Skills England, the government’s new-ish arms length body exists to coordinate the work of employers, educators, and civic leaders to meet the skills needs of the country over the next decade. As the Secretary of State for Education states in the opening of Skill’s England’s inaugural report
The first mission of this government is economic growth. Central to this mission is a skills system fit for the future. We need to harness the talents of all our people to unlock growth and break down the barriers to opportunity. Each and every young person and adult in the country must be able to learn the skills they need to seize opportunity. Businesses need a highly skilled workforce to draw on if they are to drive economic growth and expand opportunity in our communities.
On the face of it the argument is compelling. The mission is to have a bigger economy. The method is to increase economic output in key industries. The means is to have people to deliver those outputs. And the result is a more productive economy and a rise in living standards.
One of the challenges the government faces is that it has a limited set of tools. It can set incentives and regulation but in mass swathes of the economy it cannot set wages, tell businesses what to do, and for more than a decade no government has made the country significantly more productive.
As the National Centre Institute of Economic and and Social Research argues one of the reasons the UK’s productivity is stuck is because the uneven distribution of skills also leads to the uneven distribution of clusters that can spin up economic activity. Plainly, if the country keeps producing similar graduates with similar skills the economy will end up in a similar place. It might not be just that we are training the wrong skills but that we’re thinking about graduate skills entirely wrongly.
Supply and demand
It is quite hard to work out what skills will free the country from its productivity trap.
For example, the Department for Education provides a bulletin on occupations in demand and it makes for mixed reading for universities.
82.5 per cent of the occupations which the Department believes are in critical demand do not require a degree level education. Critical demand is a composite measure which assesses outliers against seven indicators which “include the number of visa applications, online job adverts and annual wage growth.” The most critically in demand occupation is care work, followed by sales accounts and business development managers, and then metal working production and maintenance fitters.
To be clear, this is a different analysis on whether those occupations benefit from someone having a degree in them. If you take a profession like childcare there are zero barriers to entry, zero licensing requirements, and in the informal childcare sector zero need for background checks. All things being equal, having nannies trained somewhere like Norland which produces highly qualified nannies is a net good for children and the economy.
The professions that are the highest in demand do not require a university degree. Therefore, there is an argument that reducing the number of people with a university degree would not harm the economy overall. A version of this narrative is played out in the too many people go to university debate and the UK needs more apprentices debate. Whether either of these things are true, having more apprentices would seem to be a good thing, they don’t always consider how universities themselves create demand for new skills in the workforce.
To put it plainly, universities don’t just supply skills, they create demand for them.
Alignment
This is because universities carry out research and one of the core purposes of research is to create products and services that can be adopted into the real economy.
The social and political implications of the contraceptive pill, the media campaigns to reduce smoking, and the innovation in materials arising from the motorway signs developed at the Royal School of Art, demonstrate R&D from UK universities shapes the skills society needs in an unexpected way.
This is a different kind of shaping of the skills landscape than the government. The government’s approach is top down: putting in place incentives, regulations, and investment, to create a different kind of labour market. Universities work from the bottom up by pursuing things that are interesting, turning ideas into reality, and then creating new kinds of work. This work then has to be serviced by new skills and new combinations of existing skills.
Kate Black, the co-founder of University of Liverpool spin-out Meta Additive, couches her work in similar terms:
It is amazing to be able to take my research which started life in a laboratory at the University and then translate it into the real-world, helping to create jobs and providing industry with smart manufacturing solutions.
There are new skills and new kinds of work needed because of the work of universities. Clearly, it’s harder to predict the industries that are yet to emerge.
Narratives
Student fees cross subsidise research but this does not mean there is a good relationship between which students universities recruit and what research they should fund. This has led to the current arrangements where incentives encourage a broad programme mix, in turn encouraging a growth in student numbers, therefore requiring academics to teach students, and in part creating research across a broad portfolio. The incentives for funding research works against specialisation for the majority of institutions.
This leads to a skills system that is led by student demand for places not the skills an economy needs. In turn, this limits the kind of research that takes place, which in turn limits the creation of new demand for skills.
For example, Labour’s industrial strategy requires a workforce skilled in core sciences. The university recruitment landscape is working against having more people taking up those roles. The more numbers decline, the less likely universities are to provide those courses, and the more the UK’s R&D base will suffer, which will limit the creation of new jobs and demand for skills to fulfill them.
This leaves an enormous policy conundrum. One option would be to designate programmes of critical importance which are allowed a permanent funding settlement to support R&D and skills development. This could be an increase in the teaching grant or additional hypothecated funding through the research councils. This would help the stability of the R&D and skills pipeline but it would be massively unpopular for some institutions, hasten the closure of non critical research fields, and it does not solve the problem that skills and research needs are unpredictable.
The other solution is a more stable research funding settlement for universities that nudges toward de-coupling research funding from student recruitment. This would mean either more research funding to maintain the current system or fewer better funded projects. Again, not easy or cheap.
Universities will respond to the incentives in front of them but the narrative is theirs to shape. Instead of talking about research, graduate jobs, and a graduate skills gap, the opportunity is to talk about how the economy really works. The current arrangement incentivises universities to continually tack their programmes, research, and offer to the funding in front of them. An alternative narrative is the investment in broad based curricula and research is the best insurance against an economy which is unpredictable, and the only opportunity to jump start an economy which is comatose. This requires long-term and predictable funding.
