29th March 2010, 1:38pm
Report warns of serious economic repercussions of university funding cuts
Money Research by the University of Lincoln has revealed the damaging impact that cuts to public funding of higher education would have on the wider economy.

The study by the Enterprise Research and Development Unit (ERDU) at the Lincoln Business School found that the region’s universities had acted as stabilisers for the economy during the recession and there was a strong case for continued public investment in the sector during the economic recovery.

The findings of the study are summarised in a report published today by East Midlands Universities Association (EMUA). The document, Investing in the East Midlands: Funding changes to universities and the economic impact on the region, shows that:

• Universities are key drivers of the economy. In 2007/8 the universities in the East Midlands had a combined revenue of £1.38bn, with a total impact of £3.31bn on the economy.
• The levels of UK public debt, and reductions in future public spending from 2010, will have major negative implications for higher education funding for years to come.
• Universities in the East Midlands could face up to a £60m reduction in public funding, over the three years 2010-13.
• The total impact of these funding changes on the East Midlands economy is estimated to be up to £145m.

The report states that while universities recognise the need to make efficiency savings and to diversify funding sources, there must also be realism about the extent to which cost savings and potential new funding streams can offset cuts in public funding. It concludes that the case for continued investment in universities is strong, as the effects on the wider economy of public funding cuts are likely to be disproportionately damaging.

The research was commissioned by EMUA and undertaken by Professor David Rae, Liz Price and Fizza Alamder from the University of Lincoln’s ERDU, and Professor Glyn Owen, Visiting Professor of Economics at Lincoln.

Professor Rae said: “The East Midlands universities make a very strong contribution to regional economic competitiveness, growth, international profile and skills development. The announcements of funding reductions by HEFCE for 2010/11 will reduce their economic contribution to the region and have damaging effects on the wider economy as it tentatively recovers from recession.
“The effect of these cuts, if followed as expected by a further £600m reduction nationally in teaching and research budgets in 2011-13 could, if this affects the research councils as we anticipate, be up to £145m on the region's economy over three years. There are undoubtedly further funding reductions yet to be announced, although these may follow the election.
“The future health and development of the region’s universities will depend increasingly on their success in growing their international and employer-based activities, as well as on contributions from students. However the scope for achieving this in the short-term is limited. Managing change in our universities over the next few years will be challenging, and will require support from all those who have an interest in them.”

Professor Neil Gorman, Chair of EMUA and Vice Chancellor of Nottingham Trent University, said: “This study confirms that we should view our universities as an investment, not a cost. Our universities deliver highly skilled graduates into the economy, create new knowledge through world class research, support the development of new products and new businesses, and drive regeneration in the region. University activity underpins the economy of the East Midlands. To remain a prosperous region, we must continue to support and invest in our universities.”

To read this report in full please go to http://www.emua.ac.uk/downloads/fundingchangesmar10.pdf
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