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Last Updated: Friday, 11 July, 2003, 23:32 GMT 00:32 UK
A question of skills or scholars
By Mike Baker
BBC education correspondent

Which do we need most: more university graduates or more adults trained in technical or craft skills?

The easy answer is "both". But let's suppose, just for the day, that you are the Chancellor of the Exchequer and you must decide which is your spending priority?

Your civil servants wouldn't expect you to make this choice without some facts. So here are some that were put in your red box.

The UK has just about the highest graduation rate among competitor countries. According to the OECD's international comparisons, 38% of the typical age-group achieves a first degree in the UK. The average for industrialised countries is just 26%.

Lagging behind

So we are already doing well at producing university-educated workers.

But the picture is not so good at the lower, intermediate skills level.

According to this week's white paper (21st Century Skills: Realising Our Potential) we lag behind in the proportion of our workforce who are qualified at apprenticeship, skilled craft and technician level.

In the UK, just 28% of the workforce has these skills. By contrast, in France it is 51% and in Germany 65%. This could explain why productivity is 25-30% higher in France and Germany than in Britain.

So, on the face of it, we need skilled technicians and apprentices more than we need more graduates.

This might suggest that if you were in charge of the nation's purse strings you should shift financial support away from university students and in favour of adults who want to train to acquire intermediate, vocational skills.

Students at a lecture
Students enjoy a high rate of financial return on their degrees

On the economists' assumption that we act on a rational basis, you might want to ask what the current financial incentives are to a) go to university or b) enter an apprenticeship or other form of work-related training.

The Organisation for Economic Co-operation and Development (OECD) recently calculated that the financial return for a British student who chooses to go to university is 17%. This is one of the highest rates of return in the world.

It is based on the return to the individual after taking into account the costs (fees, living expenses and loss of earnings while studying) of achieving a degree.

Financial incentive

Of course, this rate of return may fall in future, when tuition fees go up from 1,100 a year to a maximum of 3,000 or maybe more.

So, at present, there is still a lot of financial incentive, and government support, for those going to university.

So far, there is no sign of a fall in demand for university places. Indeed, the predictions are that demand will grow quickly over the next few years.

After all, the government still pays for most of the costs of university tuition. The 1,100 fee is only about a quarter of the real cost of a typical degree course, much less in subjects like medicine.


Although the proposed 1,000 grants for poorer university students are not yet available, undergraduates already receive a heavy government subsidy through their student loans, which carry a zero "real terms" rate of interest. This subsidy to graduates costs an estimated 1 billion a year.

So what about a 22 year old training full-time in computing, electrical skills, or as a health technician in a further education college?

At present, they get no grant and no loan for their living costs. There is no government help or subsidy for their fees, although many FE Colleges do generously waive fees for full-time adult students.

Workers on the factory floor
Britain has fewer skilled workers than France or Germany

Is this fair? It seems the government has been persuaded it is not. That is why this week it announced plans for a 30 a week grant, and free tuition, to adults studying at intermediate level.

But where are they going to get the money from? Are they taking away from the universities to give to their poorer cousins, the FE colleges?

Not exactly. The Skills White Paper makes it clear that while those learning at intermediate levels will pay less, this will be balanced by charging other FE students more.

The full implications are not spelled out. But the white paper says "those learners...who already have good qualifications and who wish to undertake further study at the same or a lower level, should pay more".

This means higher fees for adults taking A-levels or their vocational and skills equivalent. Surely we need these skills too.

Lower-level skills

Our fast-changing economy needs workers who retrain in new - but same level - skills just as much as it needs the unskilled to gain better qualifications.

As the prime minister said in his introduction to the white paper, increased flexibility of the workforce will be needed to ensure "the economy responds quickly to changes in economic conditions inside the single currency area".

So, if we are providing a substantial subsidy for young people to go to university, shouldn't there be a similar , or even higher, level of support for those working towards the lower-level skills of which the economy has the most pressing shortage?

The case for support at the lower skill levels is perhaps even more important because it means not just a boost to the economy but also big savings in public services.

Those OECD figures show that people without qualifications at GCSE level are twice as likely to be unemployed as those with A-level type qualifications. They are also more likely to get in trouble with the law or be socially excluded.

The great divide in the UK seems to come at age 16. We are now moving towards 50% of young people following a track leading to university.

But, at the same time, in England more 17 year olds have completely left education and training than in most other developed countries. Seven million British adults have not attained qualifications at the level of GCSEs or equivalent.

It is a curious - and apparently very British - division into sheep and goats.

Where would you direct the greater financial support?

We welcome your comments at educationnews@bbc.co.uk although we cannot always answer individual e-mails.

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25 Jun 03  |  Education
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21 May 03  |  Education

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