National Centre for Universities and Business (NCUB) - State of the Relationship 2023: Analysing trends in UK business university collaboration

The report, the tenth edition of the State of the Relationship, presents trend analysis of data on university business interaction, along with reflections from leaders and practical case studies. The report is structured under the headings of resilience, reaction and reform. Its findings are based on the NCUB’s Collaboration Progress Monitor (CPM), which covers the period between August 2021 and July 2022. Its 25 metrics capture indicators of collaboration in research and innovation, and skills and talent. The 2021/22 data is analysed and compared to a 5-year average. Other data sources include Higher Education Statistics Agency (HESA) records, Innovate UK, and the Department for Education (DfE).

The full report can be found here.

At-a-glance:

• 2021/22 saw growth across most of the 13 key indicators ranging from HE income from business to HE interactions with businesses, with the exceptions of patents granted and Innovate UK academic grants, which declined (p6)
• After a drop in interactions between universities and businesses during the pandemic in 2019/20 and 2020/21, the data for 2021/22 reveals an upswing. The total number of interactions rose by 5 per cent, reaching 88,881 and indicating a “robust resurgence” in university-business interactions (p6)
• Positive trends for academic research commercialisation and spinout activity was characterised by a 40 per cent increase in the number of licences issued, and a 27 per cent growth in licensing income (to £222 million), mainly driven by a 70 per cent increase in software licences. However, non-software licences saw an 8 per cent drop, to a level similar to that at the onset of the pandemic. Universities experienced a 63 per cent increase in the number of licences granted to large businesses, while SMEs saw a 13 per cent fall in licences granted (p7)
• Total income to universities from knowledge exchange activity grew by 16 per cent, reaching pre-pandemic levels of £1.2bn. This increase was driven mainly by a 15 per cent rise in contract research services and an 8.5 per cent increase in consultancy services (p7)
• The number of patents granted to universities decreased by 21 per cent on 2020/21, with 1,622 patents reported (p8)
• There was significant growth in degree apprenticeship starts (by 10 per cent, up to 43.230) over the past year, extending a trend that has seen a nearly fourfold increase in five years. On the other hand, enrolments on CPD/CE courses for business and the community dropped from 4,136,090 in 2020/21 to 3,906,709 in 2021/22, although the average CPD/CE learner days per university rose by 5 per cent during this period (p8)
• Across all UK nations, the number of university-SME interactions slightly lags behind the established 5-year average. However, there are regional variations. The surge in licensing in the UK, for instance, was mainly driven by English universities (p9)
• 7 per cent of university R&D was funded by UK business investment, a 0.5 per cent increase from 2020/21. 9 per cent of university R&D was funded through foreign investment - in line with previous years and pre-pandemic levels (p10)
• Next year’s CPM data will demonstrate the possible impact of the loss of access to the European Regional Development Fund (p9)

Implications for governance:

As the UK entered 2022, challenges such as rising inflation and elevated borrowing rates, supply chain issues and skills shortages, have plagued businesses and the wider economy. The fallout from the Russian invasion of Ukraine added to the headwinds. GDP growth throughout 2022 remained relatively flat and global trends in economic growth between 2021 and 2022 closely mirror those observed in the UK.

Universities have experienced the consequences of this external turmoil, compounded by internal challenges such as disputes over pay and working conditions and gaps between funding and costs for research.

Despite these pressure points, the NCUB report shows “remarkable resilience” in university business interactions, with increases in most metrics. A stand out 40 per cent increase in the number of licences issued, and a 27 per cent growth in licensing income is particularly noteworthy and encouraging. Coupled with the recent news that the UK will continue its participation in Horizon Europe, the prospects for future R&D growth look positive.

Governors will be well aware of the importance of business interactions, not least because of the alternative stream of income they can provide at a time when financial constraints abound. The NCUB annual report offers an opportunity to compare institutional data with trends across the sector to gauge the direction of travel and areas which might require more focus.

Interactions with large businesses now exceed pre-pandemic volumes, increasing by 7.5 per cent and reaching a total of 26,791 in 2021/22. While interactions between universities and SMEs, which had declined in the previous two years, have now stabilised, this is presented as an area where more work needs to be done. As the recent Advance HE Governance Conference heard, governors can help universities network locally and act as champions.

In the past, the most common form of interaction between universities and SMEs was through consultancy services. However, there has been a recent and significant surge in contract research, fuelled by the availability of funding schemes and incentives, such as grants, tax credits, or vouchers, reducing costs and risks for SMEs. Universities need to be aware of this shift to take advantages of opportunities it may present.

Opportunities to secure R&D government funding are also being explored by institutions. Some £60m has been ploughed into a pilot Regional Innovation Fund to support knowledge exchange, commercialisation and economic growth as a supplement to the Higher Education Innovation Fund and its equivalent funding streams in Scotland, Wales and Northern Ireland. Fledgling innovation accelerator, investment zones and innovation zones encourage clusters which universities can facilitate.

Innovate UK, which leads the Innovation Accelerator Programme, has a pilot budget of £100 million and strategically places universities at the heart of co-creation.

In response to the Nurse review of the R&D organisational landscape, the government has also announced the launch of the Advanced Research and Invention Agency (ARIA) in a bid to support bold risks in research.

A series of case studies in the report make interesting reading and highlights university business partnerships across the country and internationally, particularly in AI, the green economy, health innovation and skills development. Degree apprenticeships, as the report shows, continue to be a growth area.

The next CPM will capture 2022/23 data and the first year of universities not being able to benefit from the European Regional Development Fund (ERDF), which has historically supported university and business collaboration at a local level. It will be critical to consider the impact of this on both the number and scale of interactions, particularly with SMEs.