Graduates ‘worth £75,000 each to UK Treasury’, analysis shows

The government receives a benefit of £75,000 for every UK graduate, even when considering the cost of subsidising their education through loans and grants, figures show.

In a report, London Economics estimates that the activities of the UK higher education sector generated a total economic impact of £158 billion in 2021-22. Of this, 60 per cent was through its teaching and learning activities, 34 per cent through its research activities, and 6 per cent through knowledge exchange activities.

Compared with the associated public funding cost to the Exchequer, the firm calculates, this produces £11.60 of impact into the economy for every £1 spent.

And taken together with the estimated benefits of international students produced for a previous report, UK higher education and research makes a total net contribution of £265 billion to the economy, the report finds, resulting in a higher cost-benefit ratio of £14 generated for every £1 invested into universities.

Commissioned by Universities UK (UUK), which represents 141 universities, the report also finds that the public purse makes an average profit of £75,000 for each full-time first-degree graduate.

This benefit remains even after the costs of subsidising their studies are taken into account because of higher tax and national insurance contributions. Wider benefits, such as improved health outcomes and reduced crime associated with higher education qualifications, were not included in the analysis.

Dame Sally Mapstone, principal and vice-chancellor of the University of St Andrews and president of UUK, said the statistics make a strong case for viewing universities as another part of the UK’s growth infrastructure.

“Unlike other sectors, the influence of higher education is felt in communities along the length and breadth of the country and by people of all backgrounds.

“With a new government at the helm, it’s imperative now more than ever to acknowledge the key role higher education can play in unlocking the full potential of the economy, both locally and nationally.”

The report finds that higher education generated at least £5 billion for every region of the UK, but was highest in London (£60.9 billion), the south-east of England (£36.3 billion) and Scotland (£28.3 billion).

Amid financial anxiety for the future of universities and question marks over their long-term funding, Dame Sally said the sector was “at a fork in the road”.

“We can choose to act to ensure our universities thrive, or we can allow them to slide into decline. For me, the latter path would be unconscionable.”

Jo Grady, general secretary of the University and College Union, said the report “highlights how important university staff are to the economy and society at large, and demonstrates the benefits of government funding”.

“But university leaders cannot be handed blank cheques: they must use public money to invest in their own workforce,” Dr Grady added.

“We echo Universities UK’s call for more investment, but this must be accompanied by a fair pay uplift, in line with that awarded to teachers, train drivers and junior doctors.”

patrick.jack@timeshighereducation.com