Universities UK 13 September 2017

Transcription

1 Universities UK submission to the House of Lords Economic Affairs Select Committee inquiry into the economics of higher education, further education and vocational training Evidence is sought by the committee on whether the current structure of post-school education and training, and the way it is financed, is appropriate for the modern British economy, and if not, what changes are required to meet the needs of enterprise and the labour market, whilst providing value for students and the government. Our response covers the following areas: 1. The types of skills needed by the UK economy 2. An assessment of how effective the current structures are in delivering the different types of skills required 3. Proposals for change The skills needs of the UK economy 1. The UK needs to be prepared for the challenges that are imminent and emerging from increased global competition and technological change, particularly in the context of the UK leaving the EU. Increased productivity of the economy, together with high employment, are the key determinants of the UK s economic prosperity and ability to compete globally. 2. The post-school education and training system is crucial to both increased productivity and high employment. The system provides employers with the essential skills to generate new ideas and technologies, and to adapt and exploit new ways of working. It provides individuals with the opportunities to sustain standards of living and improve their life chances. Sufficient skills with the following characteristics are essential: Higher-level: technological change has led to a significant increase in the proportion of jobs requiring higher-level skills, which in turn has spurred upskilling of some occupations where higher-level qualifications are increasingly necessary. Technical: some professions or careers require specific, technical skills to be applied, acquired through further or higher education or other forms of training. Transferable: employers require their staff to have good communication, analytical and entrepreneurial skills that can be used across different roles and employers. Management and leadership skills are also important. Subject-specific: Some occupations require a background in science, technology, engineering and mathematics (STEM), some require training in the social sciences, while others require skills in creativity, and languages. Some occupations will require different combinations of these skills. A broad base of skills is needed at the aggregate level, as the specific mix needed is subject to change as employer needs 1

2 change, due to often unforeseen developments in local, national and international markets. How effective is the current system in delivering higher level skills? 3. Higher level skills can be defined as the set of skills acquired through completion of a higher education qualification. 1 Universities play a central role in the delivery of higher level skills. The UK has been very successful at growing its supply of higher level skills over the past decade between and , the number of higher education qualifications awarded each year increased by 91,665 or 14% The UK s success can be partly attributed to the sustained funding of the higher education system which has allowed a significant growth in student numbers to meet the higher-level skills of employers. The current system in England has the following significant strengths: there is no cap on student numbers it enables stable and sustained funding of universities it shares the cost between taxpayers and graduates 35% of educating students is funded by government and 65% by graduates 3 over the longer term and is fiscally sustainable. it is progressive, and enables students from all socio-economic backgrounds to enter university if they have the ability. 5. By 2016, young English students from the most disadvantaged backgrounds were 74% more likely to enter university than they were 10 years earlier. Although a participation gap remains between the most advantaged and the most disadvantaged students, this gap is narrowing and, last year, the participation rate grew fastest among those from the most disadvantaged backgrounds. 6. Graduates also recognise the value of their degree in securing and succeeding in employment. 4 85% of graduates believe their degree was required, important or helped them obtain their current job and 76% believe that their higher education experience prepared them for or progressed their career. Graduates also display high levels of career satisfaction, 88% of graduates are very or fairly satisfied with their career to date. 1 Universities UK (2015) Supply and demand for higher-level skills 2 Universities UK (2017) Patterns and Trends in UK higher education Institute for Fiscal Studies (2017) Higher education funding in England: past, present and options for the future 4 Longitudinal Destinations of Leavers from Higher Education Survey , Higher Education Statistics Agency

3 However, a number of problems exist: 7. There is a current shortage of higher-level skills, with not enough graduates relative to the number of jobs demanding them, and this shortage in supply is projected to continue up to with estimates predicting a shortage of up to 8%. 5 61% of employers are not confident about accessing high skilled employees in the future. 6 In spite of this shortage, and the fact that graduates earn significantly more than nongraduates, 7 there is a strong perception that there are too many graduates or a significant number of graduates in non-graduate jobs. The latest figures show that 6 months after leaving university 77% of graduates in employment are in professional level jobs with this figure rising to 84% three and a half years post-graduation. 8 The incorrect perception that there are too many graduates has the potential to discourage individuals from applying to university, and lead to further shortages of higher-level skills in the future. 8. Problems with understanding the system of fees and loans in England could also lead to further shortages of higher-level skills in the future. Concerns have been particularly raised over the level of interest rates that graduates face. The way the current student funding system in England is perceived by students, their families and graduates is problematic and demonstrates the system is not readily understandable or transparent. 9 Income-contingent loans do not share the same characteristics as conventional debt but are widely considered to be the same as debt. 9. Students face real financial challenges in meeting their costs of living while studying. Evidence from the Student Funding Panel 10 and the independent review of higher education funding in Wales in showed that current students were more worried about the level of their maintenance costs than about long-term debt arising from student loans. 10. The current system does not allow for sufficient numbers of individuals, across a wide range of ages, to learn flexibly. The demand for higher-level skills needed by the economy cannot be solely met through the training of young, full-time graduates - as the economy responds and adapts to changes over time, adults will need to retrain and 5 Universities UK (2015) Supply and demand for higher-level skills 6 CBI/Pearson (2017) Helping the UK thrive, Education and skills survey 7 Office for National Statistics (2017) Graduate labour market statistics 8 Destinations of Leavers from Higher Education survey and the Longitudinal Destinations of Leavers from Higher Education 12-13, Higher Education Statistics Agency Julia Goodfellow (2017) The Guardian: Friday 14 July, University tuition fees haven t failed but they need a second look 10 Student Funding Panel (2015) An analysis of the design, impact and options for reform of the student fees and loans system in England 11 Independent review panel (2017) Review of higher education funding and student finance arrangements in Wales 3

4 upskill. 12 The 2012 reforms to student funding, including increased fees and changes in eligibility requirements for part-time undergraduate students, combined with other factors such as the withdrawal of public funding for continuing professional development and the economic downturn, have contributed to a continued fall in parttime students Wide disparities exist in the labour markets across England in relation to higher-level skills. 14 Highly skilled graduates may wish to live in a particular area, but unable to find work, move to other areas or conversely may choose not to live in an area with skills shortage vacancies based on a number of personal considerations. Several regions, including the Sheffield 15 and Nottingham 16 City regions, have identified retention of graduates from their respective, local universities as key to driving economic prosperity. More balanced growth across England and the UK could occur if there was better matching of graduate skills with employer demand at the local and regional level. 12. Sustainable funding is needed to ensure students receive a high-quality student experience to maximise their skills development. The 2012 reforms to higher education increased average university funding per student by 25% between and but this figure has two important qualifications. It does not include cuts to teaching capital grants, and also significant cuts had already been made to teaching grant funding prior to Between and average university funding per student increased by only 4%, and actually decreased by 0.6% if reductions to teaching capital are factored in. 18 How effective is the current system in delivering technical skills? 13. Technical skills can be defined as a set of skills valued by industry and acquired through an education that draws its purpose from the workplace rather than an academic discipline. This education can range from level 2 (the equivalent of good GCSEs) to higher education. 19 Universities play a significant role in delivering technical skills, as outlined below. 14. Provision at universities includes courses with a strong emphasis on specific skills used in a particular career, including medicine, nursing, law, teaching, engineering, social work 12 Leitch review of skills (2004) 13 Universities UK (2013) The power of part-time: review of part-time and mature higher education 14 HM Government (2017) Building our industrial strategy p.110 shows the percentage of the population with a degree level qualification varies widely by geographical area. 15 A Better Future Together A Prospectus for Sheffield City Region, Sheffield City Region, February Graduate Retention in N2, Report to Economic Development Committee, Nottinghamshire County Council, March Institute for Fiscal Studies (2017) Higher education funding in England: past, present and options for the future 18 Analysis conducted by Universities UK. 19 Report of the independent panel on technical education (April 2016) 4

5 and IT. Nearly 42% of provision at universities can be classified as providing technical skills. 20 Many higher education courses have strong links with professional bodies. 15. Employers report high levels of satisfaction with graduates technical skills, with 91% of employers very satisfied or satisfied (although this figure drops to 66% of employers when considering school/college leavers technical skills) Universities collaborate with employers and further education colleges in the delivery of higher-level apprenticeships, which cover a wide range of sectors and occupations. 22 Universities have enthusiastically engaged with the delivery of degree apprenticeships, which provides an individual with the opportunity to acquire a degree while working, and without the need to take out a student loan. At least 60 universities will deliver or are planning to deliver degree apprenticeships in , with the prospect of significant growth locally and regionally. 23 This capacity development is crucial as over 80% of businesses now report operating apprenticeship programmes and two-thirds of those paying the levy plan to reconfigure their existing training use apprenticeships to upskill their workforce Some universities are pro-actively collaborating with other stakeholders to provide stronger pathways through secondary, further and higher education, and lifelong learning, and smoother transfers between technical and academic pathways. One example is London South Bank University s collaboration 25 with a university technical college, engineering academy, a further education college and a new institute for professional and technical education. This collaborative model enables individual learners within a certain geographical area to be supported more effectively than through organisations acting separately. However, there is more work to be done. Issues include: 18. The UK is relatively weak in technical skills, with England ranked 16 th and Northern Ireland 17 th out of 20 OECD countries on the percentage of adults aged with technical education as their highest qualification It is, as yet, unclear how the government s intention for new Institutes of Technology will address this relative weakness. While the government s green paper in early 2017 on the industrial strategy and subsequent call for proposals emphasised that the government wished to encourage new partnerships between key local stakeholders 20 Universities UK (2016) Higher education in England: provision, skills and graduates 21 CBI/Pearson (2017) Helping the UK thrive, Education and skills survey 22 Which? (2017) The complete guide to higher and degree apprenticeships 23 Universities UK (2016) The future growth of degree apprenticeships 24 CBI/Pearson (2017) Helping the UK thrive, Education and skills survey 25 London South Bank University (2017) Families of learning: co-creating local solutions to education system failings 26 OECD (2014) A skills beyond school brief on the United Kingdom 5

6 (building upon existing technical education provision), the Conservative manifesto states that the institutes of technology should be backed by leading employers and linked to leading universities, in every major city in England. Not building upon existing provision, and restricting the institutes to cities and a small number of employers and universities, will significantly reduce their impact and success. 20. Clearer pathways into, and through, technical education are needed, with clear and understandable information on the options available conveyed to students at the local level. This is where a collaborative approach at the local level may have much more of an impact on local learners. Barriers exist to developing these collaborative approaches across more areas which include governance issues, funding of initial costs, and sustainably funding the collaboration. These barriers should be examined in more detail in order to encourage greater numbers of collaborations. 21. The government s reforms to technical education will need to ensure that individuals have sufficient financial support for living and tuition costs, and this support will need to allow transfers between technical and academic pathways, progression into higher levels of technical education, and to be consistent with the current student finance system. How effective is the current system in delivering transferable skills? 22. Transferable (or employability) skills can be defined as a set of skills that all employees should have to be effective in the workplace, and that can be used across different roles and employers. They are needed in conjunction with higher-level and technical skills. Universities play a significant role in ensuring graduates are equipped with transferable skills in the following ways: 23. Highlighting the importance of, and ensuring opportunities for, work experience, which can be through internships or placements. Research undertaken by Universities UK shows that all universities participating in the research had a strategy and process for students to participate in some form of work experience, ranging from highlighting opportunities to specifically requiring students to participate as part of their degree. 24. Working with employers in the design of courses and qualifications. While this may benefit students through learning technical or subject-specific skills, universities working with employers can also more generally benefit students through improving their transferable skills, with courses building in the practical application of knowledge. Research undertaken by Universities UK shows that universities engage with employers in a multitude of ways, through seeking feedback from industry representatives in developing new programmes, using industry liaison panels or boards to inform ongoing programme development, the embedding of professional mentoring, and incorporating real-life scenarios into course assessments. The extent of employer engagement varies widely by subject area. 6

7 25. Careers services not only providing advice and training directly to students up to and beyond graduation, but also providing input into the university s overall employability strategy and design of courses - through feeding back of labour market intelligence, outcomes of recent graduates, and information on local skills shortages. 26. Universities work in this area is effective. 87% of recent graduates believe their higher education experience has allowed them to communicate effectively in their work and 88% to take initiative and personal responsibility in their work. 27 Most employers find university graduates well prepared for work (ranging from 80 to 84% across the four nations) in contrast, around half find 16 year old school leavers to be well prepared. 28 However, some issues exist: 27. While most graduates fare very well, some employers struggle to find the skills they require. Around 40% of employers are dissatisfied with graduates business and customer awareness, and a third are dissatisfied with graduates attitudes, including their resilience. 29 The question here is whether these skills could be better delivered in partnership between employers and universities, or to what extent these skills should be, or can only be, developed on the job. 28. The work experience opportunities available for students and the extent to which their course design will be influenced by employers will vary widely by their chosen area of study. In addition, while work experience is highly valued by employers in preparing graduates for work, there is evidence to suggest that some employers target particular types of universities. 30 This will mean some groups of students will have less opportunity than others to develop their transferable skills. How effective is the current system in delivering subject-specific skills? 29. Employers require a wide range of subject-specific knowledge, and the need for science, technology, engineering and mathematics skills (STEM) is widely evidenced particularly for specific industries and sectors. 31 Other sectors such as the cultural and creative sectors require different subject-specific skills, and the development of public policy and economic growth requires knowledge of the humanities and social sciences. There is 27 Longitudinal Destinations of Leavers from Higher Education Survey , Higher Education Statistics Agency Department for Education (2016) Employer perspectives survey 29 CBI/Pearson (2017) Helping the UK thrive, Education and skills survey 30 National Centre for Universities and Business (2016) Work experience as a gateway to talent in the UK: assessing business views 31 HM Government (2017) Building our industrial strategy 7

8 also a need for creative skills in STEM sectors, and the combination of scientific and technical skills with creative skills is crucial. 32 The current system allows universities to provide a broad base of skills as well as meet more specific needs and has the following strengths: 30. the supply of talent can respond flexibly over time as the needs of employers change. This has led to significant increases in students in veterinary, biological, mathematical and physical sciences, and engineering between and the subject of study is driven by student choice, which is important given they make a significant co-investment into the costs of their education 32. the provision of public funding has played a critical role in supporting the ability of universities to meet increased demand from employers and students for high cost subjects. Some subjects cost more to teach than the maximum annual tuition fee, including many STEM subjects. 33. It allows universities to work directly with employers to deliver courses and degrees where there are specific needs for example through higher level and degree apprenticeships, or the co-design of collaborative programmes, or centres of excellence. Twelve case studies illustrating a wide range of university-employer collaborations are featured in a joint UK Commission for Employment and Skills and Universities UK publication. 34 However, the following problems exist: 34. Some employers, in specific industries and sectors, cite persistent shortages of subjectspecific skills. 35 These gaps should not be the main driver of higher education provision, as specific shortages can be subject to change over time, and also can be due to a failure to match the supply of graduates with demand many STEM graduates, for example, choose to work in non-stem professions. 36 Skills gaps could, however, benefit from being better communicated to prospective students, so they make the best possible decision around choice of subject of study and future career paths. 35. While high-cost subject funding has been successful in supporting provision in the past, any concerted effort to increase STEM provision will need to be funded sustainably with the amount of funding universities receive per student maintained. This will ensure the quality of the student experience. Even with high-cost subject funding, some universities 32 As emphasised in evidence given to the House of Commons Science and Technology Committee on the industrial strategy, 22 February See Table 5 in Universities UK (2017) Patterns and Trends in UK higher education UK Commission for Employment and Skills and Universities UK (2014) Forging futures 35 For example, in infrastructure and the nuclear industry. 36 Social Market Foundation (2013) In the balance: the STEM human capital crunch 8

9 may not be able to meet the costs of teaching these subjects, and use income from other subjects to make up the loss. 37 Proposals for change 36. While the current system has great strengths and is largely effective in delivering the skills needs of the UK economy, we have highlighted some of the problems that exist. Therefore it is right to examine the system and consider how improvements could be made. Universities UK makes the following recommendations: 37. Enhance the student funding system in England to make it fairer to those in need: Universities would like to work in partnership with government and students to examine the option of providing targeted maintenance grants for those in most need of this support. We would also like to explore the possibility of a reduction in the interest rate payable for those graduates who are low and middle-income earners, through changes in earning thresholds to which interest rates apply. 38. Make the costs and benefits of higher education much more transparent to prospective students: there needs to be much better communication on the potential lifelong benefits of attaining a degree, the costs borne by government in educating students, and how the student loan system acts as a safety net with remaining debt written off after 30 years - unlike any other conventional loan arrangement. Universities want to work alongside the relevant stakeholders to ensure the current systemin England is much more transparent to students, their families, and graduates. 39. Enhance support for lifelong learning: this could be through greater government support for adults to retrain, upskill and to adopt more flexible ways of learning. It could also involve better career advice to older learners and those considering retraining. 40. Better match graduate skills with employer demand at the local level: this could involve supporting networks of local universities, employers and stakeholders to encourage employer demand for graduate employment and work experience, match the best possible candidates to the opportunities, while ensuring these opportunities are more widely available than currently. These networks could also monitor skills gaps at the local level, encourage collaborative development of courses and programmes to address local needs, and help address disparities in high level skills between local areas. These local networks could build on the experience of the National Collaborative Outreach Programme (NCOP). 41. Create stronger pathways through technical education from greater local collaboration: this could involve systematically reviewing the barriers to increased local 37 Financial Sustainability Steering Group (2015) The sustainability of learning and teaching in higher education in England 9

10 collaboration and creation of collaborative models between universities, further education colleges and schools, and addressing these barriers. 42. Address subject-specific skills gaps: universities, employers and government could work together at the national level to ensure long-term employer trends, and persistent skills shortages, are systematically communicated to prospective students through careers information, advice and guidance. 10