Further and higher education

CEP election analysis

Executive summary

To achieve inclusive economic growth, the UK needs a well-educated and skilled workforce.

There are not enough highly educated people. Although the percentage of university graduates is comparable to levels in many other developed countries, there are too many people who do not manage to achieve at least upper secondary education. In England, the number of apprenticeship starts has fallen sharply since 2016/17 and increasingly they are composed of older workers. There needs to be a reversal. The returns to apprenticeships are larger for younger people and the purpose is usually to facilitate the school-to-work transition for those not likely to go to university. We argue for an “apprenticeship guarantee” for young people and change in how the apprenticeship levy works to facilitate this.

There are not enough graduates. The wage premium to university degrees is high everywhere in the country (although the level and trend varies). If the UK economy is to grow, it is especially important that “strategic sectors” (those in which the UK has a comparative advantage) are supported. These sectors – which include financial and business services, the creative and cultural sector and life sciences – employ a much higher fraction of graduates than the rest of the economy.

There are also too few people educated to sub-degree level compared to other countries. But the problem is not “too many graduates” but too many low-educated workers.

The financial problems of the further and higher education sector need to be tackled to facilitate these goals. The further education sector has suffered from draconian cuts – for example, the Adult Education Budget was cut in two between 2010/11 and 2020/21. More recently, students and institutions in higher education have suffered from a funding model that has not adapted to inflation. This is both making it harder for students to afford university and for universities to stay afloat.

Achieving economic growth and prosperity involves public investment in education and skills. This requires a complete change of trajectory.

1 July 2024 Paper Number CEPEA065

This CEP election analysis is published under the centre's Education programme.