We need more graduates, just not that sort and not there

Often we read that there are “too many graduates” these days, chasing too few graduate jobs.

Jim is an Associate Editor at Wonkhe

The government’s own rhetoric often implies that many of those on “low-value courses” would have been better off pursuing an apprenticeship – or at least something that it perceives as more vocational than caricatures of students spending three years “studying” something it thinks of as “woke”.

Much of the sector’s defence in the face of this is just that – defensive. And it’s when mixed with education-for-education’s sake arguments that suggest we shouldn’t worry about jobs or earnings anyway, the message gets lost.

Yet rarely do we see a full-throated run at the opposite argument – we need hundreds of thousands more graduates, and more education, not less.

So the Resolution Foundation’s Ending stagnation A New Economic Strategy for Britain – whose launch event was attended by both Jeremy Hunt and Keir Starmer, no less – is notable both for its sophistication and its central messaging on higher education.

Put graduates in their place

Over the past three years, the Resolution Foundation has been collaborating with the Centre for Economic Performance at the LSE on The Economy 2030 Inquiry, funded by the Nuffield Foundation, to investigate, understand and confront the country’s economic challenges.

The familiar headline from its work is that the sectors that are the key to the UK’s future prosperity are precisely those that require a more advanced skillset:

The UK’s high performing and fast-growing sectors (such as finance and business, creative industries and life sciences, which collectively accounted for 18 per cent of employment in 2022) employ 1.7 times as many graduates as a share of their workforce as the rest of the economy. And while analytical and personal skills have generally become more important across all sectors since the 2010s, they are particularly so in these key sectors.

But this isn’t just about numbers. Political emphasis on “levelling up” and moving away from a focus on London has been fashionable – but has tended not to focus on cities, partly because it’s towns where Red Wall MPs tended to pop up in the 2019 election.

Yet it’s cities that matter. Hence the role that graduates might play on “Britain’s path to a fairer and more prosperous future” is probably best illustrated in the report’s discussion on Birmingham and Manchester.

It says that reducing Greater Manchester’s productivity gap with London to 20 per cent (from 35 per cent), for example, would require both a £30 billion boost to aggregate business capital – and an increase to its graduate workforce of as many as 180,000 workers.

It also finds that over the past two decades, Manchester and Birmingham’s graduate wage premium has fallen from above that of London to around three-quarters of its figure – despite no observable difference in the quality of graduates:

Combined with limp investment returns in both cities, this suggests the cities don’t merely have too few graduates but that they are not currently able to grow or attract enough highly productive firms to make good use of those they already have.

Pulling that off requires all sorts of stuff – serious investment in housing, public transport and other infrastructure both within our major urban centres and in the towns that might serve as places to live and commute from and into those cities is crucial. But in plenty of cities now, it often feels like there’s not enough room for the students we’ve got, let alone graduates.

The scale of what’s needed is interesting. To be consistent with city population growth of the sort described, 116,000 more homes would be needed in Birmingham and 126,000 more across Greater Manchester – and not doing it properly would be a problem:

If only half of the additional homes needed are built, around 30 per cent of the total gains to the typical household from these cities becoming higher-productivity could be wiped out. Progress will not be achieved without significant government investment – a £4 billion grant would be required to maintain both cities’ share of social housing at current levels.

Not just any graduate

All of that said, the sector would be foolish to think that the pattern of qualification take-up doesn’t need serious surgery either.

Much of that need for graduate inflow into places other than London is about the existing stock of degree-holders being attracted into (or attracted to remain in) major urban areas rather than needing more of them – although it also argues that both the surge in the birth rate in the first decade of the millennium, and a wider range of groups and communities moving towards the participation rates of affluent families ought to be dictating planning over places.

Separately, in what often amounts to an update to the Augar analysis, the report argues that provision for those not following an academic route is patchy at best, and a “disgrace” at worst. Almost a third of young people are not undertaking any education by age 18 – compared to just one in five in France and Germany. And only one in ten workers are qualified at sub-degree level (Level 4 and 5), half the share it should be given the make-up of the UK economy.

Some of that is about the old chestnut of clearer non-academic routes, with the report calling for a new “apprentice guarantee” for all qualified young people, funded via two thirds of the Apprenticeship Levy ringfenced for the under-25s (to reverse the trend of employers increasingly focusing on existing, older employees).

Maintenance plays a role in take up too – the Lifelong Loan Entitlement is all well and good, but the the report argues that the student support system surrounding has flaws that will be “particularly off-putting” to the young people it needs to attract, with the share of families eligible for the full level of maintenance loan support (down rto under 30 per cent from about 7 in 10 a decade ago) coming in for particular criticism, as well as the silence on means-tested maintenance grants for those studying a first Level 4 and 5 qualification.

Crucially for what we might assume will be a Labour government, the report argues that the objective should not be to make existing universities ever larger, but instead:

…innovation in provision with new forms of sub-degree provision are required, just as we need new institutions able to serve so-called “cold-spots” that lack a university such as in Blackpool and Hartlepool, building on recent successes in Lincoln, Chester and Worcester.

There are holes in the analysis – it’s pretty silent on whether (and how) higher education is positioned to deliver the analytical and personal skills it says we need in the medium (AI) term, and calls for a more dynamic and demand-led FE system jar a bit with calls in HE to be more… purposeful about where students study, what they study and where they should settle afterwards.

Nevertheless, those that simplistically paint a call for student number controls as freedom and expansion versus “the man in Whitehall will always get it wrong” probably need to accept that the world has moved on – and that it’s a lack of any attempt at planning or intervening in what students will study and where they’ll study that is contributing to our economic stagnation, and actually undermining calls for expansion.

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