence, are at risk. This is because the
Funding Council grant includes the salaries of staff when undertaking
research, and the teaching element is insufficient to allow for
adequate scholarship. Furthermore, much high quality research
of regional importance would not receive international recognition.
7. In addition to a wide distribution of disciplines
within each region, there needs to be some world class departments
and institutions within each region to attract national and foreign
inward investment, and to aid the formation of business clusters.
It is essential that national funding policies do not fossilise
the current situation, but allow new centres of excellence to
emerge, outside existing centres of excellence. The arrangements
must not discourage the formation of collaborations that bring
important links into the region, especially from research powerhouses
elsewhere in the country and abroad.
8. Table 2 below gives a breakdown of business, government
laboratories (including research council institutions) and universities
in the English regions. While universities in London, the South
East and Eastern regions undertake about 58% of the university
research in England, this is dominated by London and there is
significant university research activity in all of the regions.
Table 2
THE AMOUNT OF R&D PERFORMED IN BUSINESSES, PUBLIC
SECTOR LABORATORIES AND UNIVERSITIES IN 2001
| Business | Gov
| HE | Total |
| £m | £m
| £m | £m
|
| | |
| |
| E of England | 2,916 | 277
| 366 | 3,559 |
| E Midlands | 951 | 68
| 224 | 1,243 |
| W Midlands | 662 | 65
| 207 | 934 |
| London | 738 | 238
| 980 | 1,956 |
| NE | 119 | 4
| 142 | 265 |
| NW | 1,512 | 66
| 322 | 1,900 |
| SE | 3,317 | 515
| 562 | 4,394 |
| SW | 1,025 | 254
| 178 | 1,457 |
| Yorkshire | 298 | 50
| 317 | 665 |
| Total England | 11,538
| 1,537 | 3,298
| 16,373 |
| Scotland | 512 | 226
| 510 | 1,248 |
| Wales | 136 | 49
| 155 | 340 |
| Northern Ireland | 150 |
16 | 73 | 239 |
| Total UK | 12,336
| 1,829 | 4,035
| 18,200 |
| | |
| |
Source: Chapter 12, ONS Regional Trends 2004 (ONS 2004)
Table 1 of Annex A analyses these figures further in terms
of percentages of Gross Value Added and manufacturing Gross Value
Added.
9. The top 20 individual universities in terms of the
total research activity in 2001-02 were:
Table 3
TOP 20 UNIVERSITIES BY R&D INCOME (2001-02)
| HEFCE | Other Total grants
| Total Research | Region
|
| £m | £m
| £m | |
| | |
| |
Oxford | 64,960
| 149,744 | 214,704 | SE
|
| Cambridge | 64,274 | 148,978
| 213,252 | E |
| UCL | 64,289 | 148,034
| 212,323 | L |
| IC | 56,304 | 152984
| 209,288 | L |
| Manchester/UMIST | 46,499 |
103,975 | 150,474 | NW
|
| KCL | 38,108 | 91,426
| 129,534 | L |
| Leeds | 28,176 | 71,058
| 99,234 | Y |
| Birmingham | 28,821 | 68,048
| 96,869 | WM |
| Southampton | 24,878 | 70,397
| 95,275 | SE |
| Sheffield | 26,705 | 64,108
| 90,813 | Y |
| Nottingham | 24,536 | 64,659
| 89,195 | EM |
| Bristol | 25,033 | 56,923
| 81,956 | SW |
| Liverpool | 20,445 | 53,271
| 73,716 | NW |
| Newcastle | 21,503 | 50,747
| 72,250 | NE |
| Warwick | 25,601 | 28,057
| 53,658 | WM |
| Leicester | 12,772 | 36,044
| 48,816 | EM |
| QMWC | 14,047 | 34,021
| 48,068 | L |
| Cranfield | 7,740 | 37,699
| 45,439 | E |
| York | 12,409 | 27,811
| 40,220 | Y |
| Durham | 12,534 | 25,437
| 37,971 | NE |
| | |
| |
Source: HESA 2003 and HEFCE 2001
10. Institutions within all regions appear in the top
15. The formation of consortia, such as the White Rose consortia
of Leeds, Sheffield and York have increased the impact of these
institutions within the Yorkshire region; they have a combined
research activity exceeding the top universities in the list (£230
million). The recent merger of Manchester and UMIST has firmly
placed the combined institution near the top of the list.
11. It is worth noting that all the English regions are
represented in the top 100 European Universities and top 300 world
universities in the Shanghai Jiao Tong University compilations
(Shanghai Jiao Tong University 2004).
THE LAMBERT
REPORT
12. In its response to the Lambert Report (RS2004), the
Society supported the overall thrust of the report, and made the
following general points:
— The establishment of strong links between universities
and business and the public services is beneficial to all parties
and is essential if the UK economy is to grow and our public services
are to develop in a cost effective way.
— While such links can provide additional funding
for universities, it is essential to recognise that this will
always be a small component of university funding and that it
is the overall public good in terms of benefits to the wider economy
and public services that should be the main aim of innovation
policy.
— Initiatives to improve innovation must not hinder
the other prime purposes of universities—providing an excellent
education and undertaking fundamental research.
— There is a danger of taking too broad a view of
the situation, especially with regard to the investment by business
in innovation. While overall this needs to increase, there are
sectors that are performing well and also due regard has to be
taken of the optimum R&D intensity of various sectors.
13. As far as recommendations associated specifically
at the regions the Society would make the following points:
— There is a need to ensure that RDAs gain experience
and have access to appropriate advice on the development of business-university
interactions.
— While supporting the need for quantified objectives,
we agree with the Lambert report that these must take account
of the extended timescales associated with worthwhile innovation
initiatives.
— There should be adequate coverage of all major
disciplines within each region. This is an important factor to
take into account when determining the optimum degree of research
funding selectivity. The Society is on record as saying that the
recent increase in selectivity by HEFCE went too far.
— On the other hand it is important to ensure a
correct balance between national and regional facilities, and
some coordination is required to ensure that there is not wasteful
duplication of underutilised facilities.
REFERENCES
HESA 2003 Resources of Higher Education Institutions
2001/02: HESA May 2003
HEFCE 2001—http://www.hefce.ac.uk/Pubs/hefce/2001/01—12.htm,
with regional breakdown in the associated press notice—http://www.hefce.ac.uk/news/HEFCE/2001/GrantAnn.htm
Lambert 2003 Lambert Report December 2003—http://www.hm-treasury.gov.uk/media//EA556/lambert—review—final—450.pdf
ONS 2004 ONS Regional Trends 2004—http://www.statistics.gov.uk/downloads/theme—compendia/Regional—Trends—38/rt38.pdf
RS 2004 Royal Society response to Lambert March 2004
http://www.royalsoc.ac.uk/policy/
Shanghai Jiao Tong University 2004 compilation of
university research quality—http://ed.sjtu.edu.cn/ranking.
6 September 2004
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