Filling enough places to stay viable is, rightly, the preoccupation of most of the sector right now, and gloom the predominant mood. Observers talk of a “bust” and neither government nor commercial capital seems to want to sponsor higher education provision. But the data holds clear signals of very different problem in the late 2020s: a great recruitment crisis of inadequate supply stifling potential.
Universities have just had their toughest recruitment cycle ever. For some, accumulating recruitment losses is taking them into unfamiliar and threatening territory. For others, increases in volume have required exceptional attention and effort, and trading something, typically grades, to get there. Outside commentary on the sector has taken “boom to bust” as the theme. And the headline numbers seem to support that with total recruitment through UCAS (once the unreliable “off-book” Record of Prior Acceptance data are removed) turning lower. Investment and expansion plans are portrayed as vainglorious in the face of crumbling demand for that outmoded and overpriced product – a full-time degree at a university.
But deeper in, the data says something rather different. The strategic dynamics are such that, rather than managed decline, there is a pressing need for new investment. Otherwise a great recruitment crisis will likely emerge through the 2020s, where the potential of today’s primary school children will be stifled by insufficient supply.
The demographic data
How does the data lead us there? For UK higher education the changing size of the 18 year-old cohort, the dominant age group served by the sector, is fundamental. You will no doubt be weary of the outline of this story: a “demographic dip” then a recovery. But the scale and rapidity of population growth in the 2020s, together with its unusually constant nature make it special.
We will have two more sharp falls in the 18 year-old population of around 2 per cent – this cycle and 2020. Then the cohort grows again. This growth is strong, often 3 per cent a year. And it is consistent, up year after year. This matters, as it makes the cumulative rises large and unrelenting. The five-year rate of population growth increases reaches 17 per cent in the mid-2020s. Between 2020 and 2030 the population increases by 27 per cent. This trajectory equates to almost a million extra 18 year-olds over the decade.
If English higher education was still centrally planned then simply tracking such an increase in the population would be enough to have strategic planners sharpening their pencils. But what puts the 2020s into recruitment crisis territory is that tracking population assumes higher education entry rates stay the same. The data is clear that that assumption doesn’t match with the aspirations of young people.
There are several signals for this in the data; perhaps the most relevant is the 18 year-old application rate. We’ll use (uncapped) England here and, so we can use the latest UCAS numbers, the “January deadline” application point (not trouble-free definition wise, and 2010, 2011 are excluded from the trend for weather and fee related reasons, but the results are similar using other definitions). In 2019 the application rate was higher than ever at 38.8 per cent, and it has been growing strongly and predictably over the past decade. Extrapolating this trend forward would give application rates of just under 50 per cent in 2030, making English 18 year-olds 25 per cent more likely to apply than today.
Demand for higher education
Some react to application rates at this level with scepticism, sometimes implying that a university education is simply not suitable for such a large share of the population. We do not see the data supporting this view.
Firstly, in the long run application and entry rates have increased and are much higher than decades ago. It is a stronger assumption to say this will stop than to say it will continue.
Secondly, application rates at the forecast 2030 level are hardly incredible and are already seen for many groups today. For example, 18 year-olds in London (50 per cent) and in better-off areas (52 per cent). And almost half the population, women, have a rate not far off these levels (44.5 per cent). And these high application and entry rates do not seem to be associated with students being unable to benefit from what a university education provides. Non-continuation rates for young entrants remain low, and lower again for some of the groups with the highest entry rates.
It is quite possible a linear trend extrapolation could well underestimate application rate increases through this period. The 18 year-olds of the 2020s will increasingly be the children of women who experienced the doubling of 18 year-old entry rates in the late 1980s and early 1990s. No other factor is more closely associated with going to university than parental education. The coming step change in 18 year-olds who have a parent with a degree might well push demand along faster.
In a stable uncapped system entry rates will follow application rates. In the post-2012 English market, entry rates have actually increased a bit faster, as applicants have become increasingly successful at finding a place. We’ll be cautious and extrapolate a linear trend for entry rates covering pre- and post- number control worlds (with an imputed figure for 2019 based on the application rate). This model puts 18 year-old English entrants to higher education at around 320,000 by 2030, giving an entry rate of 43 per cent. This is around 115,000 higher than in 2018, a 57 per cent increase. To put this increase in perspective, you would need to duplicate the 35 largest English recruiters of 18 year olds in 2018 to hold it.
Perhaps the student population wouldn’t increase by quite this amount overall. We’ve been tracking the effect of the ‘cohort depletion’ on the entry rate of older age groups for some time, and although the 19 and 20 year-old populations will be much larger in 2030 than today entrants might be fewer, releasing some of the pressure on capacity. But set against this the increasingly youthful student body should have lower non-completion rates (so each entrant generates more “student years”) intensifying the pressure on capacity. And the substantial number of students recruited from outside the UK continues to grow. Overall a very substantial increase in recruitment seems likely from strategic signals in the data.
Planning for the future
The international quality university education the UK enjoys is hard to scale up quickly. It needs the right estates and teaching staff. As the demand for university both grows and becomes younger (and more mobile), capacity in purpose-built student accommodation will be another restricting factor. All of these take years to plan and build. And if the supply of any of them falls behind demand then, one way or another, the clear potential in the coming generation to go to and benefit from university will be stifled.
Our experience has been that leadership in universities have certainly shown themselves ready to step into the central planning void that has been created around future provision. But the nature of the coming challenge is difficult for them. Expenditure is needed soon to build capacity for a need (and a revenue stream) up to a decade distant. Whilst the real-terms reduction in tuition fees and reducing numbers have limited their ability to invest. And the gloom around the sector makes accessing commercial investment capital harder and more expensive.
How could universities be helped in this? Probably most important is clarity from the respective governments as to whether the policy is to realise, rather than to stifle, the university potential in the next generation. And if it is to realise, then to make it clear the student population in 2030 will be much larger than today and enable universities with the financial strength to invest in new infrastructure.