Lord Willetts is President of the Resolution Foundation. He is a former Minister for Universities and Science, and his book A University Education is published by Oxford University Press.
A lot of young people go to university. Quite a lot do apprenticeships. My father ran the apprenticeship programme of a Midlands engineering firm and I used to be Universities minister. So I see the value of both routes. Today, the Resolution Foundation publishes companion papers by myself and Richard Layard on how to boost both routes into the jobs market. Indeed, increasingly they overlap: apprenticeships at a higher education level; doing a degree after an apprenticeship or vice versa; a doctorate involving applied engineering.
Over the last few years, the Conservative Party has got itself into the rather peculiar position that apprenticeships are good and going to university is bad. This is odd – not least because the places that Conservatives represent are the ones which send most people to university. There are prosperous towns in the South-East where well over 60 per cent of young people go to university. Private schools send over 70 per cent of their pupils to university. If there is a social problem of too many people going to university it is Tory areas which are responsible, and they certainly haven’t been following some plan from Tony Blair.
As graduates tend to earn more than non-graduates, there is a viable way of funding higher education – expecting graduates to pay back when their earnings are above a threshold which is currently set at about £25,000. It is not, of course, a conventional debt which would reduce the amount you could borrow for a mortgage. And the burden of repayment is manageable – you have to earning close to £40,000 a year before your monthly payments get to £100 a month.
Apprenticeships are also now securely funded though through a different mechanism, the Apprenticeship Levy, which brings in about £2.5 billion a year. But Layard points out in his excellent paper that increasingly apprenticeships are going to existing employees who are older. He wants more of the funding rebalanced towards the under 25s. I’ve just co-chaired a report for Engineering UK on how to boost engineering apprenticeships and we reach a similar conclusion.
However, we could see a continuing decline in the number of employers willing to recruit 16-18 year olds. Safeguarding and other requirements are now very onerous. That, in turns, means that we need to provide the 16-18 year old age group with pre-apprenticeship education and training.
T levels are almost as academic as A levels and won’t do the job. BTECs work better for many less academic young people who want a qualification clearly based in the world of work. But the Government is defunding them to try to drive young people onto T levels. There is a real danger of an increase in the number of young people not in education, employment or training as a result. We need more routes into apprenticeships not fewer.
There are limits to the funding available in the Apprenticeship Levy, so its use needs to be prioritised. Richard Layard rightly suggests prioritising the under-25s. But there are ways we can prioritise as well. Degree apprenticeships are the most expensive form of apprenticeships – costing over £25,000. With limited resources, funding for each one of them could squeeze out several lower cost apprenticeships. And students doing degree apprenticeships are more affluent than typical university students doing the same subject. So there is a case for funding them out of fees and loans. That would make more of the apprenticeship levy funding available for other apprentices.
We still waste far too much talent. The teenagers who just miss out on five A* to C at GCSE find it very hard to make progress either in college or to get into an apprenticeship. There are too many eighteen year olds who get an A level or some other Level Three qualification, but don’t then progress. They may not wish to do a full honours degree (Level Six in the multi-storey car park model of modern qualifications). But it should be far easier for them to be funded to get to level four or five – Higher National Certificates, Higher National Diplomas etc. The Government is bringing in the lifetime loan entitlement to help fund technical training at that level – an excellent initiative.
The back-drop to this debate is the surge in the birth rate over the first decade of the new century, rising from a historic low point of 670,000 births in 2001 to a peak of 810,000 in 2012. That 25 per cent increase over the period feeds through into more young people entering higher education and the jobs market over this decade. It is an opportunity for innovation and reform in higher education and the labour market, as was the similar surge in the 1980s.
Far from imagining that somehow we can reduce student numbers, we should be thinking imaginatively about how best to use that growth to boost innovation in higher education. Unless existing universities are to become even bigger, this is an opportunity to create new ones, such as the New Model Institute for Technology and Engineering in Hereford. It is also an opportunity to create new institutions in the cold-spots which don’t currently have one. LSE economists find that “a ten per cent increase in the number of universities in a region is associated with about 0.4 per cent higher GDP per capita.” They conclude that “the economic benefits of university expansion are likely to exceed their costs.”
There is an exciting opportunity for growth in apprenticeships and higher education. Now we need to seize it.
David Willetts’ paper How higher education can boost people-powered growth is published today by the Resolution Foundation alongside a paper by Richard Layard, Sandra McNally and Guglielmo Ventura, Applying the Robbins Principle to Further Education and Apprenticeships.