Universities are vital to the UK¡¯s future. They contribute new ideas and skilled people that drive the innovation we need to meet the challenges and realise the opportunities of tomorrow¡¯s society. But we should not take for granted that they are sustainable organisations. They need care and attention if they are to continue as flagships for the knowledge-driven economic growth that is part of our current national vision.

The critical issue is that the way we finance these institutions is complex. Their global profile, research prowess, educational capacity and ability to deliver impact are intimately entwined. Unpick one part and you might unravel the whole fabric.

UK universities are global leaders, collaborating with and attracting academics and students from many nations. It is this diversity of viewpoints that enables ideas to be refined quickly and effectively, sorting those that have promise from those that don¡¯t. And in delivering this mission effectively, universities operate in a ¡°market¡± that rewards those who can deliver the best teaching and the best research. This is not a new idea ¨C Adam Smith advocated it in The?Wealth of?Nations ¨C and it means we compete for public funds by attracting fee-paying students, winning research grants and ranking highly in assessments of research outcomes, which feeds into the block grant.

What¡¯s less well known, though, is that none of these sources of public funding even remotely cover the costs of the activities they support. For research, that¡¯s been a?deliberate government policy for some time. The argument is that research organisations should contribute something to supplement what the public purse supplies. For education, the argument is less explicit, but the fact is that the flat UK tuition fees have not kept up with increasing costs, and inflation will exacerbate that.

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This position is not wholly unreasonable from a Treasury perspective. Calls for funds are numerous, so why not leverage public money in this way, awarding it to those institutions that can find ways to contribute financially to the public benefits of research and education?

Universities in the UK have stepped up to this challenge. Because many have such a great reputation for innovative, excellent research, they have a high international profile and are able, consequently, to attract overseas students. This generates both the talent pool and the funding leverage that enables research at world-leading levels and the provision of?labs, facilities and courses that benefit UK students.

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Overseas students bring to the UK not only the financial benefit (which amounts to more than ?26?billion per?year of net economic activity ¨C comparable to the export value of the entire UK automobile industry). They also bring things we desperately need if we are to innovate and trade with the world. They bring different vitality and perspectives, which broaden and improve teaching and research. They contribute to the UK economy by populating high-tech industries. And they build lasting links to other countries. There are many countries in the world that will welcome these talented individuals with open arms if we?don¡¯t.

If we are to continue to deliver ideas and skills for the UK, we need to ensure that research support is realistic, that the cost of educating UK students is properly met, and that overseas students remain welcome here. These factors enable UK universities to make their contribution by changing how we think about the world and how we improve it, by anchoring innovation districts that deliver economic growth, by actively supporting social mobility, and by educating tomorrow¡¯s leaders.

Our government leaders have spoken of investing in innovation and liberating talent, to boost opportunity and make the UK a ¡°science superpower¡±. None of this will happen by chance. It needs coordinated action in both rhetoric and regulation. Our research agencies need to be properly funded so that research capacity and capability is not further eroded. Innovation needs to be supported so that companies in their infancy can grow and draw on the talent pool from universities without undue constraints. The cost of educating UK students should be recognised, across all disciplines, and fees should account for inflation. Students wanting to come to the UK to study ¨C and then perhaps to contribute to industry ¨C should be able to do so easily, through appropriate visa programmes. Joined-up thinking across government is critical to making this happen ¨C we can¡¯t effectively maintain our pre-eminence in the face of conflicting policies from different departmental silos.

UK universities understand competition. It is a vital part of developing knowledge, and it is what many of us find exciting. We¡¯re ready and willing to help our collective national ambitions and support our local communities. Our international profile is what enables us to do this, and, in the long term, this is what will continue to give the UK influence around the world. It will support our future as Global Britain and ensure that we continue as a science superpower, driving economic growth through knowledge.

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Ian Walmsley is provost of Imperial College London.