Pessimism around recruitment may be misplaced

There’s a pessimism establishing itself around undergraduate higher education recruitment, specifically in England but more generally in the UK.

The accepted wisdom in some quarters appears to be that young people (your traditional 18 year olds with A levels, who I will be primarily focused on here as the largest group of prospective undergraduates) are being put off higher education because it isn’t very good – there’s “woke madrassa” angles on this (young people being famously anti-woke, of course) alongside the more insidious claims of a drop in the quality of provision, or in the expected lifetime benefit accruing to graduates.

From the other end of the political spectrum, I’ve heard arguments that university is (after two decades of more egalitarian access) now too expensive for those from less privileged backgrounds to contemplate. And somewhere in the middle there’s the continued drumbeat of the idea that international students are somehow taking places that would otherwise go to home students.

Does population change really shape the sector?

There has been a 2 per cent drop in the number of 18 year old accepted applicants from England comparing this year to last – the first time this has happened since 2018s 1.5 per cent drop.

This looks odd in context because the sector has bought heavily into the idea of a decade of continued growth due to an oncoming demographic bulge, due to peak in 2030. In a static world, free of exogenous shocks, there would be a slow curve upwards reflecting the growth in the 18 year old population.

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It’s my contention that some stuff has happened to throw observed behaviour away from this simple model. This is not unexpected – indeed we saw this in 2012 (when fees rose to £9,000) and in 2018 (when maintenance loans replaced maintenance grants).

It’s not limited to detriments – we saw a positive deviation from the curve in 2008 (when the student numbers cap began to lift, and in 2020 and 2021 (when there was a pandemic on, and limited opportunity for young people to work or travel).

But all of this is immaterial when we consider the scale of 18 year old population changes against changes in 18 year old acceptances – it appears that what feels like massive swings in recruitment are (in the grand scheme of things) surprisingly small beer.

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The tale of sector undergraduate recruitment of 18 year olds looks very much like gradual, if bumpy growth compared to the observed and predicted demographic swings.

So what is happening?

The higher education sector has an innate, if flexible, capacity. There’s only a certain number of students that will fit into the available spaces – in recent years we have seen growth linked to the removal of a (hard) numbers cap, but there is a de facto “soft cap” driven by estates constraints and expectations about the quality of provision (linked to student-staff ratios, resource availability, contact hours, class sizes and so on). That’s not to say higher education isn’t as good, per se, it’s to say that the quality of the student experience is one of the things that can flex when money can’t.

The sector is clearly bumping against this soft cap now – and we’ve seen the impact on the student experience, on housing, and on staff workloads. Because inflation and the fee freeze (today’s Institute for Fiscal Studies report spells out just how huge this impact has been) mean that every provider needs to grow income -largely fee income – just to stand still in terms of having the available cash to meet costs, most have declared an intention to grow to the Office for Students.

In reality, most providers are looking to overseas students and taught postgraduate to bring in fee revenue, but for many home students are bread and butter – and it is these providers that most need to increase their home undergraduate numbers.

Growth for all is possible if there is a corresponding growth in demand. And there were far more English 18 year old applicants in the 2023 application round than in any year other than 2022. What’s clear is that providers are recruiting proportionally less of them.

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If you much about with the filters here you can also see a corrective to the perception that international recruitment is crowding out home students here – international acceptances are down on last year, even though international applications were up.

Which applicants?

It’s been argued that the cost of living, coupled with the falling value of the maintenance offer is having a negative impact on applications and acceptances. If this was the case, we’d expect to see a larger decline in applications (people deciding not to go to university at all) and acceptances (people deciding not to enrol after being offered a place) among more disadvantaged groups. As IFS puts it:

a declining standard of living amongst students, and a widening of the gap between the support students are entitled to while studying and what they could otherwise earn from working the same number of hours, may induce some to forgo university altogether

In fact, the opposite appears to be true.

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Applicant numbers are holding steady (for 18 year olds in England) in IMD quintile 1 and 2 – the most deprived areas in the UK – with acceptances down only very slightly. For quintiles 3 and 4 applicant numbers are slightly down on last year, though acceptances are down on 2022 and 2021. For quintile 5 both applications and acceptances are down on 2022 and 2021.

Put plainly, it is the better off that are now less likely to apply to university, and less likely to accept a place.

Route change

If we look at how applicants get into universities – there’s something even more interesting going on. The last two years have seen designed-in declines in A level (and equivalent) performance as the Department for Education attempts to return to the golden ratio in results that has persisted since 2010. I noted elsewhere that the impact of the pandemic arrangements was to make teacher predictions more accurate – coming out the other side has seen two cohorts not do as well in their exams as expected.

This may have an impact on recruitment overall – some people who don’t get the grades might make an alternate life choice (or knuckle down and resit for university entry next year), though this is not really visible in the data we have. What we can see is the other thing we would expect, which is that firm acceptances are down while clearing (and other route) acceptances are up this year and last year.

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Main scheme clearing – people who apply at the usual times but don’t get a firm or insurance place -was the 2023 the route for more than 15 per cent of English 18 year olds who get into higher education. That’s the highest on record – a higher number, but the same percentage as in 2020 (another year when, for reasons beyond their control, a lot of applicants underperformed). Meanwhile, firm acceptances are the lowest on record.

It’s all a bit more complicated

The government has tried to turn higher education recruitment into a true marketplace based on price signalling three times. The issue in 2012 (and 2004, and 1997…) was not that the model was incompatible, but that it was two simple. The recruitment market is far too complex to model because there are so many endogenous and exogenous variables to keep an eye on.

And this is complicated even further when government has a thumb on the scale. Financial pressures on providers and on students, the consequent lack of capacity in the sector, and a disappointing year for many taking level three exams are a deliberate policy choice.

The Department for Education, and the Treasury, has – in other words – decided to make the English higher education sector smaller. And we are living with the consequences of that decision.