"Universities have a certain way of doing things, a structure, a set of priorities, as all organisations do, but one which is by and large antithetical to regional economic development," says Professor Mike Campbell, of Leeds Metropolitan University, who is the report's author. "There is good practice at some institutions, but it's not very widespread and not nearly systematic enough."
A major push is needed to encourage universities to add value to the local economies, according to Richard Brown, the chief executive of the Council for Higher Education and Industry which is publishing the report. Universities will find there is a big market on their doorsteps - providing continuing professional development courses for adults who want to update their skills. "If higher education can get to grips with that market and look at it through customer eyes rather than saying `Here are products, take these products as they are', then I think that there are tremendous opportunities."
In other countries, for example the US, things are done differently. Because of the size of the country and the values on which the American nation is based, universities - particularly local state universities - are seen as key engines of local economies. They are intimately involved with local business and industry, and the barriers between the two have not existed as they do in the United Kingdom.
The report, which includes case studies of six universities where progress is being made, is intended to stimulate British higher education to think about the issue. As it is, universities may say the right things, but in reality academics get on with what they are rewarded for doing - jetting about the world giving papers which will earn them top 5* ratings - and their institutions more cash - in the research assessment exercise. Regional economic development is not really part of their long-term strategy, and they are not doing much about changing this state of affairs.
"The research assessment exercise (RAE) is seen as the one single greatest barrier, in the sense that the higher education institution's reputation, its ability to attract high-quality students and its `discretionary' funds are all usually perceived to be a function of RAE ratings," remarks the report. "This is increasingly true, moreover, of the `new' universities. Academics' time which is available outside teaching is focused on producing high-quality articles for publication in the journals."
However, things are changing. The Labour Government has established eight regional development agencies around the country, and universities are represented on all but one of these. Higher education has an opportunity to get stuck in.
"It's obvious from looking at successful economies that universities can and should be central to the economic regeneration and the increasing prosperity of their regions," says Martin Harris, Manchester's Vice-chancellor and the chairman of the Committee of Vice Chancellors and Principals.
There is no reason why a university should not have a national and an international reputation - just like MIT and Stanford in the US - and also serve their local communities, as these two American powerhouses do, adds Harris.
Ministers are trying to persuade universities to change their ways by establishing a fund called Higher Education Reach Out to Business and the Community or Herobic for short. Money is being channelled through the higher education funding council - starting with pounds 11 million in the next academic year, rising to pounds 21 million the year after and pounds 22 million in 2001-02.
Although the money is welcome, the universities regard it as peanuts, particularly when shared out between them and when compared with the very large sums that are received for teaching and research. "We have to be very clear that, if the government wants us to engage with local communities, then either they accept that we will use teaching and research funds for that purpose and do less teaching and research or they have to fund us accordingly," says Professor Roderick Floud, the provost of London Guildhall University.
One of the ministers involved in the Herobic initiative, Richard Caborn, who is in charge of regions, regeneration and planning, will be speaking at a conference to discuss the subject on 15 June, the day the report is due to be released. The conference is organised by the Committee of Vice Chancellors and Principals and sponsored by The Independent.
Another speaker is Professor Christine King, the Vice-chancellor of Staffordshire University, who is emphatic that universities cannot hold themselves apart from business any longer. "When push comes to shove, we're about preparing graduates for life. You won't increase economic competitiveness unless people have the skills to manage change," she says. "In the West Midlands we're going to have to get very IT smart and flexible. We've got to have collaborative work on skills."
"Universities have got links with business and industry. It's a question of tying those into the regions. If we don't take this opportunity, then it will be our loss."
According to David Aukland, the professor of business creation at Manchester University, Manchester is beginning to build a culture of enterprise. That needs to be replicated around the country. "Universities have a great opportunity and they should grasp it," he says. And they should do so in a uniquely British way - one that fits into our establishments and our order of things, not one that apes America.
"At the moment we're stifling students' entrepreneurial activity. What we should do is encourage it against a background of knowledge."
The conference "Stimulating Regional Competitiveness in the UK" is on 15 June at the Cumberland Hotel, London W1. Speakers include Diana Warwick, CVCP's chief executive, David Watson, the director of the University of Brighton, and Vincent Watts, the Vice-chancellor of the University of East Anglia. For more details ring 0171 240 9393.
MANCHESTER: BUSINESS IS BLOOMING
A GREAT traditional civic university, Manchester has a reputation for high-quality research and a sparkling night-life. Now it is making great efforts to connect with the regional economy. To this end, it has set up the North West Enterprise Network, linking all eight universities in the North West to disseminate the idea of incubators where people are given space to "be creative in science", as David Aukland, professor of business creation, puts it. "Just as someone who is interested in physics and chemistry can come here and learn about those subjects and do research in them, so too they should be able to come here and set up an enterprise at the forefront of knowledge in physics. These enterprises are driven by creativity rather than by business management."
Manchester's incubator unit is called Campus Ventures. To date, it has nurtured 38 companies into being, all in the biological sciences and engineering areas. They include two that are designing new algae blooms, beneficial to humans and fish. Another has invented a "Rocking Robin", an automatic baby soother. Each employs an average of four people. Those creating the companies stay in the incubator, using university equipment and knowledge for up to three years, moving out to the university's own or another science park when they're ready to face the real world. Only one company has failed after leaving the incubator. In addition, a new biosciences incubator has just been built at a cost of pounds 18m. It's hoped this will help to create successful companies in the biosciences field.
The long-term aim is to set up a pounds 60m Venture Capital fund at the university for the creation of small high-technology businesses.
One of the problems highlighted in the report is the difficulty of networking with other universities for the good of the region when they have to compete for students and research money. "A university on its own can't influence the economics of a region," Aukland says. "They have to collaborate. With the Government's new entrepreneurial agenda comes the opportunity to set out on a co-operative track from the outset. The only way to link a university into the region is through enterprise-type initiatives."
LIVERPOOL: FOCUSING ON THE FUTURE
AS A former polytechnic, Liverpool John Moores has always seen itself as intimately involved with Merseyside. Its mission has been to attract a wider section of the population into higher education, but increasingly it is taking higher education into the community, boosting the local economy with its research and know-how. Wealth creation is not something universities have traditionally done, says Ed Naylor, the university's regional officer. "But it's very much our agenda now."
With funding from Europe and the Department of Trade and Industry, the university is planning to launch a hothouse project or incubation unit to help people with business ideas to set up small companies. As the businesses grow the companies set up on their own. "Students want to become their own bosses now," says Naylor.
To help undergraduates get jobs and understand the world of business and industry, Liverpool John Moores has set up a "Business Bridge" initiative, whereby students spend periods of time on placements with local firms. The hope is that local students will stay on in the region to work after graduation.
A spin-off company has been launched, Telescope Technologies Ltd, with financial help from Europe and the Particle Physics and Astronomy Research Council. The aim is to bring the manufacture of highly sophisticated telescopes to the North-west by cashing in on world-class research expertise in the university's astro-physics department. The telescopes will be manufactured in the university's science park.
One of the problems is that the university has had to underwrite the cost of the enterprise, something it would prefer not to do because it is risky. "Venture capital won't lend what are effectively quite small sums," says Naylor. "They won't look at anything less than pounds 1m because it's not worth their while. One thing that would help us in developing such projects would be the availability of more venture capital."
Liverpool John Moores is praised in the report for having a dedicated regional office. And it has created a senior administrative post, taken by Professor Neil Barlow, who is responsible for enterprise.