Trainer and apprentice in vocational training on a milling machine / via Getty Images
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Fewer universities, more skills

The government needs to expand further education while reducing higher education

On 29 September, Boris Johnson promised “radical” reform of education. He promises investments in the training of apprentices, “practical skills,” “lifetime skills,” digital skills, vocations, and trades.

This isn’t “radical” reform. Johnson is shoring up the over-worked further education sector (technical and applied qualifications), without reducing the bloated higher education sector (university degrees).

Further education handles more students, solves more occupational shortages, and is six times cheaper per student. In 2017-18, central government committed £8 billion to support 1.2 million undergraduates in England, but only £2.3 billion to support 2.2 million students in further education. Johnson’s speech of 29 September promised £1.5 billion for upgrading FE colleges. However, only £200 million would be spent this fiscal year. At this rate, the investment will take 7.5 years to spend.

As universities teach fewer skills, they teach more political bias

Johnson should release more resources for further education at the expense of higher education. The government has already articulated the socio-economic justifications. In 2018, Theresa May’s government made issues of “low quality courses” and high-subsidy, low-utility degrees, and rising intakes without commensurate expansion of classrooms and instructors. In June 2020, Johnson complained about degrees “not now delivering value.” Johnson’s most recent speech admits “the shortcomings of our labour market – and our educational system.”

However, Johnson seems to want it both ways. He said, with characteristically poor syntax, “I don’t for a second want to blame our universities. I love our universities, and it is one of this country’s great achievements massively to have expanded higher education.”

Really? In 1999, Tony Blair aimed to get 50 percent of school leavers into university. This was achieved in 2018. Academically, the results are lower standards, overcrowding, poor service, less satisfaction, reduced contact hours, inflated grades, and unnecessary degrees (creative arts is least employed; and acting is most regrettable).

The public sector helped by creating unnecessary demand. From 2013, all nurses were required to have a degree. From 2020, all police officers must have a degree by the end of their probation. Previously, they were qualified on the job and by diploma. Perversely, both degrees require frequent short on-the-job placements, which are more difficult to administer and in short supply. The degree requirement has exacerbated shortages in both professions.

Students, universities, and the parts of government that pay the subsidies and loans prefer easier, cheaper degrees. Overall enrolments increased 48 percent from the 1994-1995 academic year to 2018-2019, but engineering, technology, physical sciences and languages grew least, while social studies, creatives arts, and mass communication grew most (none of which promises more than a median starting salary).

Students in the humanities might get only ten hours per week with teachers, across all courses. Increasingly, they’re expected to teach themselves, through self-discovery activities. Even some business degrees are taught and tested mostly by research, at the expense of applied, practical skills in management and leadership.

As universities teach fewer skills, they teach more abstract ideas and opinions, political bias, toxic discourse, and social revolution.

Economically, the results are surplus graduates, shortages of reliable tradespersons, declining economic productivity, declining social mobility, more cost to the taxpayer, and more debt for graduates.

Johnson’s latest speech “recognise[d] that a significant and growing minority of young people leave university and work in a non-graduate job … We seem on the one hand to have too few of the right skills for the jobs our economy creates, and on the other hand too many graduates with degrees which don’t get them the jobs that they want.”

The degrees that offer least to graduates also cost society the most

Today, one-third of graduates remain in non-graduate employment, five years after graduating. The average graduate carries £50,000 in debt. The opportunity cost is greater still. About 20 percent of British graduates will not earn more than peers who never went to university. This is worse for men (25 percent) than women (10 percent). After costs, the premium on lifetime earnings for graduates of the humanities, such as philosophy and English literature, is negligible. The same is true even of biology (the most popular of the sciences). Creative arts degrees offer no extra lifetime earnings to women, and a loss of £100,000 for men.

The degrees that offer least to graduates also cost society the most, in the form of higher subsidies and lower revenues. The British government subsidizes nearly half of all degrees. Meanwhile, the government gathers most of its taxes from graduates of high-premium, low-subsidy programmes. Seven of the ten top-paying degrees (measured ten years after graduation) are in STEM. The others are in law and economics.

But even for some high-premium degrees, such as medicine, the supply falls short, because students prefer easier degrees, universities resent the expense above subsidy, and government caps numbers (nominally based on forecasts of demand, unadmittedly to save costs). This shortage is true for every level of medicine, from doctors through technicians to nurses. In 2018, the cap on foreign nurses and doctors was removed entirely. This isn’t necessarily good for the taxpayer. For instance, the NHS pays £5 million per year in immigration fees (averaged over the last three years).

Since Tony Blair, foreign workers have been Britain’s primary solution to skills shortages. Blair argued that this is liberal economics, but really, it’s distorted economics: industry lobbyists exaggerate shortages in pursuit of cheaper workers, who undercut British workers, which then justifies more foreign workers (and less training of British workers).

Meanwhile, Brits reach for degrees to differentiate themselves, with diminishing returns. Universities are encouraged to over-sell these degrees and to falsely market the job prospects. The biggest losers are British students and taxpayers. The biggest winners are service sector employers.

The government needs to expand further education while reducing higher education

Johnson’s administration has returned to this vicious circle. Over the summer of this year, the Occupation Shortage List was expanded by nearly 100 occupations, taking the coverage from 2.5 million to 4 million jobs. From 1 January 2021, the cap on foreign workers will be abolished for these occupations. Another 150 median-pay occupations (£25,600 per year; or £20,400 for workers younger than 26 years) will be exposed to foreign recruitment for the first time (another 3 million jobs).

In total, that’s 7 million jobs freely open to foreign recruits. For comparison, the government counted 5 million temporarily unemployed at the height of the lockdown. Most are likely to become formally unemployed after the Covid-19-furlough scheme finishes at the end of October. Government expects 4 million unemployed by the end of the year, counting benefit claimants alone. The number of economically inactive was already 8.35 million at the height of lockdown.

Clearly, the government is caught in a contradiction: it is opening millions of jobs to foreign recruits while trying to get millions of British unemployed back to work.

Britain doesn’t have a jobs shortage, so much as distorted supplies. Most of the 7 million jobs open to foreign workers are in trades that are easy to train (such as butchers, bakers, bricklayers, plumbers, electricians, tailors). Johnson’s speech on 29 September specified lab technicians, construction workers, mechanics, engineers, and information technologists. The education sector should be training more of these tradespersons and fewer creative artists, actors, and mass communicators.

To achieve rebalance, the government needs to expand further education while reducing higher education. But Johnson’s government isn’t committed to reducing higher education. And it is stuck in another contradiction: it is lowering the minimum qualification for foreign workers (from a degree to a secondary education, as of 1 January 2021), without doing anything to reduce unnecessary demand for degrees from British workers.

The government should stop subsidizing useless degrees

Over the summer, the government received plenty of advice to reduce higher education, at a time when the sector was demanding a bailout. Fellow academics Philip Cunliffe and Lee Jones recommend a reduction of higher education by 20 to 30 percent (around 25 to 50 universities), through mergers and conversions into vocational and technical colleges, non-degree adult education centres, and liberal arts colleges (where the focus is on teaching, not research).

Conservative backbencher Neil O’Brien wants public funding tied to job prospects:

The stars are aligning for a landmark reform: on one hand, boosting funding for youth job schemes, and putting rocket boosters under plans to build a prestigious, German-style technical education system. And on the other, paying for it by cutting back poor-value degree courses which waste taxpayers’ money, but don’t actually increase opportunities for students.

Johnson’s latest “reform” is less specified, less ambitious, and more contradictory. He wants “to end this bogus distinction between FE and HE,” but doesn’t talk about merging any FE colleges and HE universities.

He talks about giving “FE colleges access to the main student finance system, so that they are better able to compete with universities,” but limits this to “a specific list of valuable and mainly technical courses to be agreed with employers.”

He warns that “a huge number of [workers] are going to have to change jobs [and] skills,” but also “want[s] every student with the aptitude and the desire to go to university to get the support they need.”

In a year of emergency, with public debt greater than the size of the economy, and unemployment set to rise further, on top of an already distorted labour market, this government is making leisurely investments in further education while irresponsibly ignoring opportunities for savings in higher education.

The government should let the bottom quarter of universities fail and make the rest more competitive. The government should stop subsidizing useless degrees. It should review which public sector jobs really need degrees. It should explicitly redistribute savings from higher education to further education.

Reform doesn’t mean shoring up the status quo.

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