Million Plus

Neil Carberry, Director for employment and skills, CBI

Universities have long been central to the CBI’s work on the growth agenda. The CBI has often pointed to our universities as one of the UK’s greatest assets, from their research record to the £15bn success story of UK education exports. Our Tomorrow’s growth report drew attention to the contribution that universities make by developing our higher skilled talent, and made the case for expanding flexible and partnership-based provision, including reversing the decline in part-time study.

There’s no denying that our higher education system, in terms of quality and participation levels, is world class. Universitas 21 and the University of Melbourne ranked the UK second in the world for the quality of our university outputs. But our economy is changing – shifting towards investment and exports – with a new approach to industrial strategy tilting the field towards our competitive strengths. With this, jobs are changing too: by 2020, we expect half of all employment to be for higher skilled roles like managerial, professional and associate professional positions. As emerging market economies step up their game on higher education policy and skills shortages continue to bite in sectors like manufacturing and engineering, it’s right that the UK should be looking over its shoulder.

So what’s the strategy? It’s clear we need to raise overall levels of skills in the workforce and respond to the specific needs of growing sectors. To respond to different learning needs, encourage diversity and the challenge of re-skilling and up-skilling the existing workforce, we need to widen the gateways into skilled work and encourage flexible routes to higher skills. That means part-time provision, intensive degrees, higher apprenticeships and other forms of business-university collaboration on skills, as well as traditional full-time degrees.

But conversations with businesses and universities made it clear that we need to look much more closely at the barriers to expanding the market in more flexible provision. It’s of particular concern that the number of new part-time students has plunged by 40% in the last two years. Delivering our rebalancing strategy makes it essential that working people have the opportunity to re-train and up-skill. Universities UK’s report of their review into part-time and mature higher education outlined precisely the scale of the challenge in this area.

It’s time we had a refreshed debate about university funding, including the incentives the funding system creates. Will universities offer intensive degrees, for instance, when they can make more money if the student studies over three years instead of two? Are we creating a perverse incentive for universities to focus on recruiting candidates to courses that are cheaper to teach, because they need the funding to cross-subsidize degrees in subjects like chemistry that the economy is crying out for? And how do we make university more affordable and available to people who want to work while they study?

For our universities to fulfil their potential as generators of growth, to deliver that pipeline of talent into business, to remain truly world-class, they need to be properly supported. The same study that ranked UK universities 2nd for outputs placed them 21st for resources – a measure combining spending on universities as a proportion of GDP and expenditure per-student. This is far below many of our competitors.
There are issues that need to be tackled. This year the cap on student numbers will be completely removed, meaning universities will be able to recruit as many students as they want and government will have to provide them with loans for tuition and maintenance. Questions persist about how that will be paid for.

The removal of the cap has the potential to be a positive step – the number of people studying at university should be the number for whom university is the best option, and good universities should be allowed to succeed. But it has to be properly managed. When the removal of the cap was announced, the Chancellor told us it would be paid for by selling off the student loan-book. This hasn’t happened, and we need reassurance that any shortfall will not be made up by reducing the already stretched budgets of universities.

As the resources data shows, university budgets are stretched. The problem we have is that, in practice, government is still covering more of the cost of university than expected – because it’s estimated that 45% of student loans will not be repaid. I would argue we currently have a substantial issue: fees and student debt, even though the taxpayer still ends up picking up a lot of the bill. I think we will need to return to this issue after the election, whoever is in power, but the answer cannot be reform that reduces university resources still further.

Higher education is critical for business. In Tomorrow’s growth, we made recommendations on some of the practical steps that can be taken by government, business and the higher education sector to break down the barriers that stand in the way of the economy’s skills needs. In the years to come we’ll need a huge expansion in technician level and higher skills, particularly in the STEM subjects that are behind the economic recovery. This was a key focus of our recent report, A Better off Britain, and our annual conference. Too many people are struggling to progress in their careers, to reach the middle and higher rungs of the ladder. We’ll only see a rise in the UK’s productivity, and people’s pay, if we work together to tackle skills. A big part of that will mean businesses working closely with universities to help them design and deliver the training people need to get on. Academic rigour and comprehensive knowledge, with vocational clarity of purpose and responsiveness to the current and future job market.

There is much to be proud about in our education system and particularly our universities – from the world famous institutions that attract students from around the world, to the newer universities that engage deeply with the needs of employers to ensure their students get ahead in their careers. But we will all need to work together, with focus and openness, if we are to develop a diverse and adaptable skills ecosystem that can take on the skills challenge of 2020 and beyond.  

Follow Neil on twitter: @Gramscisghost