The Impact of Universities on their Surroundings
The UK has long had a reputation as a global centre of learning, dating all the way back to the 1200s and the founding of Oxford and Cambridge universities. Today, the country boasts over 165 higher education institutions, with the capital home to over 40 institutions itself, one of the highest concentrations anywhere in the world. Consequently, London is also home to over 500,000 students, approximately one fifth of the country’s total.
While often presented as somewhat closed off from the city and community around them, universities do in fact leave a profound impression on their surroundings, and often those who live within them. League tables—the way that the majority assess the quality of a university—however, fail to account for way that an institution can benefit its region, economically or otherwise, as a means of assessing its quality. Instead they opt entirely for the standard of its research, graduate salaries and student satisfaction. These are of course important factors and should not be ignored, but they heavily skew the criteria used to determine the reputation of an institution and thus the investment a school receives. As such, it’s difficult for a university that performs worse academically to gain the funding that could help it improve its standard of education, even if it greatly contributes positively to its local community.
As Vincent Straub wrote in 2019, “at a time when Britain faces pressing social problems including growing inequality, the educational sector has an important role to play” in contributing to its surroundings, this is even more apparent in the wake of the Covid-19 pandemic. We therefore believe that alongside academic performance, the local impact of a university should be more commonly assessed, not only to determine the quality of a university, but also as a factor that can dictate the desirability of an area for potential or current residents. That’s why we have built our Universities Impact metric for WaInsight.
But though we are certainly in favour of higher education institutions, it’s necessary to remember that their influence on residents of a university town or region are not all positive, and the effects they have on an area must all be considered together and assessed accordingly.
On the more cynical side of things there are the seemingly endless media stories in which residents are reported to find students causing disruption such as noise nuisance at night or increased levels of alcohol-related misdemeanours. These concerns tend not to play out as much in reality as they’re made out in the news, but as a result, local authorities have been under increasing pressure in certain neighbourhoods to decline planning permission for student flats or bars after residents have complained that more accommodation would lead to an unbalanced community. This can be, and in many cases has been, the outcome in a student-heavy neighbourhood.
It can also take away from the real estate available to develop other new facilities in the area whether public or private. For example, certain areas of London that are home to university halls of residence are really only known for this and therefore have not become buzzy residential neighbourhoods or 'destinations' that the majority of Londoners feel entitled to enjoy.
One of the most pervasive impacts on permanent residents is that the presence of students largely drives up rental and purchase prices which can make the local housing market more competitive than it would have otherwise been. In some cases, the resultant rates price out previous local residents. Further still in some circumstances, the dedicated use of housing stock for students means that some properties can sit empty during holidays, turning vibrant bustling areas in term time into ghost towns, which also has a knock-on effect on the volatility of income for local businesses, which as a result can damage an area’s desirability both for residents and retailers.
This is not always due to a student influx though, and if it is, it is not the fault of the students themselves. Particularly in London, areas that were once home to many students such as Soho, Camden or Shoreditch have become unaffordable for them too. It is likely that if a non-student population has been priced out of a neighbourhood, then student populations have been too thanks to the city’s inflated housing market and the overwhelming number of renters in that cohort. This means that students and staff, as well as many other sectors of society, are forced further afield, which can cause residents to feel as though they’re being overrun despite it being unavoidable as long as rental prices continue to surge.
Landlords are therefore perhaps the most obvious single category to benefit financially by high numbers of students in an area. Not only does the presence of university students and staff provide a consistent pool of tenants, but student populations create an intensification of competition in the rental market, which significantly drives up the prices that landlords can demand. In some circumstances, landlords also receive a tax break if they exclusively rent their properties to students.
University affiliates are sometimes considered to be a drain on local resources too, as those affiliates who rent tend to be (partially) exempt from paying council tax and therefore do not directly contribute to local authorities' budget. They use public services such as transport though, so are net beneficiaries of local services despite their lack of contribution, arguably to the detriment of the non-student population. That said, the high level of those seeking to use these services means over time their provision rises and tends to remain high, especially in larger cities, and in many cases these services are pay at the point of use so are funded by those who utilise them, somewhat negating the need for taxes to support them.
This situation is not such an issue if an area has a history of large student populations, as the council will most likely have accounted for any exemption for the student population into their future service delivery projections. In certain areas, student numbers have risen due to an overspill from neighbouring postcodes or because of the establishment of a new tertiary educational institution. Then the fact remains that students are exempt from payment of council tax, whilst using local services. This means that there will be a perceived strain on local resources that can sow discontent amongst residents—in some cases, it may become a very real strain.
You’ll be glad to hear it’s not all bad though, and in many ways the positives of having a thriving university on your doorstep greatly outweigh the negatives. The presence of students in an area has a number of beneficial impacts on residential inhabitants. Studies show that university students return a large "creativity dividend" to residents—that is they tend to bring innovative business ideas to the local area, and often set up initiatives which benefit the public too, like proposals for the creation of public spaces. Their presence, and that of a university, means that there tends to be more public amenities available to nearby residents, such as museums, sports facilities and libraries, that are not so apparent in neighbourhoods that don’t possess high numbers of students or an academic institution.
The positive financial impact of a university on a locality cannot be understated either. Research by Universities UK found that in the 2011-12 academic year alone, London’s higher education facilities generated £5.8bn for the city’s economy, and an additional £7.9bn that went to other UK industries, making up 3% of London’s country-wide economic contribution. In that year London’s universities created almost 150,000 jobs and employ almost 4% of the city’s workforce, as well as giving 114,000 people the opportunity to live and study in the capital. In the subsequent decade these numbers are certainly believed to have increased. Outside London, too, universities are a boon for an area, with, according to one report, Leamington Spa receiving £150.7m, including £2.3m spent in local businesses by students, and the provision of 1852 jobs from Warwick University in 2013 alone. Many other towns report similar findings, and furthermore, the NUS found that in 2014 725,000 students volunteered in their local area.
As touched on above, high populations of university students and staff have a positive impact on retailers. They have a greater opportunity exercising commercial activities and footfall which, in towns and cities such as London with prestigious institutions that sometimes act as film sets (Christopher Nolan shot scenes of Inception and the Dark Knight trilogy at UCL where he was formerly a student) not only comes from students and staff but also tourists. This leads to a larger customer base and elevated profits for comparable retailers located in student towns.
So as we’ve seen there’s no definitive answer to whether a university is good or bad for an area, but it’s definitely impactful however you choose to look at is. Therefore understanding the extent of this impact is very important when making a decision about where you’d like to live, buy, build or brand. To discover more check out WaInsight and sign up for free at wa-insight.com!