Opinion: 'The funding imbalance between HE and FE is astounding'

14th August 2015 at 00:00
Picture of David Harbourne
The acting chief executive of the Edge Foundation argues HE is the last part of the education system that needs extra funding

In June, Universities UK (UUK) released a report in which they outlined the need for “sufficient and sustained investment to allow [universities] to maintain their powerful and positive contribution to the UK economy”.

UUK’s starting point was that inflation is already eroding the real value of income generated by the 2012 rise in tuition fees. If we are to ensure the production of the skills needed for the 2 million new high-skilled jobs that are projected by 2022, they argued, we cannot afford to let universities budgets to go unprotected.

In his July Budget, George Osborne fell in line with the report. He announced that tuition fees would be allowed to rise in line with inflation in order that universities remain “one of the jewels in the crown of the British economy.”

To the casual onlooker, the line of thought seems entirely logical. The consensus view is that to compete in a global knowledge economy, we need more people with a university education.

Unfortunately, the reality is that HE was the last part of the education sector that should have been assured further funding.

The Edge Foundation has looked at the accounts of 20 universities. The average rise in income between 2012/13 and 2013/14 was 6 per cent with some, such as Manchester and Sussex, gaining as much as 8 per cent. This is not to mention the rise in the value of tangible assets held by universities following a huge campus construction boom. The universities are in ruder health than they have been for a long time – and the budget secured this position for the foreseeable future.

This comes at a time when it is becoming clear that universities are quite simply not producing the results we need for both the economy or for graduates themselves. According to data published by the Higher Education Careers Services Unit, only one in four of last year’s law graduates had jobs as legal, social and welfare professionals six months after graduation. More than one in three graduates of sociology, English, media studies and psychology were working in shops, bars, restaurants or a clerical job. 

Yet despite the oversupply of graduates overall, a recent survey by the Association of Graduate Recruiters found that two-thirds of companies have unfilled graduate roles, with a third claiming that graduates lacked the skills required. Shortages of graduates in science, technology, engineering and maths (Stem) are choking industry, with an estimated annual shortfall of 40,000 people for jobs that require Stem degrees. 

Considering the diminishing returns that HE is offering to the economy, the imbalance between its funding and that given to FE is astounding. The situation was illustrated in a report by Baroness Wolf released a day before the UUK report, entitled Heading for the Precipice: Can Further and Higher Education Funding Policies be sustained?

Baroness Wolf estimates that FE colleges received about £2,150 per full-time adult student in 2012 and that funding per FE learner fell in real terms by 20 per cent between 2005 and 2014. In contrast, universities currently receive around £8,400 per full-time undergraduate.

The situation facing FE is even worse in 2015/16. On top of an 11 per cent cut in funding for adult skills announced earlier this year, the government announced an additional 3.9 per cent cut last month – just weeks before the start of the new academic year.

The government will doubtless argue that the cost of HE has been transferred to students, who take out loans which stand to be repaid over their working lives. The truth, of course, is that a huge proportion of student debt will never be repaid: it will end up being written off by the taxpayer.

The government has now announced a concerted programme of area-based reviews of FE.

This is an opportunity to ensure that a strong FE sector can deliver high quality technical and professional education matched to the needs of national and local employers.

There are models we can look to such as Switzerland, which values technical and academic paths equally. A large majority of young people begin apprenticeships at 15 or 16, but the promise of university is still there: many students later go on to acquire a degree at a university of applied science. Unemployment is just 3 per cent, as students are ready for the workplace at a much younger age and many have seven years of experience by the age that British students are leaving university.

We cannot hope to emulate Switzerland completely. They already have parity of esteem between technical and academic pathways – we don’t (yet). But Switzerland does offer a vision of the kind of system that will be required if we are to avoid major stagnation for the economy.

The ideal outcome of area-based reviews will be the establishment of strong, effective colleges which meet our most pressing economic needs. But in the end it will come down to simple economics. Is the government prepared to look again at the returns on investment from HE and FE? If they are, they will realise that FE needs more than a review – it needs a shot in the arm. 


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