Fifteen years ago, the then Prime Minister, elected on a promise of education, education, education, pledged that half of all young people should attend university. And he almost succeeded: in 2013/14, the estimated higher education initial participation rate was 47%.
However, degrees are a more expensive investment than they were in 2001, and the dividend is worth less. Most students are being short-changed. Not only have university fees risen to as much as £9,250 pa for a non-medical course, but Sutton Trust research reveals that graduates now leave university owing an average of £44,500 – more than their peers in any other English speaking country. Meanwhile, the graduate pay premium is now negligible. The Institute for Fiscal Studies suggests this is because “firms have used the increased supply of highly educated workers to switch to a different, less hierarchical and more decentralised management structure”. In short, the employment market has evolved. The education system needs to evolve too.
No guaranteesIn 2010,
we argued that it was irresponsible to peddle the myth to young people that university is a guaranteed fast-pass to the top without taking into account three key things: the subject they intend to study; the type of degree they are likely to be awarded; and the university they wish to attend. All three factors impact on their earning potential. The great news is that now there is a real credible alternative in the form of new style apprenticeships.
In August 2016, a report by the Centre for Economics and Business Research placed the lifetime earning premium for graduates at just £2,200 more than for apprentices. That’s a negligible £1 a week extra over the course of 40 years. In some areas, such as arts and humanities subjects, the earning potential of apprentices actually outstripped that of graduates by as much as 270%.
It is timely, therefore, that some 400 clear and concise apprenticeship standards – 40% of which are the equivalent of degree level – are being created by employers and will be overseen by an Institute of Apprenticeships. All apprenticeships will involve a job in
a ‘skilled’ occupation with ‘at least’ 20% off-the-job training, and apprentices must be trained to a level that means they can apply for professional recognition, should this be available. Additionally, degree level apprentices will study for a full bachelors or masters degree as part of their programme.
The employment system has evolved. The education system needs to evolve tooAlready, many major employers, including banks and accountancy firms, are rethinking their recruitment process, either by reallocating some positions traditionally earmarked for graduates, or by increasing the scale of their existing apprenticeship scheme. This is welcome. Having protected apprenticeship frameworks in place will present an opportunity for individuals from all backgrounds to access a rewarding, professional career. It will also sharpen the competition amongst universities, which will need to ensure that their programmes of study are relevant and competitive.
But the introduction of new standards is not enough. In order for apprenticeships to filter through to the consciousness of students, parents and teachers – and to be recognised by them as a viable option – buy-in from employers is needed en masse.
To help achieve this, from April 17, UK firms will be subject to a levy of 0.5% on pay bills over £3m, but really a focused credit which must be offset against the cost of apprenticeship training in England or be lost. For the 98% of employers with a pay bill under £3m, and those with training needs that exceed their levy credit, substantial funding towards apprenticeship training costs will be available.
Firms would be well advised to unlock the funding available and embrace the education revolution. By doing so, they will not only be investing in their workforce and diversifying their talent pool, they will be bringing about a long overdue change to the education system. They will be creating choice and creating chances.
This article was originally published in the September print edition of The Review. The print edition is available to all members who opt in to receive it, except student members. All eligible members who would like to receive future editions in the post should log in to MyCISI, click on My Account/Communications and set their preference to 'Yes'.