Leader: Feel the power of universities' financial punch

Another spending review, another report underlining the importance of universities to the economy. They would say that, wouldn't they? Up to a point, of course they would, but the analysis published this week is more than propaganda. It produces hard facts to demonstrate that higher education is not just an expensive social project, it is also one of Britain's most productive industries.

The Strathclyde economists' estimates that universities and colleges generate £35 billion a year and are responsible for more than 500,000 jobs seem almost too large to be meaningful. But the fact that, without making extravagant claims for the future achievements of its researchers and graduates, higher education outperforms advertising or air transport and ranks with legal services puts its contribution in context.

As far back as the Robbins report, argument has raged about higher education's long-term impact on the economy. Neither the expansion of the 1960s nor the equally dramatic growth in the early 1990s produced obvious payoffs. But the success of the fabled knowledge economy must depend to a large extent on the fruits of universities and colleges. The Universities UK report focuses not on such imponderables, but rather on the sheer size of the current enterprise, comparing the large institutions to a medium-sized town. Even small universities are often the largest employer in their area, as well as an engine of creativity that can help to attract valuable business from around the world.

With the government's spending review imminent, the chancellor is plainly the prime target of the report, but its message must be spread more widely. The findings would make valuable reading for firms that fail to see the benefit of investing in projects such as Oxford's new chemical research laboratory, and they might surprise many academics. At a time of low confidence in academia, it does no harm to be reminded of the sector's value to local and national economies.