Higher education in Britain is "high growth export", says new report

The UK economy could receive a welcome boost from exporting the higher education sector as a whole, says Universities UK research.

Higher education plays an essential role in the UK’s economy, supporting the uptake of skills while driving innovation and attracting investment and talent. New research this week from Universities UK shows that education exports offer a valuable contribution to Britain and its economy, creating a high-growth industry in its own right.

The report outlines the financial benefits that higher education as an export industry provides. In the 2011 to 2012 period, UK universities generated over £73 billion of output and provided around 2.7 per cent of all UK employment.

Meanwhile, the higher education sector generated an estimated £10.71 billion of export earnings for the UK. The combined contribution to GDP, of universities and off-campus expenditure of international students and visitors, totaled £39.9 billion - which is equivalent to 2.8 per cent of GDP in 2011.

Moreover, these figures paint only half of the picture. The higher education sector already provides support to a number key areas of the British economy, but there remain a few obstacles to realising the higher education sector’s potential.

Productivity puzzle

The UK’s “productivity puzzle” could very well be the key to unlocking long-term growth in the economy, according to the report.

Figures from the Office for National Statistics show that the UK’s labour productivity gap with other G7 countries widened to a record-high of 17 percentage points in 2013. Meanwhile, the Institute for Fiscal Studies showed that output per hour in Britain fell by 12.3 per cent in 2012 when compared to its pre-recession trend.

The higher education sector is critical in enhancing productivity through a number of methods:

- Aiding local growth by contributing to regional areas in terms of jobs, infrastructure, investment and community wellbeing.

- Supporting export-led knowledge-intensive growth which in turn boosts business productivity and ultimately aids in rebalancing the economy.

- Responding to the skill demands of the workforce, anticipating future needs, and driving research and innovation.

However, in order for these challenges to be properly faced the higher education sector requires the correct support from the government.

Barriers to education exports

The recently appointed minister for universities and science, Jo Johnson, outlined the Conservative government’s targets to increase education exports to £30 billion by 2020, from £18 billion in 2012. The government has “an ambition to grow” its activity in international education, he said.

Mr Johnson did not elaborate on the methods the government will use to boost the value of education exports, but he noted that the market has three business streams.

“We have the component of education exports derived from income from students coming to study here; we have our institutions basing themselves overseas and then we have technology-enabled education exports.”

Policy implications

The facts speak for themselves, the UK’s higher education sector delivers value to the economy and benefits the market. While the impacts of their activities are so wide-ranging and difficult to understand, they are a critical asset of the economy and aid in creating sustainable growth in the UK.

For these reasons, any policies that aim to promote long-term economic success in the UK must also consider universities and education exports. Many years of continued government investment and a funding system for higher education have helped build the current success of UK universities.

Its success relies on a number of globally recognised strengths such as autonomy with accountability, as it gives them the flexibility to respond to challenges as they arise while ensuring that funding is spent wisely.

Diversity is another strength, as those in the sector can then cultivate their strengths to provide all-round excellence. Meanwhile, it allows them to cater to the different needs of the local regions as well as the national economy.

Sustainability is built with the ability to invest for the long-term and resilience to external developments, which requires funding systems that ensure financial stability while maintaining high performance rates.