14 July 2017

Does the UK really need more undergraduates?

By Sophie Sandor

Universities minister Jo Johnson has reported that having a degree is worth on average £250,000 in higher lifetime earnings to a woman. “Remarkable”, you must be thinking. How can three years of being a student, instead of spending that time learning on the job and working one’s way up the career ladder, possibly make one that much more likely to land a highly-paid position at the end of it all? Then again, eye-catching statistics paraded by politicians are often misleading.

Rather than being a product of their degree, the earnings bonus is largely attributable to labour market advantages that young people already possess when they arrive on campus. Good school grades, extracurricular activities, and harder-to-measure qualities correlated with both of these examples are already in the bag. Put simply, they are already more employable before they have even gained their degrees.

Only a partial attempt is made to acknowledge the already-existing advantages university applicants have over everyone else in the jobs market. This is done by using those who have two or more A-levels but no degree in the control group. Sending your average 18-year-old to study for a degree certificate would not necessarily cause them to benefit from this extra cash they otherwise wouldn’t earn.

What’s more, this is an average of the potential net earnings for all degrees bundled together. Someone leaving school and deciding between starting a career in journalism straight away and studying journalism at university first would be wrong to infer from Johnson’s claim that opting for the latter would boost their earnings by £250,000. Nor can two people doing different degrees expect their studies to have the same impact on their future earnings.

The £250,000 quoted by Jo Johnson is therefore not very helpful, and misleads us on the merits of university education. Most politicians avoid admitting the consequences of successive governments’ drive for a degree-decorated society. Doing so would be politically unpopular. And disentangling the complicated issues that surround this new normal would require the kind of nuance that cannot be reduced to a soundbite.

Like Jeremy Corbyn, Jo Johnson takes for granted one of the most contentious issues in the debate: that more people going to university would be a good thing. The universities minister concedes that it is the goal, pointing out that charging enables universities to offer more places. He then said that, despite tuition fees, children from disadvantaged backgrounds are 43 per cent more likely to attend university than they were eight years ago. (Though that particular statistic overstates the progress since it’s the number arrived at before factoring in that people in general are more likely to attend.) But this still begs the question of whether more graduates should be the goal, and most people in the tuition fees debate are guilty of begging the question in this fashion.

Even if the £250,000 figure was perfect, it doesn’t follow that sending more people to university would see more people benefiting from these higher earnings. The advantages accruing to individuals with degrees would, by definition, diminish. Not everyone can be the most employable person and not everyone can be most worthy of the highest paying job available. It’s typical of politicians to fall into the trap of thinking otherwise. It was why, in the 1990s, John Major’s government decided to name all technical colleges universities, downplaying or completely ignoring any inflationary effects that that might have on education.

Indeed, fees should be defended. Fees provide a disincentive to not spend three years out of the labour market if it’s not worth it. Fees also incentivise universities to turn out employable graduates (something the UK needs more of) by making graduates sign a contract saying they will pay a certain amount of their future earnings back to their university. And, as the recent experiences of Scotland and England demonstrate, fees don’t negatively impact applications from the poorest young people either.

Without tackling the assumption that more and more people should go to university, we are putty in the hands of those who would see young, taxpaying non-students foot the bill for a policy abolishing others’ tuition fees.

Both sides of the tuition fees debate share the same objective: more students enrolled in British universities. But that assumption isn’t necessarily right. Young people are typically eager to get on, be successful and make lots of money, which is also good news for the economy. So politicians need to see the forest for the trees and debate whether a degree is always the answer.

Sophie Sandor is Programmes Manager at the Institute for Economic Affairs