National Centre for Universities and Business (NCUB)

State of the Relationship Report 2025

The annual barometer of collaboration between universities and industry draws on 25 indicators across research, innovation and skills. It analyses long-term trends, regional performance, and the evolving economic and policy landscape. This year, it includes NCUB’s first Global Benchmarking Framework, positioning UK performance alongside international peers. 

The full report can be found at: https://www.ncub.co.uk/wp-content/uploads/2025/12/6574_NCUB_State_of_the_Relationship_2025_f.pdf

At-a-glance:

• 81,499 interactions between universities and businesses were recorded in 2023/24, an increase of 6.4 per cent from the year before. However, a 2.1 per cent real-terms decline in total income from business collaboration (excluding CPD), returned overall business collaboration income to £1.34bn (p14)
   
• There was an 8.7 per cent rise in the number of university interactions with small-and-medium-sized enterprises (SMEs), reaching 56,755 engagements. A 1.3 per cent increase in the number of large business and university interactions brought total engagements with large firms to 24,744 - still below 2016/17 peak levels. Average value per interaction fell 5.8 per cent from £14.7k to £13.8k, indicating a shift towards lower-cost engagements (p14)
   
• Domestic industry funding accounted for 6.1 per cent of HE R&D income, broadly maintaining five-year average performance. However, in real terms, the value of funding from UK-based industry fell by 3.7 per cent between 2022/23 and 2023/24. Overseas industry funding held steady at 4.6 per cent of total income, but the underlying value declined by 3.6 per cent, extending a long-term trend from historical highs
   
• Licensing activity fell sharply: licences granted were down 25.9 per cent to 16,641, and income fell by 5.5 per cent to £212 million. Software licensing was particularly affected, declining by more than a third, reflecting corporate preference for spinout acquisition over direct licensing (p14)
   
• Spinout performance reached record levels, with 1,687 active spinouts (+7.3 per cent), and median investment surging to £10 million (p14)
   
• Graduate employment remains resilient at 80.1 per cent (undergraduates) and 88.8 per cent (postgraduates) despite a cooling labour market (p28)
   
• Internship participation declined with falls in undergraduate (0.4 per cent) and postgraduate (0.1 per cent) placements, which means they remain below pre-Covid levels (0.5 per cent and 0.2 per cent). Sandwich course participation was stable at 23.6 per cent of undergraduate enrolments (p28)
   
• Degree apprenticeships expanded rapidly: Level 6 and 7 starts increased 7.1 per cent to 50,110 (p28)
   
• The report’s new global benchmarking framework, which considers research partnerships, skills outcomes and investment attraction and capacity, suggests that the UK ranks in the middle of the 10-country comparator group— but seems to be declining rather than rising (p42)

Implications for governance:

The report’s central message is that collaboration between universities and businesses remains one of the UK’s greatest strengths, but is not accelerating at pace.

Activity levels are strong, with total interactions up, SME engagement recovering, and spinouts showing record resilience and investment. However, the underlying value of collaboration is stagnating: business collaboration income has flattened in real terms, licensing has fallen again, and large-firm partnerships remain well below their pre-2017 peaks.

UK universities continue to excel in generating knowledge and new ventures, though the evidence suggests that fewer of these discoveries are being translated into large-scale industrial innovation.

According to the report, this second consecutive decline in business R&D expenditure, combined with falling international industry income and innovation levels, indicates pressures on the demand side of collaboration rather than its supply.

Tight budgets across both universities and firms constrain risk-taking and capacity. The withdrawal of European structural funds has left regional gaps in collaboration infrastructure, compliance and security costs add friction to international partnerships, and venture capital contraction has limited finance for scale-ups and spinouts—often the most research active business partners.

In these headwinds, universities need to ensure they can adapt rapidly and develop initiatives that connect research, skills, and innovation more directly with business need.

Governors will know that universities are striving to diversify their partnerships and experiment with new models of engagement to meet the needs of firms that are increasingly selective and outcome driven in their collaborations.

Boards will want to ensure that the necessary people, procedures and processes are in place to ensure their institutions are central players in their regional ecosystems. No doubt they will wish to bring the knowledge and experience of their members to bear on the associated challenges. 

The 2025 Spending Review and budget reinforce this regional focus, allocating £500 million to Local Innovation Partnerships and £500 million to an R&D Missions Accelerator, alongside devolved funding for nations and combined authorities. Governors may want to consider their institution’s strengths and weaknesses in place-based collaboration going forward.

Data in the report shows graduates are facing tough labour market conditions. Unemployment is rising, vacancies are falling, and higher employment costs are constraining recruitment and training.

Many universities have expanded their degree apprenticeships provision, which is reflected in the data, but undergraduate and postgraduate internships are below pre-Covid levels. In a cooling labour market, universities’ graduate employability measures and initiatives become even more important.

Government investment is being redirected towards further education and skills, as laid out in the Post-16 Education and Skills White Paper. Boards will want to ensure their institutions can take advantage of any opportunities that may arise here.

Dr Joe Marshall, chief executive of NCUB, described the landscape as one where universities are becoming “less able to secure the industry pull, co-investment and translational capacity needed for innovation to scale.”

“The UK’s spinout ecosystem is stronger than ever, and the numbers of interactions between universities and businesses are rising,” he said. “But beneath these positive signs lies a more fragile picture. Capacity on both sides is under strain with the total value reducing, and the foundations that make collaboration possible are facing increasing pressure.”

The risk is that the sector will continue to lose ground while internationally, the connections between research, skills and industry are increasingly strengthened.