03 Nov 2021
By Stuart Patrick, Chief Executive of Glasgow Chamber of Commerce
Last week the University of Glasgow published an independent study of its economic impact compiled by London Economics. Economic impact studies by major organisations are not uncommon and usually produce a big number which I suspect most observers - myself included - find tricky to interpret.
In the University’s case the number is pitched at £4.4billion covering its activities in the academic year 2018 -19 and with a benefit to cost ratio of 5.8 to 1 given the University’s operational costs of £757million that year. Helpfully, London Economics give as comparison the average ratio of 5.5 to 1 for Russell Group institutions, so Glasgow is achieving slightly better impact.
The full 110 page report is however packed full of fascinating analysis explaining how the £4.4 billion has been assessed and given that the University’s principal Sir Anton Muscatelli is one of our most prominent economists, it is perhaps no surprise that the study work is unusually rigorous.
Instead of simply relying on the impact of the University’s spending, London Economics takes a detailed journey through the impact of the teaching and learning of its students, the export results from the overseas students who have chosen to come to Glasgow and, crucially, the impact of the University’s research work. As each step is laid out, the importance of the University to the success of the city and its people emerges.
Given the challenges Scotland has in converting academic research into commercial gain, it is fundamentally important to find that the economic value of the University’s research activities makes up 42% of the £4.4 billion. The University attracted £253million in research funding and in 2018-19 that amounted to almost 10% of all the research and development activity in Scotland.
But the so-called ‘productivity spillovers’ which assess the effect the University’s research is having on other organisations make up the bulk of the research impact. London Economics draws on other academic study work to decide on a multiplier which suggests that for every pound the University spends on research, the additional economic output across the country is £6.90. This is exactly why the Chamber is such a strong supporter of the three Innovation Districts that both the University of Glasgow and the University of Strathclyde are developing. These are projects that are designed to grow that multiplier.
A few further nuggets are worth noting. In 2018-19 there were 5,870 international students matriculating at the University and of those, four fifths came from countries outside the European Union. Likewise, in the ten years since 2009 the total overseas student numbers rocketed from 3,695 to 9,690, with nearly three quarters of that growth once again coming from outside the European Union. The study doesn’t break that down into specific countries however the growing community of Asian themed businesses along Dumbarton Road gives a sense of the University’s international student body. In fact, overseas students now make up nearly a third of the University’s student population, contributing £631 million to the UK economy, 72% of which is generated within Scotland.
In the section calculating the economic value of the students’ teaching and learning, the net benefit to the student of securing a degree is also carefully explained. The lifetime net present value is on average a positive £89,000. That is a graduate premium that takes into account the potential income foregone during study and the costs involved in taking the degree. On average it still pays to go to University.
That our universities and colleges are central to Glasgow’s economic success is hardly a new message but here is a report that helps explain precisely why.
This article was first published in The Herald on Wednesday 3 November 2021