IPR Blog

Expert analysis, debates and comments on topical policy-relevant issues

Topic: Education

GE2017 and Education: a policy ‘battle royale’

📥  Economics, Education, UK politics

Professor Hugh Lauder is Professor of Education and Political Economy at the University of Bath

The general election provided an opportunity for the political parties to demonstrate a vision for the future of education. In the recent past, more has united the parties than divided them, but this election there has been clear water between them – and as we enter an uncertain future, their manifestos signal very different understandings of the nature of the country and its future.

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To say this much is already to court controversy. It’s not clear what ‘this country’ means, so we should be clear that the discussion will be about education policy in England. Despite an unexpected election result, it is worth analysing the Conservative and Labour manifestos because their respective policies on education may tell us much about their thinking and – particularly, in fact, in the context of the surprising election result. The Liberal Democrat manifesto does not provide the clear contrasts which illuminate the debate about the visions for this country.

Judgements about these manifestos will of course be coloured by evidence, but also by prognoses for the future. Here my colours need to be pinned to the mast. As a specialist on the education-labour market relationship, it is quite clear to me that the neo-liberal assumption that the primary aim of education is to provide skilled workers for the economy is now in question. It appears that we are now on the cusp of a new form of capitalism in relation to the labour market. Up until now, the prevailing policy assumption of all the political parties has been that there will be increasing demand for high-skilled work and that graduates will be appropriately rewarded for their productivity. It is for this reason that graduates have to pay high fees for what is perceived to be the advantage they gain from the graduate premium. The politicians have been supported in this view by human capital theories that cannot address current conditions: when we disaggregate the returns to graduates we find that it is only those in the top decile of earnings that conform to the profile assumed by human capital theorists.

The assumption has been that the new technological revolution will raise the demand for skilled workers. But if we look at the returns to graduates in the United States – considered the hothouse of the technological revolution – as I have done with Phillip Brown and Sin Yi Cheung, then two points stand out. Firstly, when we track graduate returns between 1970 and 2010, incomes declined for all except those in the top decile. Secondly, and significantly, those with postgraduate degrees, who we may expect to be at the cutting edge of the knowledge economy, have fared in the same way. The UK data from the Labour Force Survey also shows that there is a wide disparity in incomes according to education credentials; interestingly, top A-level students who have not attended university earn more than median graduates.

Craig Holmes and Ken Mayhew at Oxford have documented the increase in the proportion of graduates who now undertake what were formally non-graduate occupations – an indication that there is deficient demand for high-skilled work. At the present time, some 46% of graduates won’t pay back their loans because they won’t earn enough. When that figure reaches 48%, the government will gain no more from the £9,000 fees than when they were set at £3,000. It is clear that, in the light of these data, we need to re-evaluate the idea that technology will raise the demand for skills; it will for some, but it is more likely to re-stratify the occupational structure to reduce the costs of knowledge-based work. This is, of course, one reason why industrial policy is now back on the agenda: left to itself, the market cannot create enough good quality jobs.

In essence, the optimism which accompanies the dominant view has come face to face with new forms of predatory capitalism. Here the drive is to create cut-price brain power, leading to a situation where learning no longer equals earning. In this emerging form of capitalism, the role of education is wholly uncertain, since the rationale for education under neo-liberalism has been that it is an economic investment in which the relationship between education and wages is relatively straightforward. The case for education will now have to be re-stated in very different terms.

If this account is plausible then it speaks to the two most high-profile policies advanced by the Tory and Labour Parties. The most controversial policy in the Conservative manifesto is that of the promotion of grammar schools or, as it says in the manifesto, selective schools. Such a policy is a clear example of how individual biographies and anecdote have trumped evidence. The research evidence against selective education which led to the creation of the comprehensive system was led by Jean Floud and my friend and colleague A.H. Halsey in the 1950s. They demonstrated how inequitable the 11+ system was. Since then, with more developed databases, the early claims they made have been fully substantiated, notwithstanding the use of questionable data in the Conservative Manifesto. The purpose of the reintroduction of selectivity was ostensibly to promote social mobility; in Britain, as in other neo-liberal societies, destinations are indeed still determined by origins. The debate over this issue has been dismal because it has been assumed that education alone can promote social mobility, ignoring the labour market conditions necessary to turn educational credentials into opportunities. Indeed, data from the United States suggests that the demand for high-skilled work for the younger generation is now in decline. For those of us who have a commitment to evidence-led policy, such a manifesto pledge suggests that reason is not a dominant principle in education policy. It is probably the case that the election has put paid to this pledge, but it nonetheless tells us something about the nature of a party that aspires to turn the clock back.

A similar claim has been made with respect to the Labour mainfesto’s commitment to abolish tuition fees. Commentators on the left, including The Guardian, as well as those from the right have condemned this pledge as, at best, advantaging the already privileged among the younger generation. That would be a reasonable claim if the labour market reflected the assumptions of human capital theory: as we have seen, it doesn’t. In the light of the scenario I have sketched, this Labour policy looks enlightened. As the economic returns to education decline for many, we can expect a battle royale over the role and cost of education. Given the uncertainties that this generation are confronting, the best that our society can do is to provide young people with a good education, which gives them the mental flexibility to see that other worlds and other ways of doing things are possible. This, of course, is what lies behind the European states that do not charge fees and look upon our obsession with the private rates of return from a university education with a degree of curiosity, if not outright scepticism.

This not only applies to university education but to the kind of technical education that FE colleges can provide. It is almost impossible to understand the savage cuts to FE colleges that have taken place under austerity policies. Both parties have something to say on this matter. We see this in the Conservative Party’s aim of linking technical education to degree-level studies, a theme consistent with the idea of social mobility. But before we innovate further, we might do better to re-lay the foundations of what we have.

Here, it is important to examine lifelong learning. It has long been the ‘Cinderella’ in education policy and, indeed, under the period of austerity, education has been front-loaded so there are few second chances available for those in their mid-twenties and older. Now, in the light of radical labour market uncertainty it is needed to provide necessary social and economic support for workers. Singapore is already dipping its toes in this pool with Skills Future, which provides every Singaporean citizen with $500 for further education and skills upgrading. The Conservative manifesto is silent on the issue. Labour is committed to lifelong learning, which starts with a return in the early years to Sure Start, and this too is important for the age we are entering. It may create flexibility for parents, who will certainly need it in their paid working lives, as it will for those who have caring responsibilities that extend above and beyond their children.

When these two manifestos are compared, it is clear which one has the most comprehensive account of educational policy. Of course, those on the right will suggest that this judgement is based on sector self-interest, since I am a university professor – but that is too easy. The points I’ve raised need to be addressed rather than dismissed. It is unclear on what basis Labour have made these commitments and whether they can be paid for, given the straitening times we are entering. But the implications are clearly forward-looking.

For the Conservatives, all appears well with the education system we now have with some tinkering at the edges, mainly in terms – yet again – of qualifications. We might expect Labour’s manifesto to be more radical, but it is squarely in the social democratic tradition, as would be well understood in Germany, for example. There is no suggestion of integrating the public schools with the state sector. There is no attempt to abolish school choice, and there is only a mention of questioning the testing culture, which clearly benefits the political class but neither students nor schools. In these respects, whatever the merits of the debates that no doubt will be forthcoming, this is a moderate set of policies. They may have their roots in the 1980s, but – either by design or happy accident – they are relevant to our future.

 

Skills and global value chains: a story of winners and losers

📥  Business and the labour market, Economics, Education

Professor Hugh Lauder is Professor of Education and Political Economy at the University of Bath

Two weeks ago, the OECD launched the newest instalment in its biennial Skills Outlook series, which focusses on the impact of skills and education on economies and employment in OECD countries.

OECD Skills Outlook 2017: Skills and Global Value Chains broke new ground for the OECD in that it reported the relationship of skills to the global economy. This is the first time that the organisation has extended its analysis of skills to the global economy: in the past, it has focussed on national competitiveness through education and skills, but here the focus was on the role of skills in the development of global value chains.

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There were two key messages to the report: firstly, that a skilled workforce enables countries to compete for work in global value chains and, secondly, that there would be winners and losers in that competition – workers who are less skilled, in particular, are likely to remain excluded from the global economy.

Policy challenges

There are a number of problems that national governments have to confront when thinking of policies that relate to global value chains. The primary problem is that, in many sectors, global value chains are footloose: transnational companies will always shift their supply chains to wherever they can find a cost advantage – and where technology can be substituted for workers, however skilled, technology appears to win. Two good examples of this come from the manufacturing and service sectors, respectively. First, much of East Asian manufacturing is based on low-skilled assembly work – but with the advent of smart factories, workers are no longer needed; they can be replaced by robots. The announcement by Adidas that it will establish such a smart factory in Germany is a straw in the wind, and will raise fundamental problems for the strategies of developing countries. An example from the service sector concerns the discovery work that was once undertaken in London and New York by young lawyers, who were paid high salaries. That work was subsequently offshored to lawyers in developing countries where it could be done at a fraction of the price the same work would cost in Western capitals. Now, that work is undertaken by the use of algorithms.

As Phil Brown, David Ashton and I argued in our book The Global Auction, employers do not wish to pay for brain power and skill if they do not have to; it is too expensive. The error here is to believe that we live in a knowledge economy, when it is actually knowledge capitalism that drives the strategies of cost reduction.

This is not to reject the importance of education and skills, which we should avoid doing for two reasons. Firstly, without skilled workers, small and medium enterprises that may become corporations in the future will not be able to enter the market. In emphasising skills, therefore, we need to build industrial policies within countries that enable fledgling enterprises to flourish. Skills may also be needed as an insurance policy, however, a form of resilience when transnational companies decamp from one country to another in the search for cost advantage, or when new forms of technology make firms unviable. Costa Rica developed a skilled workforce to attract Intel, for example, and for a while the strategy worked – but then Intel exited to Vietnam, where labour was cheaper. In Finland new technology from Microsoft made the Nokia phone redundant, with resultant job losses – although the company is now seeking a comeback. In both cases, the host countries were hit hard. What we don’t know is whether having skilled workforces will enable these economies to be resilient in recovering from these meteorite-like shocks.

A timely report

The OECD’s new report has involved considerable cooperation between Andreas Schleicher, Director of Education and Skills, and Andy Wyckoff, Director of Science, Technology and Innovation – as well as their respective teams. The extension of skills analysis to global value chains is a major breakthrough for the OECD and for the international research and policy community.

The report was launched at an event in London with support from the Institute for Policy Research (IPR), and included a panel discussion in which I participated, alongside Torsten Bell of the Resolution Foundation, Toni Fazaeli of the Institute for Learning and both Wyckoff and Schleicher. It was a productive discussion, and touched on many of the points raised above.

But there were some important concerns that weren’t discussed explicitly at the launch, although their shadows loomed large over the debate. The political implications of the role of global value chains are a crucial consideration, particularly in the context of Brexit and the rise of nationalist parties across the Western world. It is not only the attempts of transnational companies to cut costs that pose a threat to policymakers: economic nationalism can do the same, and a hard Brexit may see the breakup of global value chains in motor manufacturing as well as in services.

In this respect, the OECD report could not be more timely. To undertake research of such complexity required an organisation with the resources of the OECD and this report is, therefore, to be welcomed.

You can read more about the launch event in the IPR's coverage here, and the OECD report can be downloaded here.

 

Spring Budget 2017: T-levels, apprenticeships and industrial strategy

📥  Business and the labour market, Economics, Education

Dr Felicia Fai is Senior Lecturer in Business Economics and Director of Widening Participation and Outreach at the University of Bath's School of Management

In many ways, there were no real surprises in the Spring Budget, with many of the initiatives having been announced in the Autumn Statement, which focussed more specifically on science and industry. The point of greatest novelty (although still not a complete surprise) was the focus on the longer-term future pipeline of talent in the workforce and the need to raise productivity in the UK. There is some attempt on the government’s part to more comprehensively approach the issue of the future workforce, and to provide an alternative but equally prestigious and valuable route into education and careers to the standard ‘A-level + Bachelor’s degree’ route. The government will create the ‘T-level’ for 16-19 year-olds, in which formal training hours will be increased by 50% over existing options and include a minimum 3-month placement in industry to ensure school leavers are ‘workplace ready’. This is in addition to other vocational initiatives that the previous parliament established, such as the creation of 1,000 degree apprenticeships, plus implementation of the new apprenticeship levy that will commence in April 2017. Beyond the 16-19 T-levels, loans are to be made available on a similar basis to existing support for university degrees to study at the new institutes and technical colleges the government intends to create. Further, at the highest educational levels, there is £300m funding support for 1,000 PhDs across all STEM areas.

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The announcement of T-levels and a commitment to apprenticeships is welcome. The UK has long suffered from having too few clear and well-recognised (by both applicants and employers) alternative routes into skilled and high-paid work except for university degrees – and it is clear to me, as a university lecturer, that a degree structure and the forms of learning and knowledge testing used as standard forms of engagement in degree-level programmes do not suit all learners; nor is it always the most appropriate way to develop skills. As a senior admissions tutor for undergraduate programmes, I consider applications from mature applicants in their early- to mid-20s who state that, whilst they have progressed in their careers since leaving school, they now realise their ability to advance in their careers further is blocked by not having a formally recognised degree. I do wonder whether the decision to attend HE is the right one for them.

Sometimes, people are not ready emotionally or intellectually to deal with university-level education at 18, so choose not to apply for entry straight after school. Coming in later would seem appropriate, and we welcome them as they are more likely to succeed now than they would have been had they tried to come earlier. Others may have avoided university because they recognised early on that they did not want to, or were not able to, think in the particular ways in which we require students to think in order to achieve good marks in academic institutions driven by a strong research culture. For example, a recurring weakness in exam performance is the failure of students to answer the specifics of the question set – as opposed to displaying the general breadth of their knowledge – and an ability to make connections between the content they experienced on one subject and the content in the subject the specific exam is testing. The latter is looked for more generally in coursework or dissertations, but is not always appropriate in examination settings. There have been times in my career when I have seen the promise of an individual in the workplace setting and known that they will be a truly amazing employee, manager or future leader precisely because of their ability to see the ‘bigger picture’; yet, in the classroom and in written coursework and exams, they do not reveal the academic skills and precision that would get them the marks which signal their potential. Being ‘book smart’ is different to ‘street smart’, but our current system of HE is highly skewed towards the former.

The T-levels will offer a more streamlined pathway, with focused routes into 15 different areas, and have the potential to offer a different and equally valued and prestigious route into a career; but will their potential be realised? Leaving specific content aside, one of the key problems is the low profile, poor advertising and opacity associated with alternative routes into a career. The most well-established path is GCSEs, A-levels then university degrees. Chancellor Philip Hammond noted in his speech that 13,000 vocational and technical qualifications exist. How many of these are well-recognised and valued by HE institutions and employers? How much advice can cash-strapped schools and colleges provide on these qualifications to individuals looking for a career path that does not involve attending university for a bachelor’s degree? Arguably among the most well-established and widely recognised vocational qualifications are HNDs, NVQs and BTECs; how will these fair with the introduction of the new T-levels? Will the T-levels be a complementary or alternative offering to these existing qualifications, and, again, how will under-funded schools and FE colleges cope in terms of resourcing them? Whilst the Chancellor is keen to maintain choice, in reality will this mean cutting back on the provision of existing vocational qualifications?

Even if there could be a smooth introduction for T-levels, there is the question of how they would lead to more training and qualifications. One can envisage that T-levels could lead either directly to an apprenticeship, or to a place on one of the new degree apprenticeships that should emerge in the next few years, much like A-levels are the most commonly accepted way of accessing bachelor degree programmes. However, again, the pathway of this route is not as smooth as the one into existing degrees.

Whilst the government proudly announces its claim about 1,000 new degree apprenticeships being formed, the system that alerts people to these opportunities is hard to find and tricky to navigate. The chances of a person finding the right degree apprenticeship for them is remote – at least without a significant personal investment of time and research effort trolling through university or employer websites. The UCAS website provides basic information about apprenticeships, questions to consider and how to apply. It also lists employers with current schemes and links through to the government’s apprenticeship website – but from there the application process proceeds on a case-by-case basis because applicants are considered to be applying for jobs. Degree apprenticeships should grow quickly in the next few years, given the compulsory levy, and assessing these entirely on a case-by case basis is likely to become increasingly bureaucratic and cumbersome for both the employer and the university partner – who both need to be satisfied the applicant meets their respective requirements. The T-levels, alongside the better-recognised and better-established vocational qualifications, could be used as publicly available entry criteria by the universities providing the degree apprenticeships on the UCAS website. The applications should be made through an expanded UCAS service so that one application could be sent to multiple degree apprenticeships. From there, universities could select applicants who meet their academic requirements in a first round of consideration, and then this subset could be forwarded for consideration by the employing organisational partner in a second stage of the selection process; together, these actors could make a decision as to the suitability of the applicant. This would streamline the process for applicants, universities and employers alike, reducing the opacity and confusion of a currently complex pathway between school, post-16-19, further education, higher education and beyond.

The announcement of T-levels is an interesting proposal, and a welcome one at that – but there needs to be deeper and more systemic policy-thinking about how its introduction and implementation, as well as that of the apprenticeship levy, will lead to a greater proportion of the future workforce having the requisite skills to raise UK productivity.

 

The rise of Bristol, success but not yet shared growth — notes for a new mayor

📥  Education, Housing

Gavin Kelly is Chief Executive of the Resolution Trust, and former Deputy Chief of Staff at 10 Downing Street.

Any outsider asked to comment on Bristol’s prospects should, of course, tread fairly carefully. I love coming to the city but claim no special knowledge of it. I like to think I’ve been here enough to see past the standard cliché that it’s a city made of hipsters and hills, balloons and bridges. But I have no granular understanding of the different communities within the city, the twists and turns of its economy, and how its politics have ebbed and flowed.

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So I’m going to rely instead on some arid statistics to form a dispassionate external impression. Statistics are, of course, always partial and quite often misleading. They never tell the whole story  – they’re just dots on a chart. But if you join the dots you form a picture, even if it’s a sketchy one. And pictures can be very revealing. As I’ll explain, the image that emerges for me is a city that has rare strengths as well as major challenges.

What’s happened in Bristol should, I think, be of interest across the country. That’s because to some degree Bristol’s story reflects the received wisdom about the correct recipe for urban economic success. Mix physical regeneration of a city-centre with a successful and growing university, a large pool of high-skilled labour and strong transport links. Sprinkle in some cultural-cool and a high quality of life. And then sit back and watch a place thrive. On this basis, Bristol has the lot.

Given these ingredients, how does the city perform? Like most things, it’s a mixed story. Its strengths are very real: simply put, it has high employment levels, above-average pay for those working in the city, and a remarkably high share of graduates in the workforce. These are big assets. Some cities have lots of jobs but weak pay; others have decent pay but fewer jobs. To do well on both fronts is impressive. And being a magnet for graduates is more vital than ever. Every city that wants to succeed in high-knowledge, high-value sectors will always require a critical mass of highly-educated workers. Outside of London, Bristol outperforms every other city in the UK on this front with 4 in 10 of those in Bristol’s workforce holding a degree.

So far so good. Why, then, do I say the city faces deep problems? For me, three challenges stand out.

First, it is something of an understatement to say that the benefits of the city’s success have not been evenly shared. It is a city of deep inequalities. If we look at child poverty across the city we find a gigantic poverty gap with 5% of children in poverty in some wards and just under half in others. That’s a far more pronounced difference between affluent and deprived communities within a city than we see in places like Glasgow or Nottingham.

But to really get a sense of the challenge facing Bristol look at educational inequality. GCSE attainment for state schools in the city is slightly below the national average and this is mostly due to the low attainment of the poorest children. 25% of pupils on free school meals in Bristol reach the usual benchmark of 5 good GCSEs including English and Maths, compared to 62% of non-poor pupils. That’s a big, ugly, 37% gap between the poor and the rest: only nine local authorities in the country have a larger one. Put simply, non-poor pupils in Bristol do better than the national average, whereas the poor do worse.

This inequality at age 16 is maintained as young people progress. Just 13% of those on free-school meals in Bristol at GCSE progress onto higher education (and the gap between the poor and the rest in this regard has been getting larger in Bristol over time while it shrinks nationally). To put this in context, compare it to the London story. In Inner London half of the poorest kids achieved five good GCSEs including English and Maths. That’s not much lower than the overall score for all pupils in Bristol. And 42% of the poorest pupils in inner London go on to university. That’s three times as many as in Bristol. Let me repeat that: a poor child in London is three times more likely to progress to higher education than their counterpart in Bristol. And, no, it’s not just London: the 13% of poor children progressing to university compares to 30% in Birmingham and 25% in Manchester. Until this is turned around then any talk of improving social mobility in the city will be a pipe dream.

Even on wages  –  where Bristol performs better than average –  there is still a lot of poverty-pay: one in five workers earn less than the (real) Living Wage. Moreover, like everywhere else in the UK, it has been a lost decade for workers. After the financial crisis average pay in Bristol collapsed all the way back to the level it was at in 2001. As of today it has climbed back to 2005 levels. It would be very surprising if pay returns to its 2009 peak before 2020.

If the first big challenge facing the city concerns inequality then I’d argue that a second issue concerns productivity. Bristol has its very own productivity puzzle  –  and it’s a worrying one. Now, in some ways that’s an odd thing to say. Bristol  – and the South West region  – performs better than large parts of the UK on this score and, historically at least, the city looked like a strong performer outside London. The puzzle is that since the financial crash Bristol’s productivity has been sliding backwards. It now stands at just 93% of the UK average (and bear in mind that this has occurred while national productivity has itself flat-lined).

The conundrum grows when we consider that Bristol very nearly matches London in terms of the high share of graduates in the workforce. Yet it resembles places like Darlington or North Lincolnshire in terms of productivity. That’s an odd combination. It should cause pause for thought within the city’s business community and invite questions about the utilisation of skills, along with the quality of infrastructure in the city.

Finally, there is  –  of course –  the housing challenge. Again, Bristol is hardly alone in facing acute affordability issues. But the problem is particularly severe and getting worse. The average house price in Bristol has now passed £250,000. According to the ONS it has jumped 15% in the past year alone, 50% since 2010 and 255% since 2000. You don’t need me to tell you that this isn’t sustainable. To see why look at the ratio of house prices to average earnings. It leapt from around 5:1 in the early 2000s to over 9:1 today. Or to put it another way, house prices have grown more than 3 times faster than earnings in Bristol since 2002. And things are just as bad for renters. A household on a modest income in the private sector will typically spend at least a third of their total income on rent. That is what housing experts call ‘unaffordable’. And it puts Bristol in the top quarter of the most expensive places to rent in England.

Let me finish by saying that being a mayor of an incredible city like Bristol must be a remarkable privilege. But being a new mayor has to be both a luxury and a burden. It’s the former because you have the joy of being able to speak freely about the city’s challenges. And it’s the latter because you know that moment is a fleeting one and that soon all the city’s shortcomings will be hung around your neck if they aren’t addressed.

I hope and expect the new mayor will prioritise an agenda of ‘shared growth’. Doubtless he’ll already be familiar with the received views on the right recipe for a successful city. My argument is that some extra ingredients are required. I hope he won’t hold back in being candid about the scale of the challenge if the ‘shared’ part of the equation is to be made real. And he’ll need to be ambitious and innovative in his agenda for putting it right.

This piece was the basis of remarks made in response to the Inaugural Address of the Mayor of Bristol, Marvin Rees. It first appeared on Gavin Kelly's personal blog.