What government measures is what it funds: a smaller university’s view of the regional growth debate
This blog was kindly authored by Dr Tobiasz Trawinski, Public Policy Fellow and Professor Penny Haughan, Vice-Chancellor and Rector, both of Liverpool Hope University.
In his first days in Downing Street, the new Prime Minister, Andy Burnham, promised ‘good growth in every postcode’. That same week, we were having a version of that conversation at Liverpool Hope University. We had invited Professor Julia Sutcliffe, Chief Scientific Adviser at the Department for Business and Trade, to a roundtable with the University of Liverpool, Liverpool John Moores University, the City of Liverpool College, the Royal Academy of Engineering and Knowledge Quarter Liverpool. The question we put was: what stops universities doing more for their region, and what would let them do more?
The answer we kept arriving at was measurement.
The money is, at last, beginning to move. The government’s emerging Northern Growth Strategy and the new Local Innovation Partnerships Fund, alongside multi-year devolution settlements for mayoral authorities, are putting decisions about research, innovation and skills funding closer to places. For the Liverpool City Region, that is welcome. But new funds still have to be scored against something, and what they’re scored against will decide where they land. So we have one ask of the new government: establish a measure of what a university contributes to its own place, built to sit alongside the research measures when place-based funds are allocated.
The measure quietly draws the map
Roughly £1.3 billion a year in mainstream quality-related funding from Research England follows Research Excellence Framework scores. It rewards genuinely world-class work, much of it done by research-intensive universities that have earned it.
But excellence tends to be self-reinforcing (the so-called “Matthew effect”), so funding gathers where strength already sits, and each round makes the next more likely to look the same. Place-based funds are designed to offset that, but they are small in comparison.
The result is that the dominant measure captures one kind of contribution well and cannot see another at all. It does not see the work that teaching-led and mission-led universities do most: educating the local workforce and keeping graduates in the area.
What the data already shows
In the latest Office for National Statistics (ONS) figures, the North West performs more publicly funded research and development than any region outside the Greater South East, at around 9 per cent of the UK total. The Greater South East still accounts for roughly half. Headline impact figures only take us so far. Independent studies value a single university’s annual contribution to the Liverpool City Region at anything from tens of millions of pounds to well over a billion. Those totals, like research income, largely track institutional size. They say little about value for money, and no published measure currently allows that comparison to be made. Many smaller universities anchor communities that would otherwise have no university at all, and nothing in the present framework registers it.
Most of the pieces already exist
Research England’s Knowledge Exchange Framework and the Higher Education Business and Community Interaction survey both capture engagement, but local growth is recorded as narrative rather than as a metric. In May, the Higher Education Statistics Agency (HESA) published a new local-authority graduate mobility marker. It shows, for the first time at local level, where graduates actually end up.
What is missing is a single measure of local contribution. It could include workforce supply into priority sectors, graduate retention in the region and graduates moving into small and medium-sized firms. That is a synthesis job rather than a new burden. The ONS, HESA and Research England hold the data between them and could build it without asking universities to report anything new.
The obvious objection is that retention is a crude proxy and can be gamed. A regional university whose graduates go on to well-paid work in London has added value too, and no measure should penalise it for that. But that is an argument for building the measure carefully, not for leaving the gap where it is. Retention still counts on its own terms as it is what lets a place keep the skills it has paid to create.
Growth in every postcode needs a measure for every postcode
That is the change we would ask the new Prime Minister to make. If the ambition is good growth in every postcode, the measure has to be able to see every postcode and at the moment it cannot.
Universities should be valued for the research they win and for the local workforce they build and retain. Until we can place a value on a university’s contribution to its own place, it will continue to be overshadowed by contributions that are easier to measure.
Funding follows measurement.
Comments
Jonathan Alltimes says:
The postcode policy refers to the distribution of national economic growth. Higher education does contribute to economic output, expenditure, and income, but there is no evidence for the significant cumulative effects of higher education to changes in the rate of economic growth, principally as the scale of their cumulative investment is too small to cause measurable changes, even over decades. I understand why a university would argue for a means of measuring its contributions, so it can be rewarded with government funds. Higher education has for decades been in receipt of massive State funding for teaching and missions. UKRI research funds should be mostly reallocated to large scale sector-specific research institutes, which could be sited away from Oxford, Cambridge, and London. For raising the rate of evonomic growth, the State needs to persist in working out how to direct British capital to British investment and to do so by understanding how firms make investment decisions, in particular their understanding of risks because it is here where the fudge factors are likely to be found. To argue for short term project-based funding would expose universities to yet more unsustainable unforeseen costs and accumulating fixed costs. The unit of analysis for economic growth should be firms within industries. The postcode effect is obviously concerned with geographic location and so as a matter of government policy, the geographic location of firm-specfic investment should be the focus. Explanations for rises in the rate of economic growth have focused on investment following firm-specific innovation, developed from Schumpeter’s original typology and then Kuznets empirical econometric research (focused on the individual entrepreneur and the sciences). Recognition of the contribution of teaching to a geographic area should be awarded through the OfS grants, in particular for capital investment. Universities should put forward qualitative arguments for funding teaching aligned to specific industry sectors, including public sector services. But the State must do the heavy lifting for private sector investment, including the infrastructure.
Reply
Dr John Milliken says:
Trawinski and Haughan make an important point: if government wishes universities to contribute more visibly to regional growth, it must be capable of recognising that contribution. Their observation that “funding follows measurement” is difficult to dispute.
But there may be a second part to that proposition: **behaviour follows funding**.
That matters because any new measure of local university contribution will not simply record institutional behaviour; over time, it is likely to shape it. Universities respond rationally to the incentives embedded in funding systems. REF has undoubtedly encouraged research excellence, but it has also influenced what institutions prioritise, how academics allocate their time and what forms of activity acquire organisational status.
A regional contribution measure could therefore correct one imbalance while inadvertently creating another.
Graduate retention provides a useful example. Retaining graduates locally may be highly valuable, particularly where universities supply nurses, teachers, engineers, managers and other professionals required by regional economies. But retention alone cannot tell us whether those graduates are entering productive employment, addressing skills shortages, developing local enterprises or contributing to innovation.
Nor can it capture the processes through which universities generate such outcomes.
Universities interact continuously with employers, public bodies, communities, alumni and students. Employers identify changing skills requirements; universities interpret that intelligence; curricula change; students undertake placements and projects; graduates enter organisations; knowledge is exchanged; new needs emerge; and the cycle begins again.
The regional contribution of a university may therefore lie not simply in a collection of measurable activities, but in the **quality of the connections between them**.
This distinction is important because activity can be counted comparatively easily. Flow is much harder to see.
A university might record hundreds of employer contacts, placements, graduate destinations and knowledge-exchange projects while still failing to connect the intelligence generated by those activities to curriculum design, research priorities or institutional decision-making. Another, perhaps smaller, institution may act as a highly effective regional connector precisely because information moves quickly between employers, academics, students and local organisations.
A single composite measure risks obscuring that difference.
There is therefore considerable merit in the proposal advanced by Trawinski and Haughan, but perhaps government should resist the temptation to create another institutional score. A more useful approach might combine a basket of regional outcomes — graduate destinations and job quality, workforce supply into priority sectors, SME engagement, continuing professional development, entrepreneurship and applied knowledge exchange — with evidence showing how universities connect these activities into sustained regional value creation.
That would move the debate beyond asking simply, *“What did the university produce?”* towards asking, *“How does the university continually convert knowledge, relationships and people into value for its region?”*
Funding may indeed follow measurement. But universities will follow the funding.
The crucial policy question is therefore not merely what government can measure, but **what kind of university behaviour it wants its measures to encourage**.
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