The economic and social impact of The Open University

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Practice area: Education and Labour Markets
Client: The Open University
Published: 6 November, 2020
Keywords: economics of education education higher education impact assessment labour market economics quantitative analysis UK

London Economics were commissioned to analyse the economic and social impact of The Open University across the United Kingdom in 2018-19. To capture the economic impact of the University, we generated estimates of the economic benefits associated with the University’s formal teaching and learning activity associated with the 2018-19 cohort of UK-domiciled Open University students. We also estimated the economic impact associated with a wide range of informal learning activity delivered by The Open University via online channels including OpenLearn, FutureLearn, and the OU YouTube channel. In addition, we assessed the impact of The Open University’s research activities, the impact of educational exports generated by the University’s overseas students, as well as the direct, indirect and induced impact associated with the University’s physical and digital footprint. Finally, on top of these purely economic impacts, there are a multitude of non-quantifiable societal impacts associated with the University’s activities generated at home and abroad, which were identified through a survey of Open University alumni.

The total economic impact associated with The Open University’s activities in 2018-19 across the UK economy stood at £2,771 million.

In terms of the components of this aggregate economic impact, the value of the University’s formal teaching and learning activities stood at approximately £1,673 million (60% of total), while the University’s informal teaching and learning activities accounted for £24 million (1%). In terms of research activity, the analysis identified an economic contribution to the UK economy of approximately £72 million (3%). The economic contribution associated with the direct, indirect and induced impact associated with the University’s expenditures throughout the UK economy was estimated at £983 million (36%). The remaining 1% of identified economic impact (£18 million) was associated with the University’s contribution to educational exports.

Compared to the University’s total operational costs of approximately £450 million in 2018-19, the total economic contribution of The Open University’s activities to the UK in the 2018-19 academic year was estimated to be £2,771 million, which corresponds to a benefit to cost ratio of 6.2:1. This is considerably higher than the ratios associated with many other higher education institutions (e.g. the average benefit-to-cost ratio among Russell Group institutions stands at only approximately 5.5:1).

The report is available on the OU website or by clicking the download option above.