Memorandum 107
Submission from the CBI
1. As the UK's leading business organisation,
the CBI speaks for some 240,000 businesses that together employ
around a third of the private sector workforce, covering the full
spectrum of business interests both by sector and by size.
2. The CBI welcomes this opportunity to
contribute to the Committee's inquiry into equivalent or lower
level qualifications (ELQ) funding. Whilst the CBI supports efforts
to widen access to higher education, the withdrawal of funding
for ELQs could have significant unintended consequences.
3. UK businesses believe that a highly skilled
workforce is essential to achieve a productive and prosperous
UK. The CBI has broadly welcomed the Leitch agenda to increase
economically valuable skills amongst the UK workforce. The changes
to ELQ funding go against the grain of promoting lifelong learning
and continuing professional development—vital to businesses
and individuals in a constantly changing world. It is counter-productive
to raise barriers for individuals who could make a more valuable
contribution to the economy by attaining an ELQ.
4. While a policy which prioritises first-time
students is superficially attractive, it does not recognise the
complexity of the situation. Access to additional degree-level
qualifications is an important means of retraining and upskilling
for those who need to keep up with the demands of the workplace;
this could be particularly damaging to part-time students—most
of whom are driven by the need to upskill, retrain or requalify.
5. While it is welcome that there are some
course exemptions from these proposed changes, the CBI is concerned
that management courses will be impacted at a time when the UK
faces a leadership and management skills shortage.
Many ELQ students work towards management degrees,
which are vital to business development—they will no longer
receive funding under current proposals
6. The CBI is concerned by the announcement
that, as of the next academic year, it will no longer fund students
taking any HE qualification that is equivalent to or lower than
the one they already hold. There are some exemptions, including
certain STEM subjects, modern foreign languages, teacher training,
all foundation degrees and initial training for nurses and social
workers. The £100 million currently spent on ELQs will be
redistributed to fund first-time HE students. HEFCE states that
it has determined its proposed exemptions on the basis of public
interest.
7. Whilst we welcome the assurance that
foundation degrees will be exempted, we have reservations about
other areas which are clearly in the public interest but which
have not be exempted from the funding cuts. For example, given
the UK has a shortage of trained pharmacists, it is difficult
to justify exempting veterinary science but not pharmacy or pharmacology.
8. But the most damaging consequence of
these plans is likely to be the big impact on management programmes.
At a time when it is essential for firms to compete in the global
economy, effective leaders and managers are central to business
success. Managers play a pivotal role in ensuring the strategic
aims and direction of the organisation are achieved—and
they must manage staff, budgets and resources effectively. The
CBI/Pertemps Employment Trends Survey 2007 indicates that over
half (55%) of employers believe that management skills are the
most significant factor contributing to competitiveness.
9. It is in the public interest that the
UK trains leaders and managers, yet MBAs, for example, are not
exempted from the policy. CBI members predict that leadership,
management and higher-level skills will be increasingly in demand
over the next decade. Well-qualified graduates in all fields should
be given every opportunity to attain high-level management qualification
in order to contribute more effectively to the UK's competitiveness.
Doctors, scientists, engineers and others benefit from MBAs when
they move into leadership positions and their sectors improve
as a result. The most valuable MBA students have a combination
of both experience and technical qualifications. This group will
be disproportionately affected by the funding changes as they
are more likely to have a first degree.
10. The London Business School estimates
that it will lose a larger share of HEFCE funding than all but
four other English institutions. The new policy is likely to harm
business schools' financial stability, increase course costs and
ultimately prevent many individuals from developing vital leadership
and management skills.
As careers are no longer for life, lifelong learning
is increasingly important—businesses will suffer if their
employees find reskilling and upskilling more difficult
11. Businesses are more concerned about
the difficulty of attracting qualified and skilled workers than
the number of graduates in the workforce. The CBI/Pertemps Employment
Trends Survey 2007 shows that almost 50% of employers are worried
about their employees' lack of business skills. A quarter of employers
want to raise the quality of university graduates, which includes
improving the technical qualifications of those who already have
university-level qualifications. It is increasingly important
that we continually refresh our skills throughout our working
lives and the current ELQ funding arrangements provide people
with an opportunity to do so.
12. It would be short-sighted to hinder
those with outdated technical qualifications from reskilling to
meet modern needs in a demand-led training environment. Over their
working lives—which can be 40—50 years—people
may need to retrain several times, particularly to cope with new
technology, and many masters programmes are appropriate for technical
reskilling at an advanced level.
13. Employers and employees could be deterred
from applying to HEIs as course fees will increase as funding
disappears. Post-graduate institutions—where many high-level
skills are gained—will lose financial stability. Additionally,
lifelong learning centres could be marginalised or even disappear
as students and HEIs face increased costs. Birkbeck, for example,
believes that 38% of their funding is under threat.
14. The Leitch agenda will not be met unless
the UK expands its ability to promote continued professional development.
The Government's proposals do not go far enough to protect HNDs/HNCs/short-course
awards and training certificates for lecturers in FE colleges,
particularly as only initial teacher training will be exempted,
not further training for lecturers. This will exacerbate the skills
shortage of teachers with commercial experience of sectors. These
will be needed to deliver the new diplomas, for example.
The withdrawal of funding will be detrimental
to part-timers, who make up the bulk of ELQ students
15. The institutions which have done most
to widen participation—those which take the greatest number
of part-time, female and older students—will be disproportionately
affected. The Open University—using HEFCE's own modelling—has
calculated that the impact of the funding cuts on part-time students
is ten times the impact on full-time students. This will inevitably
affect those who wish to upskill as part of their CPD or reskill
in order to re-enter the workforce. These are the people who are
most anxious to make headway and gain career-relevant skills that
are vital for the economy.
16. On average, a part-time student is older
than a full-timer—half are between 30 and 50. This suggests
that those who will be most affected are those who are developing
their skills mid-career. Most part-time students are women, who
must fit their study around working hours and domestic responsibilities
and often struggle to afford fees. Drop-out rates are higher amongst
part-timers than full-timers. This is only likely to worsen as
funding is removed.
17. There will be significant financial
repercussions. Three quarters of OU students are in full-time
employment, and most pay fees up front or in instalments. They
are ineligible for course or fee grants and do not receive employers'
help. The institutions themselves will become financially unstable.
This could undermine the Government's commitment to the Leitch
agenda and damage the chances of those who wish to improve their
own skills.
January 2008
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