In 1999, then-Prime Minister Tony Blair set an ambitious target: 50 per cent of the UK population should obtain a university education. The rationale was simple – an educated, technologically proficient workforce would boost economic growth, and university graduates would benefit from higher wages. Fast forward to 2019, the target was met, and the Blair Institute now recommends aiming for 70 per cent. However, the results have been unexpectedly disappointing, prompting us to re-evaluate our approach to education and consider a free-market perspective that embraces vocational training.
Let’s start with a key assumption behind Blair’s target: university degrees primarily serve as signals of competence and intelligence, which translate into well-paying graduate jobs. Back in the 1990s, when only 14 per cent of the population held degrees, a degree carried significant value, regardless of the subject. Today, unless a degree comes from a prestigious institution, it no longer holds the same weight. In fact, the Institute for Fiscal Studies found that there is a considerable variation in graduate earnings depending on the university attended and the subject studied.
Furthermore, the belief that the demand for graduate roles would grow proportionally with the number of graduates has not panned out. The UK Commission for Employment and Skills reported that 58.8 per cent of UK graduates were in non-graduate jobs in 2013. As a result, over a third of graduates struggle to find graduate-level jobs five to ten years after completing their degrees, leaving many young people saddled with student loan debt and facing limited career prospects.
The current education system is not only failing graduates, but it is also costing taxpayers a substantial amount of money. According to the think tank Onward, 83 per cent of student loans are unlikely to ever be fully repaid. This means that the burden of financing higher education falls disproportionately on the shoulders of taxpayers.
Now, let’s consider the impact on universities themselves. Taxpayer subsidies have made higher education institutions less responsive to market demands, leading to an oversupply of degrees with little practical value. To tackle this issue, universities should be incentivized to focus on the employability of their graduates. For example, institutions could receive funding based on their graduates’ job placement rates. This approach would drive universities to offer courses that align with the job market and equip students with the skills needed to succeed in their chosen fields.
Competition within the higher education sector could also be encouraged by removing tuition controls, allowing universities to charge tuition fees based on the value of the education they offer. This would incentivize institutions to improve teaching quality and innovate in course delivery methods.
But there’s another side to this story. The push for increased university education has inadvertently devalued vocational training and apprenticeships – both of which are crucial for a thriving economy. Many parents now view any alternative to university education as a failure, a perception that must change. A more balanced approach would involve adopting a system similar to Germany’s, where a portion of students are directed towards vocational training from an early stage.
It’s essential to recognize that not everyone is suited for or interested in traditional university education, and many well-paying jobs do not require a degree. By focusing too heavily on university education, we risk neglecting vocational training, creating a skills gap in the workforce, and perpetuating a stigma against vocational careers. Embracing a free-market approach to education would help address these issues, allowing for a more efficient allocation of resources and better alignment with market demands.
While the initial goal of increasing university-educated individuals in society was commendable, the reality has not met expectations. The current system is unsustainable, costly, and neglects market demands. A shift towards a more vocational-focused education system, emphasizing skilled trades and apprenticeships, is required. By adopting a free-market approach, we can create an education system that is more efficient, flexible, and better serves the needs of individuals and the economy as a whole.
