16 February 2017

Universities challenged

Degree applications have hit a tipping point

by Frank O’Nomics

It could have been my dream job.  Greene King is hiring young people to create new ales to help it appeal to a more youthful demographic.  Training will take 18 months during which they will learn about brewing, design, marketing and sales.  All about 40 years too late for me, but the key for those just embarking on a career is that these are apprenticeships. There is no need to spend 3 years building up £50,000 of debt at university, with the prospect of an uncertain employment market.  Instead recruits are paid; yet still work towards a qualification, in this case a Level 3 NVQ.  Greene King, who have taken on 9,000 apprentices since 2011 are not alone, with the Civil Service, large accountancy firms and big banks all building apprenticeship schemes.  Will this provoke a rapid decline in university applications – a rising trend for generations?  For some years students have been happy to take on debt as a passport to future riches.  The signs of a reversal are emerging, and it may not just be apprenticeships that prompt the change in appetite for expensive degrees.

First, we should examine the numbers.  On the face of it university applications from young people remain at a similar level to last year, with Minister Jo Johnston arguing, “more young people than ever are choosing to go to university”.   However, such statements mask what looks like a significant turning point.

Firstly, while the 37% of final year school students seeking further education has risen 0.4%, this is a distinct slowing in a growth rate that had been running at between 1 and 2%, and represents 7,000 fewer applications than UCAS had expected.  Secondly, the total number of applications, when other students are included, was actually down almost 30,000 on last year.

There are three areas that seem to be leading the change.  Not surprisingly there was a fall in applications from overseas students, who were clearly concerned over whether they would remain eligible for student loans and UK student fee rates post-Brexit.

This fall may not be sustained, but the other drivers seem to be the result of increases in fees.  Some of this is mature students struggling to justify the expense, but there has also been a notable fall in demand for nursing and allied health degrees.  Applications here fell by 10,000.  Ministers had claimed changes in funding would generate 10,000 more training places – not a lot of point if you don’t have the applicants.

If the increase in fees is already turning the tide of university applications, it could be accelerated by an increased availability of apprenticeships.

The government has been encouraging the process, with companies which have a wage bill above £3 million paying a 0.5% apprenticeship levy after April.  Many companies will be more than willing to be involved, given that they have long complained about the poor standards of recruits from school and university, and will be prepared to take on the responsibility for training, particularly as they could struggle to continue to fill  gaps in the workforce from overseas post-Brexit.

For 18 year olds the numbers are quite compelling. Starting salaries may not be high, generally around £18,000, but the Civil Service fast track process puts their apprentices on £19,500 after 2 years and the large accountancy firms, who have quadrupled their school leavers programmes, are offering starting salaries as high as £22,000 . This compares well with the average starting salary for the majority of graduates (which is between £19,000 and £22,000), who may ask what is the point of 3 years of study and £50,000 of debt if it gives very little pecuniary benefit.

The development of apprenticeship programmes will not be straightforward.  There has been some recent criticism of the government’s encouragement from the Institute of Fiscal Studies, who argue the apprenticeship levy may simply be used by the Treasury like an extra tax, and that the companies themselves may channel funds into staff training rather than proper apprenticeships.  There are other issues that date back to the 1930’s, where apprentices were seen as cheap labour, whose numbers could be reduced easily when they qualified (although you could argue that accountancy firms have done this for years with university graduates anyway).

Many high profile companies have started programmes – add to the list BT, Jaguar Land Rover, BAE, Penguin and even the Royal Opera House and the National Trust – but there is still a long way to go before an apprenticeship is a possibility for anyone other than the brightest 18 years olds.  Great care needs to be taken in ensuring that the money raised genuinely goes in the right direction and that the programmes create a formal level of qualification, such as an NVQ or an “apprentice degree”.  If this is achieved the impact on our universities will be significant.  They will be faced with shifting more resources to support vocational qualifications, or sliming down.  For the next cohort of school leavers, the choice of income or debt could be an easier one.  As for what produces greater innovation – remember that Watt, Brunel and Faraday were all apprentices.

 

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