Universities should assume an explicit responsibility for facilitating economic growth, and all universities should have stronger incentives to embrace this “enhanced Third Mission” – fr
Universities and Growth
The Context of the Review
Realising the economic potential of our universities has never been more important, as the UK economy has endured five years of stagnation and output remains below its 2008 peak The impact is uneven, with regional downturns especially pronounced away from London and the South East, as illustrated in Chart 1.1.
Establishing sustainable and balanced economic growth is the most pressing challenge facing the country
Chart 1.1 Regional Gross Value Added (estimated constant prices) 2008-2012
United Kingdom North East North West
Yorkshire and The Humber East Midlands West Midlands East of England London South East South West England
Source data for regional gross value added (GVA) are from the Office for National Statistics (ONS) The 2008–2011 figures appear in ONS Table 1.1, Regional Gross Value Added (December 2012), with constant-price data shown as review estimates The 2012 data are based on ONS Table A2 from the Quarterly National Accounts Q1 2013 (UK), also presented as review estimates.
The Government has taken several steps to meet this challenge by introducing an Industrial Strategy focused on eleven sectors and eight technologies During the Review, a number of sector strategies have been published I welcome the Industrial Strategy and the partnership between the Government and industry.
Government and industry that it represents I also welcome the recognition that the right starting point for economic development policy is sectors and technologies
The soundest basis for competing successfully is strengths within the sectors and technologies of the future
1.3 The Government has also reshaped the landscape of institutions supporting local economic development Local Enterprise Partnerships (LEPs) have been introduced in England These are discussed further in Chapter 5
1 https://www.gov.uk/government/speeches/industrial-strategy-cable-outlines-vision-for-future-of-british- industry
1.4 At EU level, a new round of European Structural and Investment (ESI) funds is becoming available, for the period 2014-20 In England approximately €6 billion of
ESI funds are allocated to Local Enterprise Partnerships (LEPs) for the 2014–2020 period, with an additional €3.5 billion dedicated to the rest of the UK Up to €1 billion of the ESI funds will be directed toward innovation, and this investment must be matched on an equal basis by contributions from both private sector and public sector finances.
The Government has recognised that research is a key driver of future economic performance, shaping its spending decisions accordingly Research budgets have performed better than many other areas, and in Spending Round 2013 funding for the Technology Strategy Board was substantially increased.
This report sets out the context in which the Review has examined how university research and expertise can maximally contribute to growth, and it presents my proposals, built on two hypotheses I put forward in the Review’s Call for Evidence, which were supported by the overwhelming majority of respondents who commented.
The strongest basis for regional economic growth is activity rooted in a clear understanding of a locality’s comparative economic advantage This insight has been reinforced as the Review has progressed Investors don’t put their money into places like Yorkshire, Bristol, or Northampton; they invest in businesses that produce specific products Likewise, individuals don’t work for places but for organizations.
Thus, for bodies pursuing local growth, the aim isn’t to promote a place for its own sake but to identify where a region’s comparative economic advantage lies and to determine how best to capture the benefits of the associated economic activity for the locality By aligning policy, investment, and workforce development with that identified advantage, communities can attract sustainable investment, create jobs, and ensure that growth translates into tangible benefits for residents and businesses alike.
1.8 Moreover, a preoccupation with geographical units tends to lead to a myopic concentration on what is inside the boundary, to the exclusion of what is outside
Several stakeholders have argued that this myopia characterized some Regional Development Agencies, a view that is especially misguided in a small country like England As I noted in the Preliminary Findings, England’s geographic footprint is smaller than the areas covered by many sectoral clusters in the United States, highlighting the need for scale-aware policy thinking within RDAs.
1.9 Second, I suggested that much of the UK’s comparative economic advantage in the twenty-first century could be derived from our universities, including (though not limited to) from world class research in fields relevant to the Industrial Strategy sectors and technologies I discuss the economic impact of universities below
1.10 The main focus of the Review has been on England but I have been mindful of lessons to be drawn from approaches being taken in Scotland, Wales and Northern
Ireland Excellent research happens across the UK and there is a common interest in seeking to get the most benefit from this for national and local economies My recommendations are therefore mainly focused on England but I would expect them also to be of interest to the devolved administrations
Universities make a large and varied contribution to the economy In 2007/08, the higher education sector was estimated to contribute about £59 billion to the economy, roughly 4% of GDP, highlighting the sector’s significant economic impact.
Universities UK’s economic impact is estimated at about £69 billion in today’s prices This broad footprint includes employment and skills development, the creation and transfer of knowledge, and ongoing collaboration with companies and partners of all sizes It also encompasses the procurement of goods and services through staff and students, the facilitation of communication networks, the attraction of inward investment, the strength of alumni networks, and civic leadership across communities.
In last year’s Review of Business-University Collaboration, Sir Tim Wilson observed that no single university can cover all domains This reality reflects the diversity of our universities, where each institution has its own strengths, and throughout the Review my support team and I have seen compelling examples of excellence across these fields.
The University of Warwick is one of the largest employers in the Coventry and
Warwickshire sub-region, with over 5,000 staff; its annual turnover is £400 million Based on research by Universities UK, it is estimated that the university has generated up to
5,000 additional jobs in the local economy The presence of the Warwick Manufacturing
Based at the Technology and Innovation Centre, the on-site Group conducts cutting-edge automotive research and facilitates knowledge transfer with global partners This work has attracted more than £85 million in automotive R&D investment from Tata Motors, underscoring the Centre’s role as a leading hub for industry-academia collaboration and innovation.
Warwick’s Science Park is home to 60 per cent of the fastest growing companies in
Coventry and Warwickshire, with 150 companies employing around 2,000 staff
The University of Lincoln is worth up to £250 million annually to the greater Lincoln area economy, supporting over 3,000 jobs In 2009 it opened the first new dedicated School of
Engineering to be created in the UK for more than 20 years, in collaboration with
Siemens plc In the last 10 years, its Sparkhouse business incubation centre has enabled more than 230 start-ups to find their feet, creating almost 400 jobs
The Information Base: Mapping Economic Activity and Research Centres
A sound assessment of local comparative advantage requires awareness of others’ strengths to inform comparison and identify opportunities for collaboration During the summer, Local Enterprise Partnerships’ preparation of Strategic Economic Plans must be informed by an overview of the whole country so that plans are individually sound and collectively coherent, delivering the best value for public money invested in R&D and innovation.
2.2 To assist LEPs I presented heat maps showing locations of economic activity in the sectors in the Government’s Industrial Strategy, UK universities ranked in the top
200 in the world in Science, Technology, Engineering and Mathematics, and centres undertaking Research Council funded research on aspects of the Industrial
Within the Eight Great Technologies strategy, I observed that the accompanying maps had limitations Specifically, the classifications used to produce them did not adequately capture the granularity of economic and research activities, highlighting the need for a more nuanced taxonomy that reflects how technologies interact with real-world industry and innovation dynamics.
During the Review, I reported that, beyond collecting opinions, there was no robust methodology to identify centres with excellent research relevant to most sectors of the Industrial Strategy, and this gap was unsatisfactory I look forward presenting improved versions in the final Review report The maps illustrating these findings are in Part 2 of this report and are discussed below.
2.4 The maps have benefited from the comments and suggestions of those who responded to the invitation in the Preliminary Findings to submit views on the heat maps
Since the publication of the Preliminary Findings, I have commissioned additional work to ensure that the maps accompanying this report clearly show where research is taking place in fields relevant to the Industrial Strategy sectors The frequency of citations in relevant publications is a key indicator of the importance of a given research area Ongoing work by researchers continues to expand the evidence base and refine the maps to reflect current research activity across these sectors.
Elsevier's Review support team has used this approach by defining precise key terms and systematically searching academic publications to identify research centers active in industrial strategy sectors and technologies This method enables mapping of institutional activity in priority sectors and supports targeted insights for policy-making, funding decisions, and collaboration opportunities within the Industrial Strategy landscape.
The maps now offer improved information on where economic activity is located, particularly for Industrial Strategy sectors not covered in the Preliminary Findings This enhanced data is drawn from BIS‑led research into current industry clusters The analysis also includes comparisons of the locations of economic activity between 2011 and 2013 for selected industry sectors, and it concludes with statistics on the number of graduates and funding for industry research and consultancy in Science and Technology.
2.7 However, the maps still have some limitations Many respondents to the Preliminary
Findings highlight areas of strength that are not visible on the maps Some of these strengths are not captured in the enhanced map package because developing methodologies and research capability cannot be fully represented in two dimensions; for example, what constitutes excellence depends in part on the user’s purposes, and excellence in research does not automatically indicate translational capacity, among other considerations.
Poor information foundations hinder decision-making and weaken incentives in universities The saying “what gets measured gets done” applies here: if the information base is defective, we fail to measure or properly recognize the factors that truly matter, leading to under-encouragement of those aspects Since much university measurement lies outside government activity, the government cannot directly influence these incentives.
The Government and its agencies require substantial data from universities, and they should ensure that the incentives created by their requests—both in terms of what data is sought and how it is sought—are as positive as possible.
These challenges shape the recommendation below and are also influenced by the scale of annual research funding in UK universities and other research centres, excluding businesses’ internal spend, which amounts to about £10 billion Chart 2.1 outlines how this investment is composed.
Chart 2.1 Research And Development Performed In The UK, 2011, By Source Of
Funds And Sector Carrying Out Research (Excluding Research Carried Out Within
Higher Education Government Research Councils Private Non-Profit
Sector carrying out research £ mi lli o n
Business Higher Education Government Abroad Private Non-Profit Research Councils HEFC
Source: UK Gross Domestic Expenditure on Research and Development, 2011, ONS
2.10 The amount involved is substantial Even a modest relative improvement in the quality of investment decisions can translate into a sizable absolute gain A great deal of information relevant to these decisions is already available, particularly in the area of higher education.
Statistics Agency publish each Higher Education Institution’s (HEI) research grant and contract income from 13 different sources (e.g research councils, UK industry,
UK charity, EU industry etc) for over 30 different subject areas The Research
Councils’ RCUK Research Gateway can be searched to identify research council–funded activity by technology, universities, or researchers UK Trade and Investment provides an online interactive map of UK business and research excellence, and Scottish Enterprise is developing sector asset maps The Review’s experience in assembling heat maps suggests there is room to strengthen this information base further.
Some decision-makers, such as parts of government and large R&D‑intensive firms, have a clear understanding of where to find research capabilities that match their interests, while groups like Local Enterprise Partnerships (LEPs), SMEs, overseas companies, and smaller charities often lack this visibility, leaving them with a more opaque view of the research landscape and where to access relevant capabilities.
Transparency about funding should be extended, subject to funder confidentiality requirements, to show which universities and research centres receive what amounts of funding, categorized by sectors and technologies, and funded by which businesses and charities, in the same way that research council spending is disclosed.
This approach lets stakeholders analyze where research funding is being spent and how much individual universities receive in specific fields Meanwhile, universities active in targeted research areas gain a reliable and effective way to showcase their activity and expertise to a broader audience of potential research partners.
Universities Facilitating Economic Growth
Strength in Research and University-Business Collaboration
3.1 The research strength of the UK’s universities is an enormous national asset The
UK’s research base is world class and internationally renowned: second in the world only to the USA for number of citations, and the most productive in the G8
Despite comprising only 1 percent of the world’s population, the UK produces 6.9 percent of global publications, receives 10.9 percent of all citations, and accounts for 13.8 percent of high-impact citations The latest Universitas 21 report ranks the UK twenty-fourth worldwide in relative resourcing and second for output The UK also has more universities near the top of global rankings than any country other than the USA (see Chart 3.1).
Chart 3.1 Top 200 Universities by Country 2012/13
Ne th er la nd s
Ja pa n Sw ede n Bel gi um
K on g Sou th Ko rea
D en ma rk Isr ael
Fi nl and Ne w Z eal and Sou th Af ric a Tai w an
Nu m b er o f u n iv e rsit ies
Source: Times Higher Education World University Rankings 2012/13
Across the UK, a number of outstanding research institutes boast world-leading facilities that provide proven environments for developing top-tier researchers The UK consistently ranks among the top two globally in research across most disciplines, maintaining its lead despite growing international competition.
3.3 We also have a strong record in university-business collaboration The World
Economic Forum (WEF) ranks the UK fifth in the world, and second in the European
Union, for university-business collaboration in R&D (see Chart 3.2)
7 International Comparative Performance of the UK Research Base, November 2011,
8 U21 Ranking of Higher Education Systems 2013, Universitas 21, January 2013
Chart 3.2 University-Industry Collaboration In Research And Development In The
EU28, Other G8, And Other Selected Countries
(1 = do not collaborate at all; 7 = collaborate extensively)
S w ed en Net her la nds Irel an d
Cz ec h R ep ub lic
Ru ssia Lat vi a Pol an d
Source: World Economic Forum, Table 12.04, Global Competitiveness Report
These strengths are significant, but we must not take them for granted Other countries recognise the value of excellent universities and are committing substantial resources to improve their research and higher education institutions Our decline from second place last year to fifth this year in the World Economic Forum rankings illustrates the point.
New technologies and markets are emerging every day, so we must work hard to maintain our competitive strength as competition grows and performance from other countries improves If we do, our research capability can provide a solid foundation for leading in the critical, research-led technologies and sectors of the future, including those identified by the Industrial Strategy.
Universities with leading-edge research capabilities are uniquely positioned to play a leadership role in driving economic growth They bring substantial research and innovation capacity, national and international connections, and strong links with major industry players, enabling them to analyze and translate research from around the world into practical applications in the markets they serve Through extensive networks, they can draw on relevant research regardless of where it originates, and they help develop sectors by advancing key emerging scientific and technological developments in their regions, across the UK, and with other like-minded institutions and businesses, including international partners They are well placed to identify pivotal breakthroughs and to build the connections that generate the critical mass needed to anchor a technology in the UK In addition, they often have the administrative and other resources to lead multi-party plans that maximise the economic benefits of research—for example, universities have bid for and secured over £300 million of ERDF funds since 2007, frequently through multi-party engagements with businesses and other stakeholders.
Universities can play a pivotal role in translating the comparative advantages represented by these attributes into tangible outcomes During the Review, I discussed this idea with several universities, and there was widespread enthusiasm for undertaking or expanding this work.
In the Review’s Preliminary Findings, I described universities’ cutting-edge research and the insights it yields as the tip of an arrow, with the economic activity enabled by research-led innovation forming the broader impact that follows I argued that maximizing the size of these economic benefits for the UK should be central to both sectoral and local growth strategies I also noted that universities that adopt these characteristics can play a larger, more influential role in facilitating sustained economic growth.
– to which I applied the term a Third Mission in Chapter 1
In this chapter and Chapter 4, I outline proposals to advance the enhanced Third Mission Although this broader mission can take several forms, I focus on two, beginning with leadership of or active participation in research and business collaborations that have the potential to produce technologies delivering the UK's comparative advantage in international markets.
In Chapter 1 I argued that establishing sustainable and balanced economic growth is the country’s most pressing challenge, and the Government has clarified that this growth must be export-led To sustain enduring export-led growth, we must look to the global markets of the twenty-first century with ambition, acknowledging that some fields require a mechanism to mobilize a national cluster around a high-potential market opportunity where smaller players may lack the weight to win The box on quantum technologies exemplifies this type of research-led major market opportunity.
Quantum technologies harness the control and manipulation of quantum states to achieve results not possible with classical matter, leveraging the laws of quantum physics in radically new ways They are poised to bring dramatic enhancements in technological capabilities across several key application areas.
EPSRC funds around £30 million for direct quantum technologies research, training, and fellowships When complementary research areas essential to advancing quantum technologies are included—photonics, electronics, communications, functional materials, sensors, instrumentation, and computer science—the total investment rises to more than £150 million.
Further UK quantum technologies investment will be required to keep pace with international investments and ensure the UK remains at the forefront of this rapidly expanding domain
Potential Applications for Quantum Technologies
Quantum Secure Communications: as the secrecy of quantum communications can be measured directly, it is very useful for distributing secure digital keys on networks
Quantum key distribution is widely regarded as one of the first quantum information technologies with commercial applications
Quantum metrology uses quantum phenomena to establish next-generation standards for time, frequency, length, charge, and other fundamental measures These quantum-enabled standards have immediate applications, enhancing rapid electronic stock trading and enabling new navigation opportunities By delivering unprecedented precision and stability across core quantities, quantum metrology opens new possibilities for science, industry, and technology.
Quantum sensing technologies promise sensors capable of detecting single molecules and sensing ultra-weak electromagnetic and gravitational fields with unprecedented precision These capabilities are set to redefine healthcare and medical imaging, enhance security and environmental monitoring, and enable the efficient manufacturing of high-value materials.
Quantum simulators enable precise modeling of real molecules and materials at the atomic scale, addressing key technological challenges across fields such as drug discovery and condensed-matter physics By capturing intricate interactions between drug molecules and their biological targets, these simulations improve our understanding of binding mechanisms and guide the design of more effective therapies In materials science, quantum simulators help explore the origins of phenomena like high-temperature superconductivity, offering insights that could unlock new superconducting materials and transformative technologies.
Quantum computing leverages quantum physics to offer a computing engine capable of solving problems that are completely intractable on current and future generations of classical hardware The quantum hardware needed to build such a computer would also deliver revolutionary capabilities for other quantum technologies, accelerating advances across the broader quantum ecosystem.
Universities and Small and Medium Enterprises
Small and Medium Enterprises and Innovation
4.1 Responses to the Review’s Call for Evidence, and meetings I have had with universities have shown that the importance of engaging effectively with Small and
Small and Medium Enterprises (SMEs) face well-documented challenges, and I welcome that recognition The future growth of the UK economy will largely come from fast-growing SMEs, particularly those powered by innovation The fastest-growing SMEs generate about half of all new jobs, highlighting how innovation drives national performance and underpins the UK’s economic future.
UK innovation performance is strong on many indicators, but the country lags behind competitors in producing fast-growing, innovation-rich SMEs with the potential to break into global markets and supply chains While most innovation metrics place the UK above the EU average, the share of SMEs that are genuinely innovative remains relatively weak The proportion of exporting SMEs and the share of SMEs’ revenues derived from exports are both below the EU average, signaling weaker international market reach.
(R&D) came from real SMEs (i.e those not part of a larger enterprise group), though this was higher than in the previous 11 years 13
Chart 4.1 European Countries' Innovation Performance 2012, % SMEs Introducing
La tvi a Roman ia Hun ga ry
Sl ov eni a Cyp ru s
Cze ch Re pub lic Fra nce E U 27
Au st ria Gre ec e Swe den Ire lan d
P or tu ga l Lux embo ur g Germ any
% of SM Es intr oduci ng innov a ti on
Source: Innovation Union Scoreboard 2013, Annex B
NB Croatia joined the EU on 1 July 2013, and hence is not included in the EU27 average
11 Rebalancing Act, Shanmugalingam S et al, Nesta, 2010
12 Trade and Investment for Growth, BIS, February 2011
13 Business Enterprise Research and Development 2011, ONS, November 2012
4.3 The benefits SMEs may derive from universities are varied and substantial In the
Preliminary findings indicate that these benefits enable entrepreneurs to launch startups and consultancies, provide opportunities for student internships and year-long placements, grant access to facilities, and support joint work on business and technological challenges through the operation of business-focused networks and facility brokerage They are further enhanced by international relationships with partner businesses, academic institutions, and international alumni networks, offering SMEs a valuable resource for exporting their products and entering global markets.
The University of Huddersfield actively promotes collaborative R&D, commercialisation and enterprise among its students and staff It has opened the 3M Buckley Innovation Centre (3M BIC), a hub designed for co-locating businesses with the university to accelerate R&D and innovation Built on an open-innovation philosophy, the 3M BIC acts as a one-stop shop for rapid access to markets, finance, technology and skills for industry It hosts centres of excellence from within the university and provides bespoke equipment for industrial use with flexible access The centre supports sectors including advanced manufacturing and design, energy, IT and healthcare In addition, the university has established The Duke of York Centre.
Entrepreneurs to enable student and graduate start-up companies to be incubated and mentored alongside existing companies.” University of Huddersfield response to the Call for Evidence
“The ‘Knowledge Action Network’, a collaborative project between the University of
According to the University of Cumbria's response to the Call for Evidence, Cumbria, Manchester Metropolitan University, and the University of Chester collaborate to enable universities to develop collaborative networks of SMEs, focused on particular sectors and business innovation This approach has proven productive in creating links that did not exist previously and in driving innovation and new product development.
For many SMEs with limited resources for external engagement, the quality of locally available support is critical The Review highlights a range of valuable interventions to assist local SMEs, including those described in the box.
Stakeholders note that many SMEs could benefit from university engagement but remain unaware of this option I recognise this gap, yet it is not the only barrier to collaboration Research shows that SMEs see relationship-building with universities as a key driver of trust and a pathway to successful innovation, though they often find universities inaccessible.
“We find it difficult to get the interest of academia to do the work that Cellzome needs to complete Universities see the work as being ‘contract’, too small or short term to engage their interest and energy, and appear to be more interested in the larger, longer term strategic industry-academic alliances coming from big pharma.” Alan Watt, Chief Science
Officer, Cellzome Inc, quoted in Collaborate to Innovate, Big Innovation Centre and
4.5 In the light of the evidence I have seen during the Review I am sure that we have not yet realised the full potential of universities to support innovation in SMEs Many universities recognise this very clearly
4.6 What would it mean in practice for a university to commit to an enhanced Third
This mission centers on supporting local innovative SMEs, with the benefits described in paragraph 4.3 and tailored to reflect local circumstances It envisions an ecosystem where universities and SMEs collaborate closely, and where universities actively seek out both innovative and potentially innovative SMEs to foster collaboration, research, and commercialization By aligning benefits with local needs and encouraging proactive university engagement, the program strengthens regional innovation, job creation, and competitive advantage for small and medium-sized enterprises.
Universities should commit to ambitious programmes that identify potential fast-growing SMEs and inject technology, expertise, talent, and know-how into them, with the aim of reaching and engaging every innovative SME in the locality that could benefit from university involvement Building on Chapter 2’s plan to provide prospective research investors with comprehensive information on research strength, this approach should also increase the visibility of our innovative SMEs to potential partners, customers, suppliers, and investors, so that those innovations can be widely recognized and the SMEs can reap the full rewards of their efforts.
4.8 Many of these SMEs will have the potential to become exporters, or grow their export markets, though they will often need support to move into exporting
Universities are well-positioned to offer support by leveraging their alumni networks and international business connections, creating valuable pathways for collaboration and growth This strengthened ecosystem will have meaningful implications for UK Trade and Investment (UKTI), which Chapter 6 will examine in detail By harnessing higher education links, policymakers and firms can access global networks and opportunities, enhancing cross-border engagement and innovation.
SETsquared is a collaboration between the universities of Bath, Bristol, Exeter,
Southampton and Surrey collaborate on enterprise activities to strengthen the regional tech ecosystem Over the past ten years, this partnership has supported about 250 technology start-ups and helped launch roughly 1,000 high-tech startups.
Index ranked it the best in Europe, and fourth in the world behind three counterparts in the USA 14
Universities will need to collaborate with suitable local partners to achieve this goal, often involving multiple universities In many areas, large corporate partners may be valuable collaborators, while trade bodies and other business representative groups can also play a key role Additional partnership opportunities can arise through engagement with the Local Enterprise Partnership (LEP) or by contributing to local growth initiatives.
Chapter 5 highlights opportunities of this kind Through Growth Hubs, partners have built close working relationships to provide targeted business support and financing vehicles to SMEs in key sectors Similar partnerships have emerged to bid for funding from the Regional Growth Fund (RGF).
14 http://www.setsquaredpartnership.co.uk/