A dangerous experiment:

Skills gap

So where do we go from here? The answer is simple. Instead of cutting funding for our higher education, the UK needs to invest.

The report, Further Higher? Tertiary education and growth in the UK's new economy, commissioned by UCU and carried out by the Institute for Public Policy Research (IPPR), makes a compelling case for education from an economic perspective.

It shows that putting an individual through A-levels and university generates a £227,000 net gain for the economy. For an investment of £5,000, the net return to the Exchequer from someone who gains A-levels is £47,000. A degree is worth an additional £180,000 to the Treasury from just a £19,000 state investment.

Although the IPPR would rather not view education simply in crude financial terms, this report makes it clear that we need greater investment in education if we are to stem the haemorrhaging of jobs abroad.

With 80 per cent of new jobs by 2020 likely to be professional or technical, requiring at least an A-level, the UK must invest now in the next generation or risk losing out in the race for economic growth. The report also highlights the folly of reducing public investment in our colleges and universities, especially at a time when youth unemployment is at record levels.

Industry leaders recognise the importance of investing in UK students. The Nissan vice-president for Europe, Jerry Hardcastle, says: “In India, they are churning out hundreds of thousands of graduates and we are churning out a small number and that will restrict our ability to expand. If they’re not available here, the jobs will move to India, Brazil and China.”

Economically flawed

As well as putting subject provision at risk, the Government’s higher education reforms have been economically flawed from the outset.

At first, ministers said that universities would only charge £9,000 in exceptional circumstances.

However, figures published by the Office for Fair Access in July showed that fees closer to £9,000 will be the norm.

Hiking the cost of tuition fees is hugely detrimental to students - however the Government tries to spin it. Decisions about what and where to study at university should be made based on an individual’s academic ability, not on how much a course costs.

Hiking the cost of tuition fees does not make economic sense. Research published in May predicts the cost to public finances of higher student fee loans could increase by as much as £100 billion over the next 20 years, and will far eclipse the money saved from cutting universities’ teaching budgets.

These findings underline once again how the Government’s university funding plans seem to be based more on ideology and not on tackling the national debt.

Global reputation

One of the reasons our higher education sector is internationally renowned is because of the broad-base education it offers. We cannot afford for provision to be pared back any further.

The UK’s global academic reputation is built on the freedom of academics to push at the boundaries and create new areas of study. How many potential Nobel Prize winners will not see the light of day because the choices that were available to previous generations are simply not there now?

As the Nobel Laureate, Sir Richard Roberts, notes: “As the Chief Scientific Officer of a small Biotech company, I am looking to hire someone with good problem-solving abilities, good critical-thinking skills and an enthusiasm to learn more. Such skills are developed by exposure to many different topics during a university education, not by focusing in a single area.”

Next steps

Instead of cutting places and making it more expensive to study, ministers need a strategy which harnesses further and higher education and will provide opportunities for the next generation.

The trend towards increased demand for higher qualifications is prevalent across the globe, yet, as the report shows, the UK currently invests just 1.7 per cent of public expenditure on tertiary education. This compares to 2.3 per cent in France, 2.8 per cent in Germany, 3.2 per cent in the US and the OECD average of three per cent.

The UK will not win a race to the bottom in terms of low wages. We need to invest in areas we excel in and ensure we can continue to do so in the future. Failure to do so would seriously threaten, for example, the UK’s position as Europe’s leading manufacturer and developer of low-carbon vehicles – an industry which generates £1.5billion in research and development each year alone.

As the proportion of jobs requiring higher-level skills increases, maintaining and even expanding the number of graduates entering the workforce should be a priority across all subject areas, including the arts, social sciences and humanities.

If the Government refuses to accept the many social benefits of a better-educated population, it can surely recognise the economic returns from investing in A-levels and degree courses.

Instead of cutting places and making it more expensive to study, ministers need a strategy which harnesses further and higher education to provide a window of opportunity for the next generation.

More money, less choice

At the same time as fees are rising, university budgets are being slashed as entire subject areas, such as arts and humanities, are stripped of any state funding. Supporters of the reforms think that allowing the money to follow the student will lead to greater choice in our higher education system and empower students as consumers.

The reality, however, is very different.

Research carried out by the University and College Union (UCU) shows that, while students will pay more under the new funding arrangements, their options will narrow considerably.

The number of full-time undergraduate courses on offer at UK universities has fallen by more than a quarter (27 per cent) since 2006 from 70,052 in 2006 to 51,116 in 2012 – despite an increase in student numbers.

The worst affected country in the UK is England, where fees have rocketed to as much as £9,000 a year, which has seen nearly one in three (31 per cent) university courses axed.

By way of contrast, Scotland, which has the most benign fee regime in the UK, has the smallest drop of just three per cent.

While forcing universities to compete for students may fit with the Government’s free market ideal, it is likely to make institutions become more risk averse and wary of running courses they fear will not make a profit. 

That is bad for students and bad for the country.

Country Profiles