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Serious economic repercussions of funding changes to universities in the East Midlands

Issued on 29 March 2010

An East Midlands Universities Association (EMUA) report, published today, outlines the potential damage to the East Midlands economy resulting from cuts to Higher Education funding.

The report, Investing in the East Midlands: Funding Changes to universities and the economic impact on the region, summarises the findings of a study into the effects of the recession on universities in the East Midlands and the subsequent impact on the economy of the region.

The key findings of the report are as follows:

• Universities are key drivers of the economy. In 2007/8 the universities in the East Midlands had a combined revenue of £1.38bn with an additional impact of £1.93bn, giving a total impact of £3.31bn on the economy.

• During the recession universities have acted as stabilisers in the economy, with the benefit of sustained public spending. Demand for university places has been strong.

• 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 £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.

• Universities recognise the need to make efficiency savings and to diversify funding sources. However, there must also be realism about the extent to which cost savings and potential new funding streams can offset cuts in public funding.

• The case for continued investment in universities is strong, as the effects on the wider economy are likely to be disproportionately damaging.

This research was commissioned by EMUA and undertaken by Professor David Rae, Liz Price and Fizza Alamder (Enterprise Research and Development Unit – ERDU) and Professor Glyn Owen (Visiting Professor of Economics) at the University of Lincoln.

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

Quotes

‘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.’

Professor Neil Gorman, Chair of EMUA and Vice Chancellor of Nottingham Trent University

‘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 David Rae, University of Lincoln

Notes for editors

Member institutions of EMUA are:

De Montfort University

University of Derby

University of Leicester

University of Lincoln

Loughborough University

The University of Nottingham

The University of Northampton

Nottingham Trent University

Bishop Grosseteste University College Lincoln

Open University in the East Midlands

Professor Neil Gorman, Chair of EMUA and Vice Chancellor of Nottingham Trent University is available for comment on the publication of this report. Please contact Therese Easom (Press and Media Relations Manager, Nottingham Trent University) for more details: Telephone 0115 848 8774 or 07884 475059, Email therese.easom@ntu.ac.uk

For all other enquiries please contact Su Strange (Information Officer, EMUA) or any EMUA colleague on 01509 217797.

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