Memorandum 113
Submission from London First
EXECUTIVE SUMMARY
We are writing to express our concern over the
negative impact that we believe the ELQ proposal will have on
London's Higher Education Institutions. We believe that this will
seriously reduce the ability of London's Higher Education Institutions
to engage with employers in the future and will consequently damage
the capability of London's workforce to adjust to the changing
needs of employers in the 21st century.
The ELQ proposal threatens institution's ability
to improve employer engagement due to;
(a) The uncertainty over future funding for
part time provision, and;
(b) Co-funding failing to tackle the current
barriers to engagement.
There is a clear need for universities to offer
balanced provision, offering first degrees and the ability for
students to update and renew their skills, rather than prioritise
"firstness".
London First urges HEFCE and the DIUS to completely
review the ELQs proposal, taking in the views of employers and
offering institutions a suitably long and interactive consultation
period, in order for;
(a) The full economic impact of the withdrawal
on both HE institutions and employers is understood;
(b) The necessary infrastructure and incentives
to improve employer engagement have been identified, and put in
place.
1. Context of London First's submission of
evidence
London First represents 300 employers in London.
The majority of our members are corporate employers, but we are
proud to include 20 higher education institutions, and 14 further
education institutions within our membership.
2. The following submission highlights our
concerns regarding the ELQ proposal and the probable impacts in
London, where 43% of jobs currently require level 4 or higher
qualifications compared to 30% in the rest of England and Wales.
This is expected to rise to 50% in London by 2020, compared to
42% nationally.
3. The greater density of graduates in London
results in London's HE institutions being the most affected by
the proposal, representing 8 out of the top 10 most affected institutions
in both percentage and cash terms. London`s institutions represent
31.2% (£54.1million) of the total proposed ELQ funding withdrawal.
4. Should "Firstness" be valued
ahead of updating and renewing skills?
One of the underlying principles of the proposal
is that the study of a graduate or postgraduate qualification
for the first time should be prioritised ahead of the study of
an equivalent or lower qualification.
5. We understand the government's ambition
to widen participation in higher education and to encourage aspirations
to higher levels of qualification. However it is clear that there
is already a plentiful supply of graduates in the London job market.
Our business members do not complain of having too few graduate
applicants for the jobs they offer, but rather of a shortage of
graduate applicants who are equipped with the employability skills
that they would expect.
6. According to the government's Higher
Education Statistics Agency student destination survey, a total
of 311,000 UK students qualified in undergraduate or postgraduate
degrees in 2006. 209,000 of these students (66.9%) found employment
within 6 months, while 72,000 (23.0%) went on to further study
and 31,590 (10.13%) were still not in employment or attending
further study 6 months after graduation.
7. But according to the High Fliers UK Graduate
Careers Survey in 2006, there were only 85,000 graduate level
jobs available (three quarters of which are located in London
and the South East). This means that on average there were almost
three (2.81) newly qualified graduates in the market for every
available graduate level job.
8. Furthermore, the unemployment rate of
graduates obtaining degrees for the first time is nearly twice
that of other students. 12.2% of 204,000 students completing first
degrees are unemployed after 6 months, compared to 6.73% of the
33,000 "other undergraduate" students and 6.12% of the
74,000 postgraduate students.
9. "Other undergraduate" students
(ie have previously completed an undergraduate degree) are the
most likely to take on further study (37.2%) compared to 23.4%
of first degree students and 15.7% of postgraduates.
10. In summary, it is clear that more than
50% of graduates cannot find the level of work they would have
expected, due to the supply of graduates outstripping demand from
employers. We therefore argue that the higher education sector
should not be encouraged to prioritise firstness, and rather that
universities should be able to offer a balance of provision that
encourages the widening of participation whilst offering the opportunity
for the updating and renewal of skills to meet the needs of industry.
11. The exemptions highlighted in the ELQ
proposal
Co-funding and employer engagement
London First appreciates the need for Universities
to engage with employers, and we are fully committed to this agenda.
12. We welcome co-funding as a concept,
but are concerned that the opportunity offered by the expenditure
of employers on professional development is a long way from being
fully realised by the HE sector. The DfES estimated the market
for employer expenditure on professional development, which was
accessible to the HE Sector, to be worth £5 billion nationally
in 2006. This translates to £1.2 billion in London. HEIs
captured £300 million of this market in 2004-05, with 50%
of this figure accounted for by just 12 institutions. In London,
HEIs captured £64 million, (5.3% of the estimated market),
44% of which was taken by the London Business School.
13. London First in partnership with London
Higher and the Learning and Skills Network has commissioned HEFCE
funded research into the supply and demand for higher level skills
in London.
14. We are now starting to receive preliminary
results from this research, identifying the current barriers to
strong engagement between employers and higher education. These
are;
(a) Employer reluctance to invest in skills
provision when they have easy access to an international pool
of talent.
(b) The lack of flexibility in provision.
The major cost to employers is not academic fees, but the loss
of personnel time.
(c) Cultural differences between universities
and employers.
(d) The complex institutional landscape means
employers have difficulty identifying the most appropriate institution,
whilst universities have difficulty positioning their offering.
(e) The relevance of the course provision
available. Employers tend to demand skills based provision, whereas
universities tend to offer qualification based provision.
(f) Employers prefer on the job training,
with greater flexibility of provision than universities currently
offer.
(g) The high opportunity cost for universities
to develop employer focused provision. Universities do not have
funding available to carry out the marketing, product and relationship
development necessary to meet the needs of employers.
15. In the short term, co-funding alone
will not be able to address these issues, nor provide universities
with the infrastructure or sufficient incentive to engage employers
at the level required. It is also clear that employers do not
regard the cost of fees for skills provision as their major concern—instead
the loss of personnel time is highlighted as the major cost.
16. So while we believe that co-funding
will be part of the solution to improving employer engagement
within the HE sector, further thought needs to be given to how
universities are incentivised and supported to achieve this goal.
We hope to have the results from this research in May, which will
give a clearer picture of the market for professional development
in London, and suggest solutions to improving the University share.
17. We understand that the ELQs proposal
could be seen as growing the incentive for HEIs to improve their
engagement with employers. However, it is likely to have a negative
impact on this agenda due to the uncertainty it introduces around
the future of part time study and its failure to tackle the major
blockages to engagement.
18. Foundation degrees
Our experience, reflected by research carried
out at the Centre for Public Policy research at King's College
London by Hogarth et al (2007), is that Foundation degrees,
although highly valued by those employers who have participated,
are still largely unknown and untested by the majority of employers
in the marketplace.
19. We believe that foundation degrees will
provide a contribution to employer training needs in London in
the coming years, but because of the capital's relative high proportion
of graduates, this is unlikely to be substantial.
20. The ELQs proposal however leaves a major
unanswered question over foundation degrees: it is unclear what
happens in the case of a student taking a foundation degree, who
wants to extend their qualification to a full degree, but already
holds an equivalent or higher qualification. One of the founding
principles of foundation degrees was a student's ability to upgrade
the qualification to a full honours degree—but this would
now be prohibitively expensive if the student has to pay full
fees for their honours year.
21. Strategically Important and Vulnerable
Subjects (SIVs)
The mechanism through which SIVs are identified
is unclear to us. The HEFCE advisory group that oversees the selection
of SIVs, which are defined in part as "subjects that have
fallen short of employer demand", only has one business representative,
from the COGENT Sector Skills Council.
22. We recommend that HEFCE considers increasing
the level of business engagement in this group to ensure that
it is responsive to a wider range of industry sector interests.
23. Support for part time courses
Part time courses provided by London HE institutions
are particularly strongly impacted by the ELQs proposal. This
is a great concern to us, because part-time provision is preferred
by employers as the vehicle for delivering staff training and
skills development. To illustrate the point, 4% of full time students
currently have their fees paid by employers compared to 21% of
part time students.
24. We believe that a negative impact on
part time provision, at a time when the Higher and Further Education
sectors are working to improve employer engagement, is a retrograde
step. Rather than create a short term solution through a supplement
for 2009-10, DIUS and HEFCE need to consider creating solutions
that will not directly impact on part time provision.
25. Conclusion
The ELQs proposal is fraught with difficulties,
for which the sector is being given little time to adjust.
26. It is clear that the withdrawal of funding
for ELQs will create a barrier to Londoners improving the relevance
of their higher level skills, reducing their ability to find employment
in the fast developing industries the city hosts.
27. It has also become clear to us that
policing the ELQ proposal might be an impossible task. There is
no central database of higher education qualifications, so a prospective
student has the choice of stating that they have an equivalent
or higher qualification and pay the full fee, or decline to give
details of their previous qualifications and pay a greatly reduced,
highly subsidised fee.
28. In conclusion, we ask that the implementation
of the withdrawal of funding for ELQs be deferred until;
(a) The full economic impact of the withdrawal
on both HE institutions and employers is understood;
(b) The necessary infrastructure and incentives
to improve employer engagement have been identified, and put in
place.
January 2008
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