The Economic Impact of the University of Bristol on its Region
by Paul Chatterton

THE SIGNIFICANCE OF UNIVERSITY EMPLOYMENT

Although this HE employment growth in the region is quite impressive, when absolute levels of HE employment in the South-West are compared against other regions, its national share is low. The region has the second lowest Location Quotient of all the UK regions as shown in table 2.1. Location quotients are a statistical measure to show the degree to which a specific area has more or less than its share of a particular activity. A value '>1' represents that an area has a greater share of higher education employment compared to the UK overall.[ The LQ's are calculated as follows: (county employment in HE/county employment total)/(national employment in HE/national employment total).]

Table 2.1: Higher Education Employment and Location Quotient by Region, 1993

REGION	HE EMPLOYMENT	LOCATION QUOTIENT
East Anglia	19527	1.40
London	62154	1.13
East Midlands	28697	1.08
South East	71472	1.03
North West	41969	1.02
Scotland	33285	0.95
Yorks/Humberside	30740	0.95
Wales	41969	0.91
West Midlands	30144	0.87
South West	25269	0.83
North	15527	0.82
Total	3742454	1.00

SOURCE: NOMIS (EMPLOYMENT CENSUS, SEPTEMBER 1993).

But, if we look at a more focused level in table 2.2, the old county of Avon has a particularly high concentration of HE employment, with the seventh highest HE employment Location Quotient in the UK.

Table 2.2: UK Counties with Higher Education Employment Location Quotients >1, 1993.

1	Cambridgeshire	2.89
2	Oxfordshire	2.46
3	Leicestershire	2.09
4	South Glamorgan	1.73
5	East Sussex	1.67
6	Gwynedd	1.67
7	Avon	1.40
8	Surrey	1.36
9	Central region	1.35
10	West Midlands	1.31
11	West Glamorgan	1.30
5	Greater Manchester	1.26
12	Tyne and Wear	1.25
13	Nottinghamshire	1.25
14	Tayside region	1.25
15	Bedfordshire	1.21
16	Hampshire	1.20
17	Buckinghamshire	1.14
18	Greater London	1.13
19	Lancashire	1.09
20	Fife region	1.07
21	Strathclyde region	1.05
22	Berkshire	1.05

Source: NOMIS (Employment Census, September 1993).

The University of Bristol, with an employment total of over 4 000, is one of the most significant employers in the city.

Table 2.3: Alphabetical list of Public and Private companies in based in Bristol employing more than 2000 people.

Bristol City Council	Rolls Royce Military
Aero Engines Ltd	British Telecom
Royal Mail	Clerical Medical and General Life Assurance
Somerfield PLC	Defence (MOD) Procurement Executive
Southmead Healthcare Trust	Frenchay Healthcare Trust
Sun Alliance	Government Office for the South-West
Mitie Group PLC	Sun Life Holdings PLC
University of Bristol	National Westminster Bank
	University of the West of England

Source: Western Development Partnership and Western Daily Press 'Top 100 Companies in the West', 3/12/96.

Table 2.4 shows that employment at the University has grown by nearly 9% since 1991/92.

Table 2.4: Increase in Staff at the University of Bristol, 1991/92 - 1995/96.

CATEGORY	1991/92	1995/96	% Change
Academic and Related	1908	2329	22.1
Clerical/Secretarial	740	754	1.9
Technical	647	689	6.5
Trades/Manual/Domestic	819	877	7.1
Total	4114	4482	8.9

Source: Appendix to Annual Report.

The University's position as a major economic entity in the region can also be shown by its income. Total income increased from just over £65M in 1987/88 to nearly £155M in 1995/96. When adjusted for inflation using the Retail Price Index (RPI) the real growth in income between 1987/88 and 1995/96 was from £65M to £108M, an increase of 66% (figure 2.1).[The RPI values refer to the financial years ending 31 July and is based on January 1987=100.]

Measuring the Economic Impact of The University

Firstly, the student population of over 12 000 must have a significant economic impact. A report by the Policy Studies Institute (1996) stated that in 1995/96 the average student spent just over £5 000. From this sum, accommodation and food accounted for £1 000 each and alcohol/tobacco and course related costs accounted for £500 each. The PSI report also found that two-thirds of all students earned some money during the academic year from part-time jobs. [The Report by PSI entitled Student Finances, surveyed a representative sample of 1 971 students at 73 HEI's across the UK.]

A recent report from Middlesex University stated that spending by the 15 000 students at the University directly and indirectly supported 790 jobs within a radius of five miles - or that one job is generated for every 20 students at the University within this radius (North, 1994). This is an assumption which presumably holds for HEI's of a similar size such as The University of Bristol. Most of the student spending from the University must be highly localised within the Avon, and more realistically, the Bristol economy. Section 4 highlights the clustering of student residential locations around BS2, BS6 and BS8 which means that their spending is concentrated.

Secondly, staff have a greater economic impact than students, but the impact of their expenditure is less localised. Figure 2.2 below shows that 8% of all University staff live outside the standard South-West region, but in terms of the higher paid academic staff 16% live outside the region; the figures are 14% and 24% respectively for those living outside the old county of Avon. In terms of where the salaried expenditure of the University is finally spent, then, there are significant leakages at the regional and especially at the old county level.

Thirdly, the economic impact of University non-salaried expenditure (which in this example refers to purchases by the University and the Students' Union) also varies by geographic area. The table below is based upon some analysis undertaken on the University purchase ledger for 1995/96. Of a total of 8 272 purchase ledger entries, only 742 (9.0%) were in a usable format for the analysis (i.e. had information on both postcode and type of supplier). These entries, however, accounted for £34M or 62.7% of the University's total expenditure of £54.1M. The table below shows that 47.8% of purchases were made with firms outside the region. In fact, in purchasing categories like computing, libraries, advertising and telephone/fax, over 90% of purchasing was conducted outside the region. The analysis also shows that in terms of University purchases made within the South-West region, the economy of the old county of Avon dominates. Significant types of purchasing made within Avon included capital projects and financial/legal/insurance services. One must treat the analysis with caution, however, since it is only based on two-thirds of total University purchases.

An important mechanism for purchasing at the University is through its participation in The Southern Universities Purchasing Consortium (SUPC). Established in 1974 and now involving 29 higher education institutions and 14 associate members, the consortium negotiates purchasing agreements on behalf of its members in the procurement areas of catering, cleaning and domestic, computing, furniture and textiles, scientific equipment, laboratory and workshop, professional and administrative, maintenance and stationery and office supplies. Significant savings accrue in all these areas as a result of the University's membership in the SUPC.

Table 2.5: University of Bristol Purchases by Region, 1995/96

Classification	Number of Total Suppliers	Total Annual Purchases (£)	% of Purchases Avon	from: Rest of SW	Outside SW
Advertising	4	301674	0.0	0.0	100.0
A-V/Photographic	21	397949	47.8	2.2	50.1
Capital Projects	20	5636115	99.3	0.0	0.7
Catering	61	1390296	54.5	4.7	40.7
Cleaning / Laundry	18	383231	41.7	21.5	36.8
Computing	66	3390561	9.4	0.3	90.3
Energy / Water	14	3484330	35.0	10.4	53.1
Estates / Buildings	36	1568985	44.3	4.3	51.4
Financial/Legal/Insurance	45	1649320	78.5	0.0	21.5
Furniture and Fittings	18	295219	55.5	0.8	43.7
Laboratory	112	4971859	3.2	13.0	83.7
Library	30	1275017	6.8	0.6	92.6
Mail / Courier Services	65	602405	44.2	0.0	55.8
Office / Stationary	51	1413635	33.3	9.9	56.9
Printing	22	362238	44.0	3.4	52.6
Telephone / Fax	12	903989	0.0	0.8	99.2
Travel / Transport Accom.	58	1037893	68.2	0.4	31.4
Workshop / Maintenance	19	296775	19.8	5.5	74.7
Miscellaneous / Other	70	4571124	84.4	1.6	14.0
Total	742	33932615	47.8	4.4	47.8

Source: University of Bristol purchase ledger, 1995/96.

Modelling Income and Employment Impacts

The South-Bank Model

Table 2.6: Local Income Impact by Study Area, after The South Bank Model, 1995/96 (£m).

LOCAL INCOME IMPACT	AVON	SOUTH-WEST
Direct (Q+R)	44.4	46.3
Indirect (N+O+P)	52.6	52.5
Induced (U)	19.4	22.7
Total (V)	116.4	121.5
Multiplier (T)	1.20	1.23

Source: Stokes (1996).

The Direct Impact refers to the impact effect of the direct employment of staff at the University. In essence, it is the proportion of total net wages spent in each of the areas by University staff (C/B). So from a total University net wages bill of £77.4M, nearly 60% (£46.3M) of this stays in the South-West region and 57.4% (£44.4M) of this stays in the Avon economy. The losses are from National Insurance and tax deductions and purchase leakages out of the region. On the flow chart, the Direct Impact is represented by Q+R. The percentages which relate to Q and R refer to staff propensity to consume in the specified area and is based on analysis of previous impact studies and data from Economic Trends.

The Indirect Impact relates to non-salaried expenditure by the University and Students' Union (i.e. purchases) in the areas under consideration and the expenditure generated by the additionally impacting students (i.e. expenditure by students who are resident in the area under consideration solely because of the existence of the University). In terms of the £54.1M (A) of non-salaried expenditure from the University in 1995/96, 42% (22.7m) was in Avon and 48% (£26M) of it was in the South-West (P). In terms of expenditure generated from additionally impacting students, £29.9m was in Avon and 26.5m was in the South-West. This gives an indirect Impact of £52.6M for Avon and 52.5m for the South-West, represented by N+O+P on the flow chart.

The Initial Income Injection (S) from the University is the sum of the Direct and Indirect Impacts. For the Avon economy it is £97M and for the South-West economy it is £98.8M. This is represented by summing all the major sources of expenditure so far (N+O+P+Q+R).

The Induced Effect (U) refers to the additional impact resulting from expenditure on goods and services in the areas under consideration by recipients of both direct and indirect income. It is calculated by applying a multiplier (T) to the Initial Income Injection (S). The multiplier is based on the percentage of University purchases made within each defined area and the assumption that 40% of this is available to be subsequently spent.1 Following these assumptions, for Avon, the multiplier is 20% (or a multiplier of 1.20) of the initial income injection which is £19.4M; and for the South-West it is 23% (or a multiplier of 1.23) of the initial income injection which is £22.7M. Finally, by adding the Initial Income Injection and the Induced Effect, we arrive at the total income impact on local businesses from the existence of the University of Bristol; in the Avon economy this is £116.4M and in the South-West economy it is £121.5M. The above is summarised in figures 2.5 and 2.6.

The Robson Model

Problems and Summary

The two models, then, present us with different conclusions. This is not surprising as both models have different assumptions and premises. Firstly, the South Bank Model relies heavily upon accurate data gathered from the University. In contrast to the Robson Model, however, one weakness of the South Bank model is its failure to incorporate differences in staff salaries between residential areas and also between occupational bandings into the calculations. The model also excludes the impact made by part-time students and 'outsiders' in the form of visitors and conference delegates. The full impact of the University will, therefore, be under-estimated. Finally, there are estimations in the model on the number of additionally impacting students, student expenditure and propensities to consume, all of which should be seen as potential weaknesses within the model.

In contrast to the South Bank Model, the Robson Model may over-emphasise the consequences of University salaried expenditure and under-emphasise University non-salaried expenditure. It relies more on published data and regional statistics. As a result, it contains the assumption that regional spending by the University in a particular industrial sector reflects the region's share of overall employment in that sector. This results in a much lower retention rate for spending within the South-West. This is one limitation in the model; although post-code analysis of the University purchase ledger showed that 48% of spending was within the South-West, one must be aware that much of this could simply be to distributors in the region and that the money will quickly 'leak' elsewhere, even overseas. Further, despite the fact that the Robson model differentiates between type of students and staff, this leads to over-generalisation.

There is a strong case for considering the economic impact effect of construction activity separately in any such model. The arguments for this assert that the construction industry is more intense and localised in nature and hence will have higher multipliers. The recent rise of multi-National construction operators and the in-commuting of labour, however, distorts the issue. While this study acknowledges that recent construction activity by the University has had an enormous local economic impact (with construction expenditure running at over £10M for the last two years - section 4), because of the problem outlined above it has subsumed construction within general expenditure.

Overall, however, this modelling exercise has allowed us to see the extremely important Economic Impact the University of Bristol has on the local and regional economy. In particular, the income and employment impacts of spending by the University, its staff and students is a significant contributor to local and regional economic prosperity and there are strong reasons to suggest that the effect the University has is much higher and more localised than that of other types of economic activity.

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