Doing the rounds lately is analysis from the Financial Times’ chief data reporter John Burn-Murdoch on the decline of the graduate premium. While the thrust of Burn-Murdoch’s argument is about comparing returns to higher education in the US and the UK, he also observes that within the UK demand for graduate-level skills in the UK is disproportionately centred in London, where the premium remains strong compared to the rest of Britain. In short, the lifetime returns to HE for those located outside London, while still greater than for those without experience of HE, seem to be eroding.
It would be easy to draw the conclusion that the economic conditions outside London point to limited absorption capacity for graduates in the private sector, and even to jump from there to the idea that paying for more people to enter higher education makes for bad economic policy. To his credit Burn-Murdoch does not go there; instead suggesting that neglect of cities and regions by successive Westminster governments has left Britain “burdened by weak demand for valuable skills.”
The analysis has its origin in a wide-ranging paper exploring the interrelated elements of regional inequality published earlier this year by a team at Harvard University, which argues that the data suggests that simply increasing the numbers of graduates outside London without increasing the availability of graduate jobs “may do little to boost regional productivity, and may simply lead to underemployment or further outmigration of university graduates.” So rather than restricting access to HE – and leaving thousands less able to fulfil their potential – the goal must be about tackling the ability of places to make the best use of the graduates their universities produce.
As Prime Minister, Boris Johnson promised to make “levelling up” the UK’s regions the centrepiece of his premiership. Four years on, for well-rehearsed reasons, the Westminster government has very little to show for its promises – and the priority agenda to tackle regional inequities has to a large extent been lost amid wider economic challenges.
One effect of the government taking “place” as a theme is that policy starts to orient itself accordingly as different sectors, agencies, and bits of government respond to a perceived priority. In higher education, the debate about universities’ contribution of graduate-level skills to their places, the role of place-based funding in the R&D landscape, and the wider “civic” and public engagement agendas remain lively, and are fuelling innovative partnerships and practice.
Perhaps a lot of this would have been the case even without a national levelling up agenda – certainly the relative absence of universities in the levelling up white paper was remarkable for an otherwise thoughtful and well-evidenced analysis of the challenges facing the UK’s regions. But either way, some good work has been done that would be enormously wasteful and counter-productive to jettison in favour of whatever the next national agenda from Westminster turns out to be.
There remains cross-party consensus that if the UK as a whole is to thrive then regional inequality must be addressed, even if a coordinated national framework for doing so appears to be in abeyance. And universities and higher education providers more widely remain instrumental – via skills provision, R&D activity, and as convenors of cultural and civic activity – to the success of any regional development activity. But simply arguing for the positive impact of universities on regions is unlikely to change anything – universities, along with their regional partners and other local actors – will need to present an analysis of what specifically should be put in place to realise the untapped potential of their various activities.
For regions to make the most of their universities, there needs to be graduate jobs available – the public sector is a major employer outside London but growth and productivity demands investment from the private sector – and graduates need to want to stay in their region to live.
“We’ve done work at KPMG that shows that the biggest predictor of a region’s productivity is its ability to attract and retain 25-35 year olds – they are the biggest wealth creators,” says KPMG head of education, skills, and productivity Justine Andrew. “So you have to think about more than jobs; it’s about connectivity, culture, lifestyle options, the quality of public services. All that takes long term thinking.” Not all of that is in the gift of universities, Justine adds, which is why regional collaboration is so important to tackling barriers to growth.
Having a collective and evidenced analysis of the issues in play in any given locality is also essential; the national picture can only present a very partial and under-nuanced view. Charlie Ball, head of labour market intelligence for Prospects at Jisc, points out that of the current million or so unfilled vacancies in the labour market as a whole about half are at graduate level, but that there are not half a million graduates seeking work. He attributes the falling graduate premium outside London in part to moves among employers to offer more non-wage benefits in hopes of restraining wage inflation, but at a systemic level, to a skills supply and demand mismatch:
SMEs struggle to recruit graduates – they are small, they don’t have visibility as recruiters, they don’t have resources or recruitment expertise – and they are the main suppliers of private sector graduate roles outside large cities. When you look at data on the number of jobs for graduates in less urban areas there are enough jobs – but, for example, a medium sized company in a large town with 50-70 employees who might need a new accountant doesn’t know how to recruit one, or how much to pay them. It doesn’t have a graduate training scheme, maybe it has no links to a local university or there may not even be a local university. This is happening repeatedly across the country. That’s why I always ask universities whether they have a small business support unit.
But for Charlie, discussion of the graduate premium is ultimately the wrong way into the skills conversation, which in his view ought to focus to a much larger extent on tackling “extraordinary long standing issues with adult skills and training, and employability for those who have not engaged with post compulsory education,” and on the impact of under qualification in the workforce on productivity, noting that a quarter of the workforce is under-qualified, nearly twice as many as those that are over-qualified:
OECD data on skills matching, and data from DfE’s own Employer Skills Survey, suggests that a lot of the time people who are underqualified for their jobs don’t do them very well. And a lot of it is at managerial level. One of the problems in the UK is we make people managers for being good at something else – this is a distinctively UK problem – not having separate technical and managerial tracks in business, and not training properly. If UK companies get taken over by overseas business the first thing they often do is kick out the managers – we need to take that kind of thing more seriously. If a quarter of the workforce is under qualified why don’t we look at that as a productivity issue?
Following Charlie’s logic, what is needed at local level is a more coordinated support offer for employers and individuals struggling with the implications of skills mismatch, which will manifest in specific ways and probably require locally tailored solutions – some of which, like a shortage of managerial skills, may well be in the gift of universities, while others will be much more suited to adult education provision or work-based training.
This seems to suggest that provision for local skills planning should be a useful national policy objective. Where graduate recruitment is subject-blind the question of what sorts of courses students are studying and what is in their curricula is fairly moot, assuming most degree courses equip students with generic graduate-level skills, which is the general assumption of the way the labour market works. Yet there are pressures for education providers to more closely consider the skills landscape when designing or reviewing courses.
Provision for coordination of thinking around skills at local level has ebbed and flowed – the current manifestation in England is a statutory requirement for local skills improvement plans (LSIPs) which are led by employer representative bodies and targeted at FE. David Kernohan has argued that universities in England should be included in the development of local skills improvement plans – to some extent on the grounds that it seems odd to leave them out – but whether it makes sense to do so is likely to depend on the specifics of the area.
Some universities’ provision is closely aligned with their local labour market but there’s an argument for letting universities be, given that most graduate-level roles tend to be subject-blind and require a more generic skill set than a specific one. Moreover, while universities do systematically engage with employers in the development of curricula, they aren’t typically in the business of rapidly responding to immediate labour market needs in quite the same way as colleges. There is also the innovation side of the economy to take into account in which graduate entrepreneurship and access to finance is more meaningful than skills for already-existing jobs.
Yet bringing in universities to regional – if not, perhaps, hyper-local – thinking on skills could potentially offer a greater degree of coherence of provision and clarity in education pathways. In Scotland, the Scottish Funding Council’s Regional Tertiary Provision Pathfinders programme aims to support economic growth in Scotland’s regions through bringing together colleges and universities with other regional stakeholders to consider the skills landscape and available education provision and learner journeys and develop provision as appropriate.
That all sounds great at a high level, but talking to Liz Shevlin, deputy director for coherent learning outcomes at the Scottish Funding Council, it’s clear the council has no intention of rushing to endorse its own approach – there’s still a lot of learning to be done about how an initiative on this scale can work in practice and whether and how the articulation of broad economic priorities can translate into positive change in curricula. “We are taking a ‘learning by doing’ approach – we’re exploring how we can support people to come together to create opportunities to work in partnership for the benefit of their region,” says Liz. “We’re also thinking about what the Scottish Funding Council needs to be able to do to support these collaborations.”
As a tertiary funder, playing a more active convening role in economic development is something of a novel departure for the funding council, and there is clearly concern to ensure that it takes an equitable approach to the various stakeholders involved – in contrast to the England approach which seems determined for employers to be the driving force in skills planning. Liz says:
The overarching narrative is about creating a responsive tertiary system to enable skills to be provided, but part of what Pathfinders is looking at is how we balance that response to immediate needs but also recognise the need for stability, reflecting what communities and learners need as well as what employers need.
Though the Pathfinders programme has yet to report on the impact of its pilot activities – one lesson England’s higher education providers might take is in the value of “honest broker” organisations that can aim to create structures that focus on bringing stakeholders round the table to arrive at their own conclusions rather than weighting the conversation in a politically preferred direction.
There is clearly a limit to what central government can do – local actors will tell you they are sick of new structures and initiatives that may be well-founded in principle but are not given the chance to stick around for long enough to make it worth investing time in – think regional development agencies, local enterprise partnerships, regional innovation mapping, and now local skills improvement planning processes. Higher education providers do engage with these where they are invited to do so, but the short-termism of the Westminster government goes against the grain of the kind of long-term, stable policy and funding settlement that could give regional and local stakeholders the security they need to do the work that needs to be done.
And building the kind of coalitions for change that will be needed is hard work, and takes negotiation over priorities, and a detailed analysis of the issues. “Collaboration isn’t just about getting everyone sitting around a table – it’s got to be about changing things in your place and being really intentional and deliberate about the things you want to change,” says Justine Andrew. “Think about, what is your absolute must-win battle in your place? Or if you could only change two things, what would have the biggest impact on your innovative capacity, or your ability to scale up business? People often say it’s funding but it’s not always funding, it’s a whole complex web of things – changes that are particular to your place. And there needs to be real unity of voice coming from that place about what the long term plan is and what changes will make it happen.”
Former Prime Minister Gordon Brown’s commission for the Labour Party on the UK’s future recommends radical constitutional change including strengthening and extending devolution in the Nations and regions and empowering local government. The distinctiveness of the UK’s different regions, their different identities, and their different ecosystems and collaborative networks speak to the necessity of large-scale devolution of powers to identify and tackle the constraints to economic growth.
But the devolution agenda is beset with political and practical issues. Whatever they may say in opposition, few governments are keen to create alternative power bases that might challenge their authority – the incentive is to keep power in Westminster where it can be controlled. There is also a pragmatic question about capability – with local government and civic institutions starved of finance in the last decade, it will take time for some regions to build the capacity required to assess their economic needs and implement solutions. Universities haven’t typically been responsible for economic development – nor should they be tasked with becoming so. But there is a role for insight and capacity-building in any future devolution settlement that some universities at least would be well-placed to pick up.
At their best, universities can work with external partners to navigate the complex web of funding sources and use their research specialisms to crowd in private investment, and simultaneously provide the necessary skills pipeline. The Space Park in Leicester is one such initiative – a state of the art collaborative R&D hub that draws on the academic expertise at the University of Leicester and industry partners. In its first year of operations the space park generated an estimated gross value added of £89 million, and created 607 new jobs, according to Ian Forristal, director of research and enterprise at the university.
What is notable about initiatives like these, though, is their combined local, national and global reach and impact; the space park attracts foreign investment as well as contributing to the local economy. Other universities will have similar positive stories to tell and lessons to share in the conditions that make such large-scale undertakings possible.
As the sector looks ahead to the next parliament, pooling collective knowledge about how to achieve real change from place-based collaborations, and even undertaking a more active analytical role at regional level about what might unlock economic growth beyond broad investment in skills and R&D, could help to steer the next government into a more meaningful set of activities on place than the last has managed to muster.