As the UK continues to place cities at the heart of its growth agenda, the role of universities in shaping urban economies is becoming increasingly visible, yet many higher education institutions (HEIs) are facing financial strain and the consequences of this extend well beyond the education sector. For those involved in development, planning, and investment, the evolving position of universities warrants close attention.
The Town and Gown briefing recently issued by Centre for Cities discusses precisely this point and notes that expensive housing and transport constraints in cities such as Cambridge risk limiting the worker pool from which high-paying private firms can compete with university knowledge jobs, thereby stalling the city’s economic potential.
The briefing shows clearly that universities are not only centres of learning, but they are also significant employers, drivers of local regeneration and placemaking, contributors to local productivity, and significant international exporters. However, it also shows that financial pressures facing universities are prompting a shift in strategy. Many institutions are increasingly reliant on international students for revenue, a trend that intersects with potential changes to student visa policy. While these decisions are made with broader national priorities in mind, their implications for local economies and for the built environment are worth considering. It’s reported that in 2022, universities brought an estimated £24 billion into the UK economy from abroad. International students support local services, help to sustain housing demand, and contribute to the skilled workforce that cities rely on to remain competitive.
Student accommodation and the graduate gap
The expansion of the purpose-built student accommodation (PBSA) sector has undoubtedly helped meet the housing needs of growing student populations, particularly in city centres, and the Centre for Cities briefing recognises this contribution. These schemes have worked well in many locations, attracting private investment and supporting regeneration and jobs.
The briefing also recognises, however, that those PBSA developments won’t be enough on their own to ensure long-term graduate retention. Once students finish their studies they need access to a broader mix of housing – affordable, well-located and suitable for early career-professionals. Failure to support and deliver this gives rise to a risk of cities losing the very talent they’ve helped to cultivate.
Innovation, spin-outs, and the infrastructure challenge
Universities are engines of innovation. Their research outputs and spin-out companies have the potential to drive a city’s future productivity. But retention is a challenge. The Centre for Cities briefing indicates that almost half of university spin-outs move somewhere else over their lifetime. Some leave their home city to relocate nearby (to business parks outside the city’s boundary for example), but others go further afield, with some even leaving the country. There are multiple reasons for this, of course, but limited lab space has been recognised as a critical factor, as well as medium to long term investment funding.
Policy developments and market signals
The government’s forthcoming Skills White Paper is expected to clarify its approach to workforce development and regional growth, including through identifying skills needs across sectors and regions. Meanwhile, proposed changes to international student policy may influence university recruitment strategies and, by extension, local housing and service demand.
Conclusion
The pressures facing universities are real, but so too is their potential to drive urban growth. For those shaping the built environment, this is a moment to align strategy with long-term economic goals. Universities can be powerful partners in regeneration and growth, but only if their roles are understood in full; not just as educators, but as employers, exporters and incubators of future industries. If cities, developers, and policymakers can work together to support universities in that context there’s potential to unlock new forms of growth. That means investing in infrastructure, rethinking housing, and ensuring that policy decisions reflect the local realities of university towns.
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