David Willetts was Minister for Universities and Science 2010-2014.
Many Conservatives are wary of universities. This is bad for universities and bad for any political party which aims to win the support of young people.
One reason for going to university – though not the only one – is to boost earnings.
There is a fear that the boost to earnings from going to university is not what it was. I investigate this in my new pamphlet (Are Universities Worth It?) Earnings have been pretty flat since the Financial Crash and overall graduate earnings have not been exempt from ths.
However there has been a real increase in the earnings of people on the minimum wage since 2015 when George Osborne embarked on a policy of increasing it by significantly more than inflation. Many non-graduates are on wages at or close to the minimum wage so they have gained some ground on graduates. But by the age of 31, graduates are earning 37 per cent more than non-graduates with at least two A-levels – £30,750 and £22,500. That is a healthy graduate premium.
Moreover non-graduates in vocational jobs tend to get onto a pay level quite early on and stay there. Graduate earnings perform very differently. They may start quite low but they then grow for much longer. Indeed graduates stay in the work-force much longer. They are also far less likely to become economically inactive. More graduates makes a good long term contribution to growth.
The raw figures for lifetime earnings are stark. An undergraduate degree is estimated to be worth on average £280,000 for men and £190,000 for women, net of tax and student loan repayments, relative to what someone like them would have earned over their lifetime had they not gone to university.
These gains accrue to individuals as they make their way through the labour market. Between the ages of 23 and 31 average earnings grow by 72 per cent for graduates, more than double the 31 per cent for non-graduates with at least two A-levels. For those who were previously on free school meals, average graduate earnings growth is 75 per cent, while for non-graduates it is 26 per cent. And all the efforts to broaden access to university are working. Only 5 per cent of degree apprenticeship students were eligible for free school meals, compared with 17 per cent of university students.
Because graduates earn more than non-graduates it is fair to expect them to pay back for the cost of their university education. And the repayment terms are not onerous – paying 9 per cent on earnings above £25,000. So a graduate earning £30,000 would be paying back £450 a year, less than £40 per month. This is what really matters to, for example, mortgage lenders who look at the fixed outgoing of paying back the loan, not the so-called debt because it is nothing like a bank overdraft or a credit card bill.
What matters for students is the money they have to live on while at university and the quality of their education while they are there.
The freeze in fees has gone on for seven years now – it is hard to think of any other stage of education where we would happily preside over a 25 per cent real cut in funding per student. If fees go up it does not affect the cost of living as there need not be any change in the repayment terms – it just means people pay back for longer.
Higher education is an open system which many young people want to enter.
I don’t believe in targets such as the notorious 50 percent, or any other figure. I believe in informed personal choice and diversity of providers. 68 per cent of young people now say they plan to go to university. Afterwards graduates do have regrets – notably about their choice of course which is part of the English problem of early specialisation. But only 8 per cent of graduates wish they had not gone to university. By contrast 43 per cent of young people who do not go then wish they had.
If we were just basing policy on economic rationality and personal choice it would be clear. Plan on the basis that more people will go to university – as in just about every other advanced Western country. Fund it properly out of increased fees. And promote it particularly amongst the group least likely to go at present – white working class young men.
But universities have got caught up in the culture wars.
Some Tories fear that universities turn out Labour voters. There are differences in social behaviour affecting all young people regardless of whether or not they go to university – it looks as if easy access to social media for the past decade or more has had a big impact on them and increased mental ill-health issues, for example.
But most young people want a decent career and to own a place of their own. For many of them going to university boosts their chance of achieving that. As Giles Dilnot argued powerfully recently on this site the Conservative Party needs to be able to offer that to young people. The party of aspiration should not be against university when it is one of the most effective means of fulfilling those ambitions.
Are Universities Worth it? A Review of the Evidence and the Policy Options by David Willetts is published by the King’s College Policy Institute and the Resolution Foundation