British academy

Economic Prosperity and Well-being

How do the arts, humanities and social sciences contribute to economic prosperity and well-being?


Summary of main findings:

The arts, humanities and social sciences

  • contribute critically to expanding and strategically significant sectors of the economy, notably creative and cultural industries, and more selectively, heritage and tourism
  • contribute to understanding and developing the performance, productivity and innovative development of business
  • help companies to develop new products and build and maintain effective relationships with customers and employees, contributing to innovation and improved factor productivity
  • equip employers and employees with key generic skills, and with high-level expertise to develop specific economic sectors and activities.

The new economy

32. Whereas the dominant global industries of the past focused on manufacturing industry, the key corporations today are increasingly active in the fields of communications, information, entertainment, leisure, science and technology. The 1998 White Paper Our Competitive Future showed that knowledge, creativity and skills were changing the way that firms competed and the sources of comparative advantage between nations. It defined the knowledge driven economy as ‘one in which the generation and exploitation of knowledge has come to play the predominant part in the creation of wealth. It is not simply about pushing back the frontiers of knowledge: it is also about the more effective use and exploitation of all types of knowledge in all manner of economic activity.’ (emphasis in the original).

33. Professor Ken Peattie has said:19 ‘Over the last twenty years, the increasing pace of technological diffusion has combined with techniques such as benchmarking and total quality management to narrow rapidly the technological and “objective” differences between products in many markets. Sustainable competitive advantage is very rarely generated from technological excellence alone. Today, in markets which many people might assume to be dominated by technological issues, including cars, home computers and mobile phones, it is actually “soft and subjective” factors like design, branding or customer service that are ultimately crucial in delivering and sustaining competitive advantage. These factors are very strongly rooted in the arts, humanities and social sciences.’

Intellectual property

34. The generation of intellectual property, notably but not exclusively copyright, is a major contribution of the arts, humanities and social sciences. It is fundamental to many activities at the heart of British economic life, such as education, media, tourism, leisure, and all the manufacturing, production and service industries which support them. The value of intellectual property in these sectors depends upon their ability to generate new ideas rather than to manufacture commodities. These are the fastest growing sectors of the global and the UK economy.

35. Copyright protects not only literary, dramatic, musical and artistic works, but also related work such as publishers' copyright in their products, films, sound recordings, broadcasts and cablecasts. Literary works include anything that is written, spoken or sung so long as it is recorded in material form; they also include choreology, computer programs and databases, and other material made available on the internet. Artistic works include paintings, drawings, photographs, maps, plans, sculptures, works of architecture and 'works of artistic craftsmanship'. A great many of the products of teaching and research in the arts, humanities and social sciences are covered by copyright, providing the basis on which the intermediary industries such as publishing, analogue and digital, broadcasting, film, sound recording, and retailing of the products to consumers operate.

Contributing to the development of the creative and cultural industries

36. The full economic value of the arts and humanities has only begun to be more fully recognised in recent years. In 1997, the European Task Force on Culture and Development reported that the arts and culture were the main source of content for the creative and cultural industries, the media and value-added services of the telecommunications industries. At about the same time, organisations such as the European Commission and the World Bank, as well as national and local government recognised that such industries were a major force in the global economy, whose importance was likely to increase as a growing service sector and changing social trends resulted in heightened demand for leisure activities. Indirect economic impacts were also observed. The European Task Force on Culture and Development said that works of art and cultural products created national and international stocks of ideas or images which could be exploited by the creative and cultural industries (e.g. in advertising or cultural tourism). It also emphasised the capacity of the arts to add value to the built environment.

37. Measuring the size and growth of the creative and cultural industries has proved difficult because they do not fit the employment categories used by the Office of National Statistics. The Department for Culture, Media and Sport (DCMS) defines the creative industries as 'those industries which have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property'. The DCMS Mapping Exercises in 1998 and in 2001 defined these industries as: Advertising, Architecture, Arts and Antique Market, Crafts, Design, Designer Fashion, Film and Video, Interactive Leisure Software, Music, Performing Arts, Publishing, Software and Computer Services, Television and Radio. In 2001, the DCMS estimated that these industries accounted for 5 per cent of GDP and were growing faster than the economy as a whole.

38. Higher education has an important part to play in supporting the creative and cultural industries:

  • as a provider of cultural infrastructure and services
  • as a key partner in the development of local economies and local/regional CCI specialism
  • as a provider of research and research and development in applied and non applied subjects
  • as a provider of skilled graduates with skills in industry specific applied technical/vocational skills
  • as a provider of skilled graduates with higher level skills and understanding in arts and humanities subjects
  • as specialist conservatoires in performing and visual arts.

39. Many businesses in this sector are of small or medium size, and heavily dependent upon the resource that higher education can provide through the arts, humanities and the social sciences. The creative industries equate to four main domains: visual arts, performance, audio-visual, and the printed word. They have links to the wider cultural sector, notably, sport, heritage, leisure and tourism. Their outputs fall broadly within three categories: artistic and cultural expressions; economic activity as measured by employment and turnover; and social indicators relating to health, social exclusion, regeneration and education. These outputs are not mutually exclusive.

40. The arts and humanities often feed directly into creation, product design, exhibition and advertising, whilst the social sciences contribute to production, planning, marketing and dissemination. Furthermore, the pace of technological advance makes this sector particularly reliant on the expertise of social scientists both in devising new business models and practices, and in protecting intellectual property rights.

41. The economic contributions of the creative and cultural industries at regional level are often striking. A recent study by GLA Economics found that the creative and cultural industries were the second largest sector in London, behind business services, employed one in five Londoners and were the second fastest growing industry in the capital with growth rates estimated at 9 per cent per annum.

42. The recent competition to be European Capital of Culture 2008 demonstrated the likely economic impacts for the six cities/regions that were shortlisted. One of the cities shortlisted, Newcastle Gateshead, estimated that, if successful, it would attract some four million new visitors with £700 million to spend in the local economy, and generate 17,000 jobs, along with £100 million more through conference business. These dividends in turn would cascade throughout the whole region. As part of the bid, Newcastle University planned a reconfiguration of its museums, gallery and other cultural outreach activities into its own Cultural Quarter. The other five cities short-listed – Birmingham, Bristol, Cardiff, Liverpool (the winner), and Oxford – all provided evidence of predicted economic impact of an 'urban renaissance' driven by cultural regeneration. They also demonstrated the benefits to the UK as a whole of cultural tourism. The short-listed cities have all been designated Centres of Culture by government to assist the development of appropriate programmes and policies.

Specific sectors of the creative industries

43. Design The Prime Minister has hailed the UK as 'the design workshop of the world' and according to a survey by IDEO Europe for the Design Council, international purchasing managers ranked UK design capabilities within the top six worldwide across all design disciplines. The DCMS report, Design in Britain – 2001/2002, demonstrated a rise in export earnings from £350 million in 1995 to £1 billion in 2000. British businesses spent a total of £26.7 billion on design in 2000'2001, representing nearly 3 per cent of the UK's total corporate turnover.

Sector

Earnings

Agriculture

£1.7 billion

Consumer services

£4.9 billion

Construction, transport, storage and communications

£6.3 billion

Financial and business services

£8.7 billion

Manufacturing

£5.1 billion

Research undertaken for the Design Council has found that UK businesses see design as contributing to increased profit, better quality services and products, improved communications with customers and an enhanced company image.

44. Universities have a central role in encouraging all areas of design through their research and teaching activities. Forty per cent of UK designers hold at least a degree or equivalent qualification and there has been a year on year increase in the number of design undergraduates in UK universities. UK's design education system is held in high regard internationally; overseas student numbers grew by 112 per cent between 1994/95 and 1998/99.20 These activities also impact upon the delivery of public services. In a recent speech in the House of Lords Diana Warwick said: ‘The universities already make an enormous contribution to improving the delivery of public services. They train the professionals on whom we rely ' the designers and architects whose creative vision provides modern hospitals with specialist equipment, attractive living accommodation in towns and the countryside, bridges across our rivers, new transport systems, and so on.’

The Jewellery Industry Innovation Centre (JIIC) at the Birmingham Institute of Art and Design was established to assist companies within the Jewellery Industry and allied trades, by providing research and development, and new technological applications pertinent to the Industry. The Centre is nationally and internationally recognised, forming global partnerships in a wide range of new technology and research based projects and networks.

45. Computer Games Collaboration between science and technology and the creative arts is currently being harnessed in the development of degrees in computer games, one of the largest and fastest growing sectors of the economy. In the US, entertainment has displaced defence as the driver of new technology take-up; earnings from computer games and associated products generate more profit than Hollywood. This sector is still seeking effective business models and the means of understanding audience demand, as well as the social and cultural use of new technology. Subjects such as media and cultural studies have focused on issues such as the changing nature of production and consumption of media content and the associated technologies of delivery.

46. In 2002, the UK computer games industry had sales of over '1 billion. Success in this industry is increasingly dependent upon the quality of content, and is now driven as much by skills and knowledge from the arts and the humanities as from computer science. In digital media industries, universities are developing research expertise, business 'outreach' and start-up incubator support. Such incubator units have been developed at the Universities of Northumbria, Teesside, Lincoln, and Huddersfield. Research Centres into digital technologies and their creative applications include the International Centre for Digital Content at John Moores University, the Digital Media Research Centre at the University of the West of England, the Virtual Reality Centre at the University of Teesside, and the National Centre for Computer Animation at the University of Bournemouth. The Royal College of Arts and the colleges of The London Institute are also running a wide range of research and development projects based around the creative application of new technologies.

47. Publishing Publishing is a major UK industry with revenues of '18,484 million, exports of '1,654 million, and an estimated 280,000 UK employees. Employment has grown significantly in recent years and, according to Publishing NTO Skills Foresight Research, is set to continue doing so, especially in book and magazine publishing. The number of new and revised book titles published in the UK rose by 17 per cent in the five years from 1996 to 2001. Forty-eight per cent of all new book titles in 2001 (academic and non-academic) were within the arts, humanities and social sciences. Figures from the Publishers' Association show that in 1999 (latest year available) home and export sales of academic and professional publications were worth '850 million.

48. The UK's universities have a high profile in academic and educational publishing ' many with their own presses. Oxford University Press is one of the largest publishers in the UK and is the largest academic press in the world. It publishes more than 4,500 new books a year, has a presence in over 50 countries and employs around 3,700 people worldwide. Similarly, Cambridge University Press publishes over 2,000 books and 150 journals a year, which are sold to some 200 countries. These two presses depend upon the direct input from researchers in the arts, humanities and social sciences. The same is true of many non-academic publishing houses. Contributing to the British Library's recently commissioned independent economic impact study, Lord Evans, Chairman of Faber and Faber, market leader in film and drama publishing, observes that 'Contemporary publishing depends upon the research and scholarship of the past... At Faber and Faber, we and our authors remain heavily dependent on the British Library's resources to provide well researched, authoritative new writing'.21

49. Television and Radio The UK TV industry has a strong international reputation. It impacts on the economy in many ways, having close links with the advertising industry and sharing with the arts and other creative industries a set of interrelating technical and creative skills. It has been estimated that its revenues are '12,136 million, with exports of '44 million. The sector is estimated to have grown by 50 per cent in total size between 1994/95 and 1999/2000. Subjects such as art, history, literature, music, cultural studies, the performing arts and archaeology figure very heavily in current programming by terrestrial broadcasters such as the BBC and Channel 4, as well as the satellite channels such as the History Channel and the Discovery Channel. Public interest in historical research in particular appears to be high and has been encouraged by well-established TV programmes such as Channel 4's Time Team, BBC's Meet the Ancestors and A History of Britain. Several developments, particularly those supported by the BBC, lead viewers or listeners from the relatively popular, high profile documentary programme to the network of printed and electronic resources which underpin the subject and encourage the interested public to invest time and money in 'finding out more about it'.

The North West Film Archive developed from the needs of social historians at Manchester Polytechnic (now Manchester Metropolitan University) for primary material for their research. The Archive ensures the long-term survival of moving images about the region and has more than 23,000 items dating back to the 1890s, making it the largest public film collection outside London. It is used by the academic community, the commercial and media sectors, as well as the public. In 1996'97, 82 television programmes broadcast material from the Archive.

50. Music The UK has an international reputation for the quality, depth and range of its music output, ranging from popular music to classical orchestral music. Its conservatoires in particular are renowned for the quality of training they offer to musicians. University music departments have seen a substantial increase in student numbers, a growth of 17 per cent in the period from 1996'67 to 1999'2000. The economic value of the music industry to the UK is substantial. In 2002, the National Music Council's Counting the Notes valued total domestic spending on music at just under '5 billion in 2000, resulting in a contribution to the economy of about '3.6 billion. Overseas earnings yielded a net surplus of '435 million. The report stated that young people between the ages of 12 and 20 spend more of their free time and more of their disposable income on music and music related activities than any other single activity.

The first UK TCS programme22 in the arts and humanities was established at the University of Wales, Bangor in collaboration with Sain Records Ltd. The Programme sought to preserve Welsh musical heritage for future generations, and won the prize for 'Best Application of Technology and Knowledge'. Sain Records held an archive of 5,000 musical items, extending as far back as the 1940s and 1950s, but stored on outdated analogue tapes with an estimated lifetime at most of 50 years, and showing signs of degradation. Sain's Managing Director, Mr Dafydd Iwan, said: ‘through TCS we've now converted this unusable legacy into a digital sound resource, fully accessible via a database catalogue with a production potential of 400 new CDs (or £2.6 million) over a period of 10-15 years. This TCS partnership has revolutionised my company's ability to extend its markets and deliver record-breaking levels of profitability’. The programme also opened the way for many other projects with companies in the region.

Much of the pioneering work in the Early Music sector was undertaken in higher education music departments. Editorial work, concert giving, the study of instruments, editorial work and instrument manufacture are all underpinned by research and teaching in the HE sector. Early music is recorded and broadcast widely in the UK and abroad. The 2003 Early Music Yearbook lists over 175 record companies whose output includes 'a significant proportion of recordings of early music'. In addition to the live or 'recorded product', the sector generates value through publishing, instrument manufacture (there are over 90 UK-based early music instrument manufacturers), and sponsorship.23

Heritage and Tourism

51. The DCMS Mapping Exercise on the creative industries (see paragraph 37) did not include the wider cultural sector of libraries, archives, museums and galleries, and the built heritage. These are areas to which the arts, humanities and social sciences make major contributions. Tourism is one of the largest industries in the UK, worth approximately '76 billion. Figures from the DCMS show that there were 2,056,200 employees in tourist-related industries in March 2002, representing 7 per cent of the national work force. Tourist related industries employ more workers than either construction or transport.

52. Many subjects within the arts, humanities and social sciences contribute directly to this sector, including, history, archaeology, arts management and administration. The promotion of Britain's culture and history feeds into the tourism and leisure industries. For example, the development of tours of Scottish film locations, the promotion of 'Catherine Cookson Country' or 'Thomas Hardy's Wessex', and other such tangible products of literary and mass culture activity, testify to the manner in which the creative and cultural industries utilise the arts for economic benefit. And the research such activities draw upon for their success often derives from the work done by academic researchers employed by diverse agencies, as well as universities. At national level, organisations such as the National Trusts for England and Wales, the National Trust for Scotland, English Heritage and its counterparts elsewhere in the UK play a vital role in expanding, sustaining and marketing the tourism product.

53. In the State of the Historic Environment Report 2002, it was reported that a 1996 survey into the reasons why overseas visitors came to the UK found that the single most important factor influencing their decision was, at 37 per cent, the UK's heritage. Other factors included: exploring historic towns or cities, 29 per cent; visiting museums, galleries and heritage centres, at 29 per cent; and watching the performing arts, at 18 per cent. In 1996, the British Tourist Authority Survey of Overseas Visitors found that 62 per cent of overseas visitors visited museums during their stay, and that a further 34 per cent visited galleries. Research undertaken by MORI found that 28 per cent of the UK public had visited a museum and/or gallery in the 12 months prior to the publication of the survey in 2001. It concluded that a higher proportion of the public visited museums and galleries than almost any other types of places and events to visit, including sports venues.

54. The number of visits to the six museums and galleries sponsored by the DCMS in London that had previously charged for admission increased from 4.3 million for the December-June period 2000-2001 to 7 million for the same period in 2001-2002, representing an increase of 62 per cent. The takings of these museums, which do charge for admission, represent only a tiny fraction of average total spend per visitor head, since successful museums and galleries have a key role to play in delivering secondary economic impacts in the retail, catering, tourism and hospitality sectors of the economy for example. In 2001, 163.1 million trips were made by UK residents within the UK generating revenues of £26 billion. In the same year, there were a total 22.8 million trips by overseas residents generating £11 billion in revenues.24

55. The heritage industry is also a powerful generator of wealth and prosperity. The report, The UK Cultural Sector, revealed that there were 68.3 million visits to historic properties in the UK in 1998, and that 35 per cent of overseas visitors visited these properties. Total revenues were '338 million. According to MORI research in 2001, 25 per cent of the UK public had visited an historic building/castle/palace in the 12 months prior to the survey. The National Trust's study into the impact of its work in the South West concluded that 21 million visitors spent '4.6 billion a year and created 225,000 jobs in the regional economy.

Other sectors

56. It is not easy to determine the size of some of the sectors to which the arts, humanities and social sciences make a contribution because they fall within the service sector, where the economic categories are rather 'broad brush' in comparison to those used for the production industries. Some of the clearer examples follow. It should, of course, be borne in mind that the sciences also make substantial contributions to some of the sectors shown below, most notably retail and healthcare.

57. Educational industries In 2001, turnover for this sector was '14.9 billion, which was 5.7 per cent higher than the previous year. The gross value added of educational industries was '5.3 billion. In recent years, there has been growing recognition of the role played by higher education as a wealth creator for the UK, not least by attracting overseas students to study in this country. The report on the impact of HEIs on the UK economy that was commissioned by Universities UK in 2002 said that ‘in many ways overseas students are analogous to long-stay tourists; while their per diem expenditure may not be as high as a short-stay tourist, they stay for a much longer time and their overall expenditure therefore represents a significant injection into the economy’. It produced the following estimates of the contribution of overseas students to the UK economy:

  • Total personal expenditure (off campus): £1.3 billion
  • Expenditure on UK goods and services: £933 million
  • Knock-on output generated throughout UK economy: £2 billion
  • Knock-on household income generated: £499 million
  • Knock-on employment generated: 22,157 full time equivalent jobs

HESA figures show that a high proportion of overseas students (58 per cent in 2001-2002) at UK universities study subjects in the arts, humanities and social sciences.

58. The arts and humanities also make a significant contribution to the international export business through the study and teaching of the English language. It has been estimated that the international demand for specialist courses of English as a second language will multiply sixfold by 2025, and that most of the increased demand will be satisfied by UK, US and Australian providers.

59. Legal Services The legal sector generates '1 billion of foreign earnings a year and provides jobs for about a quarter of a million people.25

60. Translation Services In the past decade there has been a huge expansion in the worldwide demand for translation services, and the computerised tools created to help meet these demands are increasingly powerful and sophisticated. A recent survey by industry analysts IDC estimates that the econtent localisation market worldwide is set to grow to 11.7 billion euro by 2005. The fastest growing sub-sector is centred on linguistic tools for translation and content management, which are projected to grow to 325.4 billion euro by 2005. The EU and US markets represent some 78 per cent of this total, with an expected EU turnover of 5.5 billion euro in 2001'2004.

61. Financial Services Financial services account for nearly 7 per cent of UK GDP, employing over 1 million people. London is the largest international financial centre in Europe. The arts, humanities and social sciences provide many of the personnel who work in this area. Research undertaken by prominent economic and financial research centres, such as the Institute for Fiscal Studies, SPRU at Sussex, BHPS at Essex and CRIC at Manchester have made a major impact on this sector.

62. Retail This sector accounts for one in nine of the UK's workforce, representing 2.5 million employees. Retail sales turnover was '200 billion in 1999, contributing about 11 per cent to the UK's GDP. Subjects such as business studies, economics, planning, occupational psychology, education and design all make direct contributions.

63. Healthcare This sector has a turnover in excess of '45.6 billion and employs over 3.3 million people making a '14.5 billion GVA (gross value added) contribution to the UK economy. Whilst it is primarily dependent upon scientific and medical advances, the contribution of subjects such as psychology, social work, ethics, planning and cultural therapy programmes should not be overlooked.

Understanding and developing the performance, productivity and innovative development of business

64. It has been argued that business is as big and as globally influential as government. The United Nations estimates that there are 60,000 multinational corporations; according to the Financial Times, 37 of the top economies of the world are corporations. Subjects in the arts, humanities and social sciences make a substantial contribution to understanding and developing business processes and strategies, and in so doing help to maximise corporate performance. The social sciences analyse the performance and productivity of businesses, and develop innovative practices to help businesses to respond effectively to the growing demands of the global economy and technological advancement. Educationalists promote understanding about issues related to the most effective ways of raising skill levels. Geographers and planners inform decisions about business location. An example of an individual researcher's contribution to understanding the processes involved in the formulation of strategies in organisations is that of Professor Andrew Pettigrew.

Professor Pettigrew has systematically examined the links between external factors, internal processes, and outcomes. He studied private and public sector organisations. He exploded the myth of the 'great leader' and demonstrated the role of teams. He then moved on to comparative case study work, asking why similar firms have different degrees of success. The answer turned on the interaction of five factors, with the embedding modes of behaviour over time as the central theme. He was one of the first researchers to ask why in a single organisation such as the NHS the pace and direction of change varies so much. He showed that time is needed for receptiveness to change to emerge, and that this trust is easily destroyed.

Helping to develop new products and build and maintain effective relationships

65. Subjects in the arts, humanities and social sciences also evaluate the ways in which the global economy will affect the economic future of the UK. The challenges posed by the global economy have meant that it can no longer be argued that economic success is dependent upon technological innovation alone. Professor Ken Peattie says: ‘Rather, it requires an eclectic mixture of disciplines and ideas in the process of developing new products. In cases where this process is informed by a mixture of technical excellence, sound economics, clear understanding of consumers and their psychology, behaviour and lifestyle, an appreciation of design aesthetics and branding, awareness of the commercial implications of the product ' the result is usually a success.’

66. In the changed circumstances in which business now operates, new responsibilities have to be assumed. Corporate responsibility has become a theme of all the leading transnational firms. The arts, humanities and social sciences across a number of disciplines including ethics, law, sociology, geography, business and management studies are particularly well placed to help business meet these challenges.

67. Recent crises, such as the collapse of Enron and other well-known US companies and problems in the UK pensions industry have meant that official regulatory bodies and companies have become increasingly aware of their need for a greater understanding of risk.

The Economic and Social Research Council (ESRC) Centre for the Analysis of Risk and Regulation (CARR) is a multidisciplinary centre at LSE, drawing upon the expertise of those working in law, sociology, political science, accounting, economics, geography and environment and operational research. It pursues academic research into risk management and regulation and provides partners (including BP; PwC; Deutsche Bank and Aon) with a stream of knowledge transfer on operational, environmental and compliance risk management in both the public and private sector. Staff at the Centre engage actively with policy makers and practitioners both in the UK and abroad. In the UK, staff have advised policy makers in the Cabinet Office, DTI, Environment Agency, Health and Safety Executive and Treasury. They have also engaged with the Committee for Standards of Public Life, National Audit Office, Commission for Health Improvement, Strategic Rail Authority, Railtrack and so on. Engagements abroad include government organisations and policy-makers in Canada, Italy, Japan and Jordan and the World Bank.

68. A company's ability to build and maintain good relationships with customers often determines its success. This ability is closely related to the social, ethical and psychological issues that are informed by the arts, humanities and social sciences. The findings of a recent MORI poll showed that four in five people surveyed did not believe that directors of large companies could be trusted to tell the truth. Companies themselves are increasingly concerned about such intangibles and the way in which environmental and social credibility could impact on them in the future. A recent survey undertaken by the Judge Institute of Management of the Chief Executives from the Global Fortune 500 found that in spite of the recent financial scandals, the CEOs who responded believed that in the near future social credibility would be as important as financial credibility, and that environmental credibility would only be marginally less important.26 For companies seeking to generate faith in themselves and their brands and products, this is not going to be accomplished by further technical and scientific innovations.

Equipping employers and employees with key skills

69. One major economic contribution made by the arts, humanities and social sciences is the education of graduates with the skills necessary to sustain a knowledge driven economy.

70. Findings from surveys of the first destinations of arts, humanities and social science graduates, together with findings from the Labour Force Survey on the longer-term career paths of graduates, show that a significant proportion of graduates in a wide range of subjects within the arts, humanities and social sciences enter careers in management. The skills and qualities that employers seek from these subjects are sometimes discipline-related but often draw on the broader critical, creative and personal aptitudes and training that run through the arts, humanities and social science spectrum.

71. The importance of business education to the health of the economy was highlighted in the report, Raising our Game, by the Council for Excellence in Management and Leadership. It found that there was a large market for management education. It is understood that there are roughly 4 million managerial jobs in the UK, and that the UK needs 140,000 new managers each year. Business and management studies is an important entry route into these careers, and is extremely popular with students. UCAS figures showed that it was the most popular subject at degree level for full-time students starting in autumn 2001, with new enrolments up nearly 7 per cent on the previous year and more than 20 per cent higher than the next most popular subject. MBA awards have almost trebled since 1990, and 1 in 5 taught postgraduate students study Business and Management. It has been reported that UK Business Schools earn well over '500 million a year in teaching students from overseas. Furthermore, universities are actively involving business in the development of undergraduate and postgraduate programmes related to their sectors.

In 1997, the Ford Motor Company and the Business School at Loughborough University launched what was believed to be the world's first BSc in Retail Automotive Management. This was soon followed by an MSc programme and Diploma and Certificate courses. The aim of the partnership was to improve management within the dealership network of the Ford Motor Company. The curriculum is underpinned by university-led research that also receives funding from Ford. The success of the partnership has led to courses being offered to Volvo, Jaguar and Mazda with additional research being undertaken in conjunction with Vauxhall, Peugeot, Toyota and many of the major dealership groups.

72. A first-hand knowledge of foreign languages and cultures facilitates wealth creation by encouraging international trade. Industry relies heavily on languages graduates. These needs are likely to intensify in the immediate short term. The Institute of Export's annual survey recently sought information on developing markets and the number of UK companies trying to increase activity in these markets. The results were as follows: Latin America (76 per cent), the Middle East (68 per cent), and the Far East (67 per cent). In addition, it is anticipated that the growth in the multilingual population in the UK will increase the demand for linguists to work in the public services such as Health, Law and Local Government.27 The economic importance of the tourist sector is expected to grow significantly.

73. There is an evident crisis in the recruitment of students and academic staff in languages departments as a result of the decline in language teaching in secondary schools, and the financial pressures under which the universities are working. A number of university language departments have closed in recent years (see also paragraphs 92-94).

74. Research by the DTI has shown that for every 1 per cent increase in export activity, £2 billion is added to the UK economy. The larger businesses surveyed said that 20 per cent of export orders were lost due to a lack of linguistic competence. These results also appear to apply to SMEs. Since May 2000, the Languages NTO has undertaken audits of language skills provision and skills use and demand by employers for five of the English Regional Development Agencies, and also in Wales. It found that the results were remarkably similar across the regions:

  • Between 16 per cent and 22 per cent of respondents were aware that they had lost, or failed to secure, business as a direct result of a lack of language skills.
  • Between 45 and 54 per cent recognised language as an inhibiting factor in conducting overseas trade.
  • There was a growing recognition that inter-cultural awareness can be as important as linguistic skill in a world where, for the English-speaking business, it may not be possible to cover all the possible language permutations. Approximately 16 per cent of respondents saw cultural differences as inhibiting business.

FOOTNOTES

  1. Professor Ken Peattie, Director of the ESRC Research Centre for Business Relationships, Accountability, Sustainability and Society (BRASS) at Cardiff University. [return to text]
  2. Trade Partners UK, 2003. [return to text]
  3. Measuring our Value, forthcoming, quotation from Website summary. [return to text]
  4. The TCS programme (formerly known as the Teaching Company Scheme) is a UK Government Scheme through which long-term partnerships are formed between universities and companies. Based on an innovative project which is central to the strategic development of the company partner, a TCS Programme provides funding to introduce a high calibre graduate into the company for 2 or 3 years with joint university/industry supervision. [return to text]
  5. Drawn from a case study provided by Nick Wilson, Lecturer in Small Business and Entrepreneurship, Kingston University. [return to text]
  6. Figures from Star UK which collects data for the UK Tourism Industry. [return to text]
  7. Figures from the Law Society. [return to text]
  8. 34 per cent of those surveyed responded (the revenues of the companies they represented amounted to almost US$5 trillion). For further information, see Forecasting the Impact of Sustainability Issues on the Reputation of Large Multinational Corporations, Judge Institute of Management, 2003. [return to text]
  9. Languages and Employability - A Question of Careers, report presented by Professor T J Connell of City University, London, June 2003. [return to text]