- A new University of Manchester report says better alignment between business, universities and policy could boost UK growth.
- Drawing on input from 610 businesses, it highlights skills shortages and barriers to collaboration that are holding back innovation.
- It calls for stronger talent pipelines, simpler collaboration and policy that better supports UK frontier sectors.
A new University of Manchester report commissioned from CBI Economics, the CBI’s economic consultancy division, has revealed the enormous opportunities for UK growth, regional development and productivity that can come from aligning business needs, universities and government policy.
The report, which is based on survey and interview data from 610 businesses and university stakeholders, reveals a system that is working well in some areas with eight out of ten businesses surveyed recognise the positive contribution of working with universities. However it is also failing to make the most of talent and the ability to innovate.
Ultimately this is stunting growth, preventing new work being carried out, or forcing businesses to shift operations overseas.
The report shows that this is particularly acute in the UK’s priority ‘frontier sectors’, crucial for delivery of the government’s Industrial Strategy, including advanced manufacturing, digital technologies and life sciences. Compared with firms outside of these sectors, surveyed frontier sector firms are around seven times more likely to report relocating activity outside of the UK if universities were less able to supply skilled graduates or collaborate with business.
The findings also present a significant opportunity – the UK has world-leading universities, strong research capability and businesses operating at the technological frontier. The UK can build on these by strengthening talent pipelines, improving collaboration and aligning policy with business needs.
Talent and skills
Businesses reported that the constraint on talent and skills is largely one of availability, not quality.
Survey responses indicate that around one in five businesses (19%) are currently experiencing a graduate skills shortage or gap, with shortages more pronounced among firms operating in frontier sectors.
The findings show that international talent is filling targeted skills gaps rather than displacing domestic workers.
Addressing this talent gap this will require strengthening the scale and alignment of the domestic skills pipeline, while maintaining access to international talent, where gaps persist. [HA1]
University-business collaboration
The other significant way in which universities and businesses collaborate is in research and innovation. This, the report finds, delivers benefits including commercial product development and productivity gains, access to specialist facilities and research expertise, that businesses would not be able to invest in themselves.
However, businesses also highlight that it is difficult to find the right contacts, and there are differing timescales and multiple funding streams which complicate engagement.
One SME described how establishing initial engagement with a university could take several months, from securing the right contact through to progressing discussions. This contrasted sharply with their experience in other countries, where similar partnerships could be initiated within days.
Recent University of Manchester initiatives point to the types of practical steps universities can take. This includes plans to offer all undergraduates meaningful real-world experience, such as placements, internships, live employer projects or work with public and community organisations, and the launch of the five-year, £5m, Future of Work Alliance with BNY, focused on responsible human-led AI.
The report calls for clearer incentives and simpler funding routes from government, with universities doing more to speed up and simplify access for businesses.
Professor Duncan Ivison, President and Vice-Chancellor of The University of Manchester, said: “Economic growth depends on our ability to turn talent and ideas into new products, services, and industries. The countries that do this best will lead the global economy.
“We need to be more ambitious, more responsive and more outward-looking in how we work with employers and entrepreneurs. The issue is not whether the UK produces highly skilled people. It is whether those skills can be connected quickly and effectively to the places, sectors, communities, and businesses that need them most.
“As this report makes clear, by strengthening skills pipelines, removing barriers to collaboration and backing innovation wherever it emerges, we can unlock far more of what universities and businesses can achieve together. This is what the country needs and what we are committed to delivering.”
Adriana Curca, CBI Economics Director, said: “Our research shows that universities are a critical part of the infrastructure that supports business growth, providing access to talent, research capability and innovation expertise. This is particularly important in the UK’s frontier sectors where firms rely on advanced skills, research capability and innovation to grow and compete.”
“While many examples of collaboration are already delivering tangible benefits, there is a significant opportunity to do more. Better connecting business needs with talent, research and innovation capability could help unlock growth in the sectors that will shape the UK’s future economy.”
