There's a lot said about the impact that universities have on their local economies. But there's a need for more of the assumptions to be backed up by evidence. That's why we've launched a short report today looking at five facts about universities and local economic development. It finds that by far the biggest impact that universities have on the local economy is through the students they attract and the people they employ.

This isn't the only benefit that universities have for their host cities, but it is certainly much larger than other impacts. For example, local businesses tend to make up only a small proportion of the total commercial income that universities receive from businesses. And although high in value, business spin outs from universities only make up a very small proportion of the total business base in a city.

These impacts matter but are much smaller than the effect of employment by universities and the spending of their students. For example, the two universities in Coventry account for over 10% of total jobs in the city. And undergraduate students spend £267 million per year in Stoke, £350 million in Plymouth and £410 million in Cambridge.

As the debate about university fees rages on, this analysis poses questions about the impact that the new fee structure will have on city economies. The £9,000 fees that students will have to pay at Cambridge University is unlikely to dampen the clamour for places. But the impact that the £8,500 fees will have on the demand for places at the University of Teesside, where students currently spend an estimated £290 million per year, is much less clear. Other universities, such as Oxford Brookes, are taking an active decision to levy higher fees and attract fewer students in order to change the profile of the institution – decisions that will have an impact upon the local economy.

So it is important that cities understand that decisions made by universities about fees, students and staff will have implications for local economies, and they should talk to their universities to understand their plans. The fee structure that universities go for is for those institutions alone to decide. But more co-ordinated working between universities and cities on how to attract prospective students could help improve the offer of these institutions and potentially offset some of the impact that higher fees are likely to have on the local economy.