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Neil O’Brien is MP for Harborough.

Before coronavirus, universities were tottering on the edge of change. Evidence had emerged that a large proportion of degrees aren’t a good investment for taxpayers or students. The Augar Review had officially recognised the problem of low value Higher Education (HE), and called attention to the huge imbalance in funding between universities and technical education.

A ruling by the Office for National Statistics means the subsidy element of student loans has to be properly accounted for from this year on, scoring against the government’s deficit. No more PFI-style funny money.

Coronavirus has accelerated things. With lucrative foreign students gone, many universities are in financial trouble. So controls on student numbers have, rightly, been reintroduced, at universities’ own request, to allow the system to be stabilised.

Many universities have finally started to provide online learning, an approach which made pitifully little progress before now. But universities still want to charge the full fees, leading to resistance from students.

Youth unemployment is rising. Jobs, apprenticeships and work placements are disrupted. The Government needs to move fast with schemes to help. But it’s also massively in debt, with a big structural deficit to fix.

The stars are aligning for a landmark reform: on one hand, boosting funding for youth job schemes, and putting rocket boosters under plans to build a prestigious, German-style technical education system. And on the other, paying for it by cutting back poor-value degree courses which waste taxpayers’ money, but don’t actually increase opportunities for students.

Before we continue, let me wind back a bit. Back to 1963. Between the end of the Chatterley ban, and the Beatles first LP.

That was the year of the Robbins Report, which said university places “should be available to all who were qualified for them by ability and attainment,” and triggered rapid university expansion.

Participation in HE rose exponentially: from 3.4 per cent in 1950, to 8.4 per cent in 1970, 19.3 per cent in 1990 and 33 per cent in 2000. In September 1999, Tony Blair set a target to get to 50% per cent, which we reached in 2018.

But somewhere along the way we lost sight of the Robbins principle – which wasn’t “more students”, but places for those who can benefit.

Robbins spent a long time pondering economic and academic evidence about how many could benefit. He considered a wide range of different types of education and training.

But under the 50 per cent target, the only rule has been more, more, more. You can go to university now without a GCSE in English and Maths, but the proportion of Firsts awarded has risen four-fold since the mid-1990s: universities are competing for students by debasing standards.

The creation of the Longitudinal Educational Outcomes dataset – initiated by David Willetts – has challenged this. It gives us data on how much graduates of particular courses at different universities earn.  It lets us look at value-added too: how graduates’ earnings compare to people with similar backgrounds and A level results.

It shows us that while university is on average good for those attending – there are many for whom it’s not worth it. Either their earnings are lower than comparable people, or improve so little that it’s not worth the big upfront cost.

The most recent Institute for Fiscal Studies analysis found that, viewed from the point of view of the student, their degree isn’t worth it for around 10 per cent of women, and a quarter of men. This is extraordinary, given they are receiving big taxpayer subsidies.

Viewed from the point of view of the taxpayer, the taxpayer makes “a loss on the degrees of around 40 per cent of men and half of women.” Summing together the effect for society as a whole (the gains to students and taxpayers) “total returns will be negative for around 30 per cent of both men and women.”  In other words, nearly a third of students degrees are not worth it economically.

The variation by degree and institution is even more dramatic. The taxpayer makes huge losses subsidising creative arts courses – only four and a half percent represent a positive investment.

Only 30 per cent of English students earn enough to justify taxpayers’ investment. The taxpayer makes a loss on the majority of students in sociology, psychology, communications, and languages. Many would be better off doing something else.

Median graduate annual earnings five years after graduation were £25,900, compared to £27,240 for Level 4 apprentices five years after completion. If we looked at, say, the bottom quarter of graduates, the case for them doing something else is even stronger.

Yes, for many students, going to university will have a value in itself. To study a beautiful poem has a value. We don’t expect the theology graduate who becomes a priest or a nun to earn a packet. Yes, we should explicitly make losses on some courses for the same reasons we subsidise public art and the like.

But let’s not be so snobby that we think there’s no satisfaction or intrinsic value from technical study. No sense of accomplishment for an apprentice building a jet engine, or a house.

For a country like Britain, deep in debt, lofty thoughts are not enough to justify such huge numbers of students doing things that don’t help them economically, given that’s what many themselves want. Half of young people go down the technical route – more in blue wall seats. They are less well funded.

While no neat comparison is possible, the Augar Review noted that in 2017-18, over £8 billion was committed to support 1.2 million UK undergraduates in England, and only £2.3 billion to support 2.2 million full and part time (FE) students.

That’s roughly £6,600 vs £1,050 each. Further education participation has fallen from 4.8 million to 3.6 million since 2010.  Key higher technical qualifications (HNDs/HNCs) are down by over two-thirds since 2010/11. Universities have become less diverse too. Part-time higher education has fallen by 53% since 2010/11.

We have to rebalance the system from higher to technical education, and put those middle options back in. Gavin Williamson has talked about “stronger alignment of the courses delivered with the economic and societal needs of the nation.”

That’s right, but to get there we need to recognise the limits of market forces. Students choose their course aged 17. What it will do to their earnings at age 50 isn’t front of mind. With lots of public subsidy sloshing around, universities’ incentives are to put on lots of cheap arts courses, charge full fees, and use the money to cross-subsidise other things.

They get the benefit, and the taxpayer the cost. Ministers need to step in to protect taxpayers. A report last year for Onward (I was one author) looked at ways to reshape funding. Ministers could impose a floor on prior attainment like a minimum A level score.  They could directly cut back numbers on poor value courses.

Personally, I’m drawn to the idea of a deals-based approach. Highly subsidised universities would propose to government how they will reduce their cost to the taxpayer. That could mean reducing numbers on some courses, or making them cheaper with shorter degrees, or and doing more online. Or a mix.

If they don’t produce a plan, the sanction would be direct number controls. We’d use the savings to fight youth unemployment, and fund technical education properly.  How does that sound?

55 comments for: Neil O’Brien: Higher and technical eduation. The universities should reform themselves. Or have reform forced on them.

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