How can higher education nurture the green shoots of economic recovery?

Lucy Hodges talks to a man with answers

The idea of universities helping companies in a recession may seem far fetched. What can the ivory towers offer to horny-handed men of toil? But universities say they can give a lot to business and industry, and Universities UK has speedily put out a booklet, Standing Together, to prove it, including many examples of universities helping small companies.

Politicians believe that universities can do their bit. Towards the end of last year, a group of vice chancellors was called in to see John Denham, the Universities Secretary, to talk about how higher education could help the country get out of the recession as quickly as possible. In that group was Professor Tim Wilson, vice chancellor of the University of Hertfordshire, which puts industry at the core of its work.

The VC, a mathematician, told Denham that universities should not be duplicating the work of Lord Mandelson's Department for Business, Enterprise and Regulatory Reform, but that there were a number of things they could do quite quickly.

One item on the list was innovation vouchers, which have been up and running in the West Midlands for some time. The idea is to give small companies a voucher of £1,000 which they can "spend" at a university to get advice on issues such as innovation and product design. "What a fantastic way not only to get universities to support small businesses, but also to get small business expertise into universities," says Wilson.

The Hertfordshire VC would also like to see training vouchers introduced for people who are made redundant. They would be able to "spend" these on short or long courses at universities, which would enable them to retrain for another line of work or to improve their skills.

In addition, universities can give space to start-up companies and hold their hands while they innovate and grow. Hertfordshire gives space to "spin-in" companies that want to relocate close to the university – and universities could do a lot more of this, he believes. "The way out of recession is innovation," he says.

None of these ideas takes much money, he maintains. "This is one of the biggest opportunities the university sector has ever had to make a real impact on economic regeneration."

This kind of talk shows the extent to which universities have moved from being fringe players to being at the heart of economic development. Wilson is deputy chair of the CBI's science and innovation committee and every speaker at a recent CBI conference, he says, spoke about the importance of universities. A decade ago, that would not have happened.

Wilson's involvement with economic development goes back almost two decades. In 1991, when Hertfordshire's boss arrived at its Hatfield headquarters, it was a one-company town, dominated by British Aerospace.

"I'd been there three months and the company closed," he says. "Unemployment went to 17.5 per cent overnight and economic deprivation set in very quickly. We started working with the local authority and developers to regenerate Hatfield. Now that same site has 15,000 knowledge-based workers. It's the European headquarters of T-Mobile, Computacenter, Ocado and the Japanese pharmaceutical company Eisai."

Wilson emphasises that these companies have created graduate-level jobs and that Hatfield is now no longer a deprived place. "It's a hub of economic activity," he says. "That's what universities can do – we've just got to have the courage to do it."

Hertfordshire, which describes itself as an ambitious and entrepreneurial university, has been so keen to get close to firms that it bought a company called Exemplas, which gives advice to small businesses. The company employs around 150 people and is now worth £22m.

"I am a business-facing university and I need to get as many contacts in business as I can," he says. "I can't afford to buy a direct sales force. The idea that a university can put up a web page and expect businesses to flock to it is erroneous. I want to get penetration into small and medium-sized companies. How can I do that?"

That was Wilson's thinking behind the acquisition of Exemplas. The company had 80 people visiting the offices of other firms every day, doling out help and support. "That meant that those 80 people all of a sudden had higher education products and services in their briefcases," says Wilson. "So, buying the company gave us more leverage, more access to markets. It's doing very well now, thank you."

Exemplas holds the contract for the Government's Business Link service for the East of England, as well as for Yorkshire and Humberside, so the University of Hertfordshire's reach extends far and wide. Examplas offers all kinds of help to companies, often for free – whether developing new products and designs, consultancy to help with costs or competition, or staff training.

According to the Universities UK pamphlet, other universities are also actively engaged on economic development. Brighton University, for example, offers practical advice for local firms through monthly sessions aimed at their sectors. ProfitNet brings together 500 companies across Sussex and has helped to create supply chains, develop new processes and explore joint venture opportunities.

Warwick University has an access to finance programme to help firms raise start-up money and individual students can do magical things for companies when on placements with them.

One student in particular, Andrew McIntosh, stands out. A management student from York University, he established a PR campaign for a company while he was on a summer work experience placement with it.

This had a big effect on the company's bottom line: the firm now has two new customers worth £34,000 a year and has the opportunity for a £150,000 contract with the London Olympic Committee.