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Flying south for the jobs
Local Government Chronicle – 31 January 2008

Graduates boost economies, but many university towns and cities lose them to London and the south-east, Mark Smulian reports

It might be hard to imagine that scruffy students falling out of a city centre pub in a drunken stupor could one day be key to a vibrant local economy, let alone that a council may wish to encourage them to stay.

But for university towns and cities, students who appear economic mainstays only of publicans could one day be the same people who will drive the knowledge economy that most councils want to attract.

A steady flow of well-educated people helps any local economy to thrive. As the government's State of the cities report found last year when it surveyed 56 towns and cities, all the worst economic performers had increased the proportion of graduates in their workforces by less than the English average. "Attracting and retaining graduates matters," it concludes.

"Differences in human capital are critical and lead to differences in invention, innovation and ultimately productivity."

Clearly, having several thousand fresh graduates on its patch each summer is an advantage for any council, but many will head either to the lure of well-paid jobs in London, or will return to wherever they came from. Persuading them to stay where they studied is not wholly within any local authority's power, except in the sense that they may employ some graduate trainees.

However, councils can work with local businesses, regional development agencies (RDAs) and universities to make sure that graduates are aware of local opportunities, and use their place-shaping powers to make the local environment attractive to them.

Adequate cheap housing, good cultural facilities and a thriving nightlife might not be the deciding factors for graduates, but they help.

Graduate retention is not just a matter of winning students' hearts and minds. It also means convincing employers, particular those in small and medium-sized enterprises,that graduates are suitable, and will not either rapidly leave or try to take over their business.

Charlie Ball, chief labour market analyst at the Higher Education Careers Service Unit, says local authorities are important to graduates as employers, as are public bodies in general.

"Outside London, the largest employers of graduates are the public sector and the NHS," he says. "There is clear evidence that the more skilled your workforce is, the more prosperous your area becomes."

Mr Ball says councils can improve both the economic attractiveness of their area to graduates and its liveability.

"They can encourage small businesses, which are very important for new graduates," he says. "People think graduates all go to work in large businesses, but about half do not."

This support might involve direct employment of graduate trainees or help for small businesses that university leavers want to set up, in particular in the creative arts, a destination for many self-employed graduates. Councils that get the right combination of jobs, homes and amenities to tempt graduates will then find that their presence attracts their successors, so that graduate retention eventually becomes an objective that largely looks after itself.

"Attracting them means decent housing and amenities, but do not underestimate how serious young people are about careers. They may be attracted to places with good entertainment, but that will not be the main factor," Mr Ball says.

Southampton hosts two universities, which together have some 30,000 students. The city council is working with both in the Graduate Jobs Southampton partnership, backed by RDA funds, to try to retain graduates.

Economic development and tourism manager Jeff Walters says there are two main motivations. "The first reason was a desire to improve the local economy, which will be based on expansion in the knowledge economy where the flow of graduates is vital to both technical businesses and to employment in the arts," he says.

"The second is that our qualifications level among the general population is not that great and we can't turn that round in the short term, so attracting graduates is a way to bridge that gap until our working with schools and adult skills pays off."

One important aspect is working with small and medium-sized businesses to "overcome some of their scepticism about employing graduates and get them to see them as a useful source of recruits," Mr Walters says.

"Some businesses believe graduates will be difficult to employ, or will not want to stay. We've encouraged those businesses to register their vacancies with the partnership and then graduates can register their CVs and we match them."

Southampton also had a project, until European Social Fund support ran out, that helped graduates set up businesses by providing marketing and product development support. The council ran this, but since officers were not qualified to make commercial assessments of graduates' proposals, a panel of experts from business bodies was formed to carry out evaluations.

House prices in Southampton are low by southern England standards and have proved an attraction even to graduates, some of whom use the city as a base to commute to the Thames Valley. The council is also improving the city's night-time amenities with the development of a cultural quarter in the Northern Above Bar area, where it is offering support to galleries that wish to relocate. It is trying to attract a wider range of bars, clubs and restaurants "to cater to those who are a bit older than students," Mr Walters says.

Students and recent graduates have led Sheffield City Council's city centre renaissance, transforming it from a commercial district with a few hundred permanent residents into a thriving community, with many homes in flats carved out of historic industrial buildings.

City development manager Simon Ogden says: "Students make very good pioneers for inner-city living and the city centre now has a range of housing. We've worked with landlords so that if a group of students share a flat and want to stay on after graduation they can. The distinction is breaking down between young professionals and students.

"Having a wide range of prices and spaces is important in keeping these people and we are addressing it."

To improve its attractiveness to young professionals, and indeed others, the council actively supported publicans who wanted to open their premises for longer than normal even before licensing hours were relaxed in 2005.

"There is certainly evidence that graduates do stay on. It's difficult to track the exact effect on the local economy, some do commute elsewhere, but they are certainly an asset," Mr Ogden says.

Having many students in an area can create problems - not just in pubs, but also the effect of whole suburbs being taken over by student housing.

But these same students might, though, hold the key to future local prosperity if they feel comfortable and welcome in the place where they studied.


There is no university within the borders of Ashfield DC, a former coalfield area in Nottinghamshire. Nor has there traditionally been much employment for graduates, and so those who left the area to study rarely returned.

The council decided to tackle this by helping students to find summer vacation jobs with local employers that might turn into permanent ones once they had gained their degrees.

Ella O'Connor, senior economic regeneration officer, says: "The area was exporting graduates. People who went into higher education left and did not come back because the perception was that the area was somewhere to get out of.That might have been the case 15 years ago, but now there are opportunities for them."

Ashfield's graduate retention project offers eight-week, paid placements for which students receive 200 a week, contributed by the council and Aimhigher Nottinghamshire, a government body that encourages local participation in higher education.

Last year 21 students took part, more than double the previous year, and 15 employers were involved. "We try to match students' skills and the subject studied to employers," Ms O'Connor says.

"It is also about educating employers, who perhaps did not go to university themselves and do not know graduates' capabilities and would not think of employing them. Some are just bowled over when their graduate builds them a website within a few weeks, for example."

Ashfield's programme is only two years old, and so no participant has yet graduated. It hopes to gain support from East Midlands Development Agency to make the programme permanent.

Ian McCracken is project director for Hot Prospects, which is supported by the development agency, and works with councils and other agencies to place graduates in the region.

"We show employers how to source graduates and how they can bring stability and growth to their businesses," he says.

"This region has got fantastic universities, but 71% of their graduates are lost to the region, so the potential is there."