England may have a well-funded education system that can boast several world-beating universities, but young people from a disadvantaged background too often fail to benefit. We see too little progression of young people with advanced vocational education like BTECs, for instance. Less than a quarter progress to tertiary education, compared to two-thirds for those with A-Levels. The fact that children from disadvantaged families opt for this type of education more often results in even more inequality in educational attainment. This has knock-on effects for labour market outcomes and life chances.
But more generally, whether in early years or mid-career, there is a lack of opportunities in the UK for people to gain skills via the education system or retraining. The result is a dearth of skills among UK workers. Upskilling the domestic talent pool should be a policy priority. It will be of even greater import after Brexit.
Young people who want to make an earlier start in the labour market often do not gain the right skills to find decent work, either. By the age of 28, about 38 per cent only have low or intermediate qualifications – equivalent at best to good GCSEs or one successful year in further education. This is not enough to take up the well-paid jobs in a dynamic service economy, which require highly proficient workers with problem-solving skills, autonomy and adaptability to technical change. Estimates of income gains from achieving advanced vocational education differ, but most show significant earnings gains from further education of between 10 and 15 per cent, and higher for apprentices. Year on year over an adult’s working life, such differences result in large variations in household incomes and family opportunities.
Those who already work and wish to improve their skills to bring careers forward or who need to change jobs because of accelerated industrial change, do not have enough support for learning over their adult life. Taken together, this shows that, while improvement of Britain’s low productivity requires business modernisation and increased investment, there is an equally important role for education. We must create the human capital required in a modernised – and besides, decarbonised – economy, so that workers get their share of the benefit. With the UK’s value added per hour of work 30 per cent behind Germany and France, better education is at the centre of reducing the gap in workplace productivity – and will help increase wages and prosperity in the long term.
A great problem here is that the chances that a student will enjoy a good education and obtain the highest qualifications still depend too much on the income and wealth of their parents. Research carried out by the National Institute of Economic and Social Research (NIESR) shows that the parts of the country with the highest rates of people not in employment, education or training (known as NEETs) are in the inner cities and parts of the North of England. While in the Thames Valley corridor less than 5 per cent of young people are NEET, in parts of Merseyside, Yorkshire and the North East that rises to as high as 30 per cent.
The reason this should be a high priority for the incoming government is that this long tail of low attainment, which has remained unchanged for years, has been identified as a key problem holding back growth and workplace productivity. If the government is serious about raising educational standards as part of its legacy, ministers must understand that if they are to reduce the negative impacts on income inequality on people’s educational achievements, then they must deliver improvements at every stage, from early years education through to in-work training.
While extra funding is a consistent theme, it is important to understand that this extra investment should be focused on targeted areas of the system to address specific problems.
Starting at the early years stage, the government must increase the availability and affordability of childcare, especially for low-income families. This is a justifiable investment in the future as research shows that effective pre-school education will reduce attainment gaps in GCSEs and beyond in the long term. It also improves employment and incomes for young families, which helps to reduce inequality further.
Moving on to primary and secondary education, the government must reverse previous funding cuts and further financially support schools in deprived areas to alleviate the effects of family poverty. It should also reintroduce targeted financial support for poor families, which research has proved to be effective, showing it improved attainment of disadvantaged young people in post-16 education.
It is essential that there is a clear pathway so that students who do not go to university find a route to opportunities in further education, apprenticeships, and vocational training. This would ensure that those who do well there can find highly productive, rewarding and well-paid jobs as their counterparts do in much of continental Europe.
In terms of university education, the government must act swiftly on the recommendations of the Augur Review and cut tuition fees, extend the time over which student loans are repaid, and bring back maintenance grants, which were axed in 2016, for poorer students.
But universities need to go further and get serious about ensuring that they are genuinely inclusive institutions and can embrace and represent the diversities within both British society and the global community. Ultimately this will benefit the quality and innovation of higher education.
Last but not least, people who lose their jobs need help with further training, retraining and modernisation of skills so that they can find high-quality employment again. The government should make full use of active labour market policies that help people find gainful employment, as happens in other productive economies.
In our view, while improvements of the education system will involve higher spending, after years of austerity, per head expenditure on education is around £1,000 below levels that would be warranted by UK long-term fiscal and demographic trends, based on NIESR research. Making the necessary readjustment of spending should reflect the urgent policy priorities discussed here.
Finally, both rigorous cost-benefit analyses applying a microeconomic framework and the macroeconomic analysis of drivers of economic growth provide empirical evidence that improving education has considerable effects on productivity and prosperity in many cases. From this viewpoint, increasing education spending today will eventually deliver considerable returns to the Exchequer, and should be more clearly understood as a long-term investment in the future.
Both the long-term benefits for the economy and its importance for reducing current social inequality should therefore put a wide-ranging education reform programme on top of the agenda for the early days of this new government. The spending review should not hold back work to make tangible improvements in this area.
Dr Stefan Speckesser is associate research director for education & labour at the National Institute of Economic and Social Research