We need more engineers, fewer bankers and estate agents

Blair's revolution failed. We now have many graduates failing to get a suitable job. All the while the UK's trade gap worsens. If we want an economy of production rather than service then the government must step in.

Joseph Wright
2 February 2015

Flickr/Chris Devers. Some rights reserved.

Labour look set to reopen the wounds carved by the introduction of £9,000 tuition fees in 2010. It is almost certain they will pledge to lower the cap to £6,000, as reported by the New Statesman, Guardian and Telegraph. From a cynical perspective, the temptation to capitalise on Liberal Democrat perfidy must appear too great for Labour strategists, particularly where Lib Dem-Labour marginals are concerned. But the protests against the £9,000 cap, the largest on domestic policy in decades, also signalled the issue would not lie outside of this parliament.

Returning to this debate presents Labour with considerable opportunity to make headway on long-standing problems with further education. According to the ONS, 47% of recent graduates in 2013 were working in non-graduate jobs; for those who graduated five years earlier, 34% remained under-utilised. Recession has exacerbated graduate underemployment by limiting opportunities, but it does not explain the magnitude of the problem, nor the simultaneous desperation of many sectors for the right skills. Manufacturers in particular have called upon government for some time to boost the number of students taking STEM subject degrees (sciences, technology, engineering and maths), especially engineering.

The introduction of higher fees has created a generation that expects, and deserves, a great deal more from higher education in return for an eye-watering £27,000 bill. While contact time with tutors, resources and general course quality are pressing factors for students, employment prospects play an increasing role - economists call it ‘cost sensitivity’. STEM subjects are gaining popularity again because of employer demand, and because of government schemes to promote them in schools. Nevertheless, the skills gap remains huge and unlikely to be filled while engineering and technology make up just 7% of all first year undergrads (compared with 15% for business and finance).

Engineering and technology subjects did not entice the previous generation. Even during the New Labour graduate boom, engineering and technology saw students numbers fall year on year. After the financial crash they experienced a small recovery, but according to Engineering UK there remains an annual shortfall of 55,000. To add to these problems, the Higher Education Funding Council for England (HEFCE) reports current levels of English engineering numbers retain ‘considerable reliance on overseas students’; 7% of current intake are EU, non-UK, while a fifth are from non-EU countries, meaning nearly a third of the current students may not want, or be able, to remain following graduation. The worst statistic is that just 6% of UK engineers are women - the lowest proportion of female engineers anywhere in the EU.

Clearly more must be done to boost the number of people qualified to work in production – for the health of British engineering and the UK economy. One solution worth considering is to place a lower cap on subjects where there is an economic need for graduates – subjects like engineering. The headline price of education clearly impacts on students’ decisions. Creating an added financial incentive, even temporarily, to consider subjects in huge demand from employers would speed the process instead of waiting ten/fifteen years for that allusive ‘cultural shit’. A public endorsement of industry, along with a more open debate about the future jobs market, should filter the importance of industry through to the next generation. Most importantly, government would be signalling its confidence in a British industrial future. 

The main parties agree the 2008 recession had such a deep and lengthy impact because of the erosion of Britain’s manufacturing base: offshoring in the 1990s demolished the remains of British industry; companies fled to places like China for cheap labour. Today, just 12% of UK output is made up of manufacturing, compared with a third in the 1970s. It is this decline, and subsequent reliance on services to produce jobs, that many economists and MPs believe left the UK so vulnerable in 2008 (and the reason places outside the cities benefited so little from the boom years). Such dependence is also likely the reason Britain remains 4% less productive than before the banking crisis and 20% less than the average of the G7 countries.

Along with the knowledge that, whatever happens in the future, technology will dominate, policy makers believe a high-tech manufacturing revolution is necessary. The same line of thought dominates in the US, where President Obama stated in 2012, 'an economy that is built to last starts with manufacturing'. It’s why the powerhouse industries in Detroit and Michigan were saved at eye watering cost.  

The coalition produced an industrial strategy in 2010 (which required a profound shift in Conservative economic thinking) to fund and support new and growing companies. But without the talent and skills to support it, their efforts will be in vain. Few things affect the trajectory of an economy as substantially as education.

Attempts have been made to promote vocational qualifications like apprenticeships, but it is increasingly clear that creating the right skills must involve universities. Vocational qualifications’ ‘disparity of esteem’ with academic degrees is a stubborn problem; 82% of sixth-formers plan to apply to university (Chartered Insurance Institute survey). Such is the Universities’ continued monopoly on ambition that the OECD refers to the UK as a ‘graduate economy’. As good as that sounds, it leaves a shallow talent pool for employers desperate for vocational skills.

Furthermore, the trend in industry is towards de-skilling - factories replacing labour with machines where they can. The future, therefore, is in invention and problem solving, skills which require the next generation to be highly educated in the right disciplines if the UK is to play a significant role. But there is a huge disparity of esteem between degree subjects within universities: the number of students choosing the arts, economics, management and social sciences is nearly double those opting for STEM subjects. Subjects tailored to high-end services jobs dominate.

These problems are rooted in policy and the huge transformation of education during the rise of Britain's services economy. New Labour responded to manufacturing’s demise in the late nineties by conceding to it, choosing instead to mould education around services. They emphasised flexibility, communication, analytics, organisation and creativity – ‘soft skills’. Education was to serve as a one-size-fit-all preparation for the modern world, leading Blair to pledge he would get 50 per cent of young people studying at university. For the third of graduates not in graduate level work even five years on, this has proven misguided. Worse, it has been at the cost of vocational education needed by growing industries.

Changing perceptions of industry entrenched by recent policy is an uphill struggle. Previous generations, who witnessed manufacturing’s rapid and messy decline, will influence their children’s A-level choices. That generation came from an era without tuition fees, when any degree was a firm step toward a job. But the sheer number of graduates today means competition is tough. Young people know this: 75% of sixth formers believe it will be harder for them to find good careers than it was for their parents.

Aside from galvanising demand to study subjects which fill the skills gap, there are very good reasons for lowering fees on subjects driving technological advancement: they are far more likely to lead to new businesses. An overspill of engineers is more economically useful in terms of entrepreneurship than, say, an overspill of lawyers or financiers. With the right infrastructure, students with technological know-how can be encouraged and guided into innovative production.

It could also have profound implications for wider economic problems by nudging the UK away from its London-centric model. Focusing on industries independent of the capital will ease pressure on London housing, schooling and hospitals, and stop the brain drain on other regions of the UK.

The aim is for an education system which helps to reconnect the popularity of subjects with the opportunities available after university, one which also helps to create the inventors of the next great technologies like driverless cars, 3D printers and commercial space travel. History has proven time and time again that invention and manufacturing makes countries wealthy. It did so for the UK during the industrial revolution, the US during the 1960s and is now doing the same for China.

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