Knowledge pays six-fold in times of crisis

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8 mei 2012 | Recent data show that England’s policy of slashing university budgets might have been ill-advised. Every £ invested in HE innovation yields £6 to the economy. Facing tuition hikes, students need to build employability through internships and entrepreneurship. A tricky task given a sour economy.

In an era of European austerity, countries all over thecontinent increasingly contemplate shifting the higher educationfunding burden from public budgets to individual students. British Prime Minister, David Cameron, wasone of the first to propagate this approach when he announced tocut £200 million (€226 million) in HE funding and new tuition feehikes. The now failed Dutch government followed a similarapproach by designing a student loan system to substitute existinggrants.

The Higher Education Funding Council for England (HEFCE) nowfinanced a report
called “Strengthening the Contribution of English Higher EducationInstitutions
to the Innovation System: Knowledge exchange and HEIF funding”measuring the impact
of HE innovation funding on the English economy. According to theauthors, “a
crude estimation of the impact of the funding suggests that, forevery £1 of HE
innovation funding invested, it returns £6 in gross additionalknowledge
exchange income.”

Employability without employers

The environment of English universities has changed dramaticallyover the past two
years. Cameron cut funding to universities and advocated aneconomic recovery driven
by private-sector innovation. For students, this meant that tuitionfees almost
tripled to £9.000 (€10.170).

The report argues that “the new student regime is set to have aprofound impact on the HE
sector in England, particularly placing an increased focus onemployability, as
HEIs will be concerned to address the career and hence salaryprospects of
students, to be able to pay over their loans. The difficulties ofthe present
employment market seem also to be placing a focus on support forstudent
enterprise, to increase employability but also employmentprospects.”

This greater focus on employability has led to a shift inmindset among universities
as well. According to the report, it has become common practicethat
internships and work experiences are guaranteed as part of thecurriculum.
Whether this is a solution in the short-run remains doubtful. Theauthors point
out that given that the English economy is in recession, it is notclear
whether employers will be able to meet this increased demand. Thequestion that
remains is whether focusing on employability is a feasibleinstrument at all
when the economy goes sour.