Peter Ainsworth is the Managing Director of EM Applications and is the author of Universities challenged: funding higher education through a free-market ‘graduate tax’.

You don’t have to be a Marxist to believe in historical materialism. The idea that changes in the economic environment drive institutional change is hardly revolutionary. Just as the invention of the steam engine and the spinning jenny underpinned the industrial age, destroying many long-established occupations but creating a multiplicity of new ones, so today’s developments in robotics have and will continue to shake up the occupational landscape.

The Government’s Green Paper outlining its proposed “Teaching Excellence Framework” identifies the key problems that arise from the resulting fast-changing workplace. It accepts that there are significant skills shortages despite ever rising student numbers and that a high proportion of graduates are not in graduate-level employment long after completing their studies. Both suggest that Universities are failing to align their offerings to the changing needs of employers. The paper also recognises that Universities “need to provide degrees with lasting value”, and it gives a nod to the idea that a sector that accounts for three per cent of GNP should be subject to some market discipline by offering financial incentives to those Universities that do a better job.

But the measures the paper puts forward to assess performance would do nothing to address the dynamism of the modern economy and could more accurately be described as just “Totally Excessive Fiddling”. Instead of measuring current facts related to the value graduates are getting from their education, it puts forward a panoply of subjective tests based largely on what goes on while at University rather than what is achieved after graduation. It measures mainly inputs rather than outputs.

And rather than rely on neutral data driven measures the paper indicates the government is planning to create new body of “experts” to pass judgement on “Teaching Excellence Framework” (TEF) submissions from Universities which will determine the level of fees they are allowed to charge.
In the proposed environment the key determinant of the financial success of a University will be its ability to persuade the “experts” of its cause. Not only will this create a bureaucratic monster at each University that will consume significant resources; it will also be dysfunctional. To assess the TEF submissions from each University there will be designed a set of measures that are:

  • “Comprehensive: the metric provides wide coverage that enables institutional and subject level comparisons”.
  • “Credible: the metric is established and has gained the confidence of the sector”.
  • “Current: the metric has been collected in the last three years”.

It is hard to think of a more certain way to freeze the sector in aspic, unable to respond to a rapidly changing jobs market. Using measures that apply across the whole sector and have been around long enough to be familiar will inhibit the experimentation and innovation that is just as much a requirement for future relevance for the University as it is for any business or charity. Any new approach may not initially score well on the established measure so Universities will be pushed into sticking with what worked in the past rather than exploring what may work in the future.

And the future of the jobs market is scary, for professionals as much as for the cabbies threated by Uber. “The Future of the Professions”, a new book by Richard and Daniel Susskind, highlights current developments in expert systems that have the potential to replace large components of the work done by doctors, lawyers and academics. Anything repetitious or rules based – simple diagnoses, standard contracts, mainstream lectures – can be automated for a fraction of the cost of human labour. The effect has already been felt in another historically stable profession – accountancy – where the numbers of chartered and certified accountants fell 10 per cent from 2002 to 2011 with earnings falling even faster.

Any backward-looking metric would lead Universities to encourage their students into such careers. These occupations have in the past been the best guarantors of a healthy “graduate premium”. But their reliance on a set body of knowledge – the very aspect that makes them most at risk of computerisation – is the very same attribute that makes them most attractive to a University seeking to raise its TEF score.

It’s easy to prove you have taught a defined body of knowledge where that knowledge is established and unchanging. Much harder to measure the teaching of creativity, innovation, empathy, leadership and the ability to learn in the future what currently is neither known nor imagined. Yet there is every possibility that the top earning careers in the future will be exactly those that most rely on the most unmeasurable of human skills, those being the ones most difficult to computerise.

The Teaching Excellence Framework is, in effect, a system of price control. Preparing hundreds and thousands of individual students, with their different interests, abilities and aspirations, for the world of work over careers that span decades is a massively complex task. In relation to any other industry with even a fraction of that complexity a modern progressive government would accept that it is impossible to efficiently set prices by fiat. It simply doesn’t work. The small group of “experts” charged with deciding whether Universities deserve a fee increase will be shooting in the dark. The real experts that need to be consulted are employers. They know whether or not graduates are worth their salt and they express their opinion in what they pay them.

This leads us to an alternative, simpler and more effective approach. Included in the Small Business, Enterprise and Employment Act 2015 is a power for the Government to build a database that links school information to the student loan database and HMRC income statistics. This means that it will be possible to measure the clearest and most current value of a degree – the earnings of the graduates – and adjust for subject, institution and student background so as to produce a real time measure of University value added. As Universities, over the years, produce many thousands of graduates, this figure will be relatively stable over time, and directly comparable between institutions. The very diversity of students and their employment experience becomes a strength as the University’s risk is spread over a large number of unrelated outcomes.

Once Universities are measured on earnings value added, much of the regulatory burden can be swept away. Universities won’t have to worry about filling in copious forms for submission to remote “experts” but instead will be free to experiment to find out what actually works for their students, both in terms of getting a job and building a career. Universities will have a real interest in keeping in touch with their graduates long after they leave. The data set, which already has a history back to those who graduated in 2001, will build over time so that there will be a real measure of whether a degree has lasting value – and Universities will have an incentive to-retrain those whose degree loses value over time.

The Teaching Excellence Framework is stuck in the age of state control and corporatism; the age of the robot calls for a more human approach that recognises the value of diversity, freedom and experimentation to meet the challenge of a fast-paced world.