Treating Students Fairly: The Economics of Post-School Education Contents

Summary

Successive governments, over many decades, have pursued and encouraged the expansion of higher education. These efforts have succeeded: in the 1960s, five per cent of young people went into higher education; today, around half of young people do.

Today, there are many options for a person looking to enter higher education: there are thousands of different types of degrees and diplomas to study, hundreds of universities and further education colleges to enrol at, and the choice of studying full-time, part-time or as part of an apprenticeship.

Despite this variety, one form of higher education has become dominant: the growth in higher education during the 21st century has been almost entirely as a result of ever-increasing numbers of young people going to university to study for full-time undergraduate degrees. By contrast, the number of students graduating with other higher education qualifications (Levels 4 and 5) have declined in recent years and there were over 200,000 fewer part-time students in higher education in 2016 than 2010, with an 88 per cent reduction in enrolments at the Open University over that period for qualifications at Levels 4 and 5.

There has also been a recent decline in the number of qualifications awarded to adults at Level 3. These qualifications are awarded largely through the further education sector, to people who have not pursued higher education at a young age. Compared to similar countries, the UK has fewer people without a qualification at Level 3.

Effect on the economy of the expansion of undergraduate degrees

The UK does however produce more workers with undergraduate degrees than similar countries. The present Government claims this expansion has been a boon for young people and the economy. But is the continued expansion of undergraduate degrees the best outcome for graduates and the economy?

We are sceptical. Many graduates appear to be in jobs which do not require a degree-level education and at the same time, many businesses are reporting skills shortages, particularly at technician level. This suggests that in terms of labour market outcomes at least, some graduates may have been better off considering other higher education qualifications that were cheaper, shorter and more relevant to the workplace.

But why then, are people continuing to pursue undergraduate degrees if future employment benefits are uncertain?

Prioritisation of the A-Level/university route

A monoculture has developed around the primacy of the undergraduate degree which has crowded out other options which are perceived as inferior. This situation is not helped by the paucity of information available to young people; the incentivisation of schools to send pupils down the academic route; and employers requiring degrees for jobs which do not really need them. For example, an apprenticeship should be viewed by young people and society as just as valid an option as the academic route of sixth form and university: they offer a way of accessing higher education without incurring student debt and can address directly skills shortages in the economy. Schools should present all routes into higher education as equal and there should be a single, UCAS-style, portal that covers all forms of higher education.

Market reforms have encouraged undergraduate provision

The 2012 reforms to university financing, which replaced nearly all funding by government grant with funding through tuition fees, have incentivised universities to attract prospective students onto undergraduate degrees, given that funding now follows the student. This includes students who may have been better served by pursuing alternative higher education qualifications. The reforms failed in their aim to create an effective market amongst universities, as evidenced by the lack of price competition. Furthermore, we were struck by the suggestion that the 2012 reforms may have incentivised universities to award more higher class degrees, with 26 per cent of graduates receiving a first-class degree in 2016/17, up from 18 per cent in 2012/13.

Low quality and availability of other options

There are issues around supply too: the quality and availability of other options is variable. Ofsted reported recently that around half of apprenticeship training providers that they assessed were inadequate or required improvement. The lack of demand for courses means it is uneconomic for colleges to provide them in some areas. Better funding for these other options would help. Our proposed reforms to funding should also help support and encourage part-time and flexible learning, which will become more important as a changing economy and career patterns require people to re-train, often several times.

Our system of post-school education is not a system. It is unbalanced in favour of one route, and as a result offers poor value for money to some individuals, taxpayers and the economy. It requires immediate reform.

The Government appears to be open to change, and several reviews of higher education have been launched over the past year. This report sets out what now needs to be done.





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