The Northwest is the United Kingdom's 'academopolis', boasting the highest concentration of students in Europe. Harriet Swain and Alison Utley look at how institutions are working to give the region's economy a boost.

Keith Lee, 29, had made more than 100 applications for engineering jobs and attended about 30 interviews. Jeanette Wordsworth, 39, applied for more than 60 posts in administration and had been unemployed for nearly a year.

Both landed jobs within a few months of joining the Graduate into Employment scheme run by Liverpool's three universities and the Merseyside Innovations Centre.

The scheme was set up with Objective 1 funding from the European Union to help reduce graduate unemployment on Merseyside, increase the number of graduates choosing to stay in the region and use graduate skills to help industry.

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It selects by interview graduates who have been unemployed for at least six months, takes them through a 40-day programme preparing them for work and matches them with small and medium-sized businesses for specific six-month projects.

The companies receive grants to cover the cost of the projects while the employees receive expenses in addition to benefit. In addition, both receive support from the Innovations Centre throughout the project.

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So far, 85 per cent of the scheme's graduates have gone into full-time employment and organisers estimate it has created about 600 new jobs.

Mr Lee, who studied manufacturing engineering at Salford followed by an MBA in Hull, originally went to Liverpool for cheap accommodation. Through the graduate scheme, he started work for Greaves Brothers precision engineering helping set up a database of technical information and has now been taken on full-time as an information technology coordinator.

His boss, managing director Robert Greaves, said the main attraction initially for his small family company was not the graduate but the grant.

"Graduates are academically clued up but they lack experience," he said. "The advantage is, they are bright people and pick things up quickly." He now plans to move Mr Lee around different parts of the business to develop his knowledge.

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Ms Wordsworth, who studied as a mature student at Liverpool's John Moores University, was placed with Liverpool Housing Action Trust. She got a first-class degree in urban studies and was quickly offered a post as personal secretary to the finance director.

In the last two years, the scheme has dealt with about 750 smaller enterprises, 100 large Merseyside companies and more than 1,000 unemployed graduates. It costs just over Pounds 1 million a year to run, with unit costs of about Pounds 500 a project.

Concentrating on smaller companies means graduates can quickly make themselves indispensable, while directors gain the time for strategic planning which could eventually make their businesses big.