Cutting, or ending tuition fees?

In the context of a ‘review’ and a pending government announcement on HE funding, City investment broker Hargreaves Lansdown has put its financial and accounting expertise to more benevolent purposes.

https://www.hl.co.uk/about-us/press/press-releases/cutting-tuition-fees-and-loan-interest-rates-is-no-help-for-the-average-student

Remarkably it finds that neither a reduction of tuition fees to £6000 from the current £9000 plus per annum or a cut in interest rates, would benefit the average student who, after 30 years ( the time that it is written off) would still not have paid off the debt – although the outstanding amount would have been reduced. By comparison, better off graduates, those who start on and continue to earn salaries well above the norm, would be able to clear their debts much earlier.

Hargreaves Lansdown suggest the best way to help graduates starting on (and often staying on!) low salaries could be to raise the repayment threshold – it’s currently at £25 000. Doing this would have the same effect as raising the income tax threshold; so surely the best (the fairest and most efficient) solution would be to scrap the notion of ‘fees’ completely and depend on the tax system to moderate earning inequalities. Labour has committed to this.

Labour and Industry

Jeremy Corbyn’s recent speech to engineering and manufacturing employers has ( as is generally the case!) been misrepresented. Launching Labour’s Build it in Britain, Corbyn has been accused of wanting to establish a ‘protectionist’ blanket around UK manufacturing and by implication being ‘pro-Brexit’ even though it’s questionable whether there’s anything in EU legislation that would prevent this.

Yet, in arguing that all state contracts should be awarded to UK companies, Corbyn was restating Labour’s commitment to rebuilding the manufacturing sector and by implication, halting the drift to low-paid, insecure and zero hours work, by creating thousands of skilled jobs.

Likewise, Labour’s proposals for channelling £250 billion worth of funds through a National Investment Bank, linked to regional investment plans, creating a more accountable financial sector and upping expenditure for education and skills are in sharp contrast to anything offered by Theresa May.

Beyond this however, Labour must do some broader thinking – accepting that the damage done by the Tories in recent years has intensified but not caused the decline in UK manufacturing and recognising that because of changes in consumer demand, all the world’s major economies are to varying degrees effectively becoming service economies. With the likelihood that most of manufacturing will be automated by the middle of the twenty first century, then hoping the sector will restore employment opportunities is unrealistic. Work could start on developing a post-industrial strategy. The aim would be to ensure that the only alternative to deindustrialisation is not the polarisation of income and the unfettered expansion of ‘precariat’ work.

For a party built on the back of an industrial working class and its trade unions however, this is easier said than done. Through expanding industry, Labour like other social democratic parties has sought to grow the economic cake so there will be more to go around. Instead it means accepting a flatter cake and focussing on redistribution issues. All European social democratic parties face this dilemma.

‘Full employment’ ?

Post-war governments committed themselves to maintaining ‘full-employment’. According to economist John Maynard Keynes, this meant the state ensuring levels of ‘aggregate demand’ remained high. But governments also accepted that there would be ‘trade-offs’ – as the labour market tightened, inflation would start to rise and so on. Economists tried to calculate the ‘non-accelerating inflation rate of unemployment’ (NAIRU).

: Post-war economics guru Keynes

But as well as being dependent on an interventionist fiscal policy, the prosperous economic conditions of the post-war years also enabled trade unions to become much stronger and demand a greater share of profits, so by the mid-1970s the cost of maintaining full employment was being regularly reflected in double digit inflation as employers passed on the costs of higher wage bills to consumers. After Labour governments failed to impose a ‘social contract’ on unions to limit wage rises, Margaret Thatcher abandoned the commitment to full employment and ‘crashed’ the economy. Inflation and wage demands fell but unemployment rose to levels not seen since the inter war years.

Things couldn’t be more different today. As latest labour market figures continue to show, unemployment is at its lowest level since 1975 and more people than ever are working. It’s true that the bargaining power of unions has been heavily shackled – strikes are at an all-time low, with Draconian management practices meaning workers are often frightened to act, but also, in the economy of the 21st century, the concept of ‘full employment’ as an indicator of social welfare is no longer useful.

In the post-war economy, full employment was generally conflated with male full-time employment, where it was assumed that having a job generated the income necessary to provide basic comforts and look after family members. Now, it’s predicted that the number of employees earning the Minimum Wage will double to more than 10% of the UK workforce by the end of this parliament. This has resulted in a new category of ‘working poor’, people in full time work who still qualify for benefits.

Secondly, the labour market doesn’t ‘tighten’ in the way it used to (by people leaving the dole queue and exchanging welfare benefits for a pay cheque). The new types of ‘24/7’work, though invariably poorly paid and insecure, allow opportunities for different types of people to temporarily enter the labour market. For example; there’s more part-time work for students and for those (generally women) with caring responsibilities. And of course, there have been huge supplies of additional labour (East European in particular, but not exclusively).

Thirdly, while most people may be able to get employment if they want to (though we should not ignore the much higher rates of unemployment in particular areas and amongst certain groups) it’s often not the job they want, doesn’t fit the qualifications they have or always give them the hours they want. So while unemployment may be low, the amount of ‘underemployment’ may be much higher.

Of course, the supply of labour isn’t endless, and it may well be that market forces begin to push up wages. But economists now continually revise their expectations about NAIRU. It’s also the case that the ‘hollowing out’ of ‘middle jobs’ because of automation and AI is leading to creation of more low-skilled, low-paid workers, which trade unions find very difficult to represent or establish national conditions of employment. As well as restoring trade union rights and trade union power, it’s likely that a strong ‘Labour State’ would need other extensive powers. It could implement a new type of social contract where wages kept up with inflation and increases in productivity and rather than just raising the minimum wage and guaranteeing hours, it could also consider replacing the failing universal credit system with some form of Universal Basic Income for everybody.

Another fall in apprenticeship starts

The number of apprenticeship starts has fallen again. Latest government figures show just 290, 500 starts for the nine-month period from last August. This compares with 440,300 for the same period a year ago. The Department for Education chart below illustrates the extent of the decline. It suggests that David Cameron’s target of 3 million new apprenticeships by the end of the decade, may now not be reached. The decline in starts has coincided with the implementation of the employer levy and opponents of this will want to draw their own conclusions.

Apprenticeship starts per quarter

Source DfE Apprenticeships and Trainee Release July2018

The levy has not been popular with many employers who rather than use it to recruit apprentices have written it off in their tax returns. There may well be issues with the way funds are collected, but the principle that employers should contribute towards national training programmes, remains a good one. It needs to be remembered also that it’s only large employers that contribute (those with a payroll of £3 million) and therefore only half of starts have been levy supported. Smaller employers have up to 90% of their training costs reimbursed by government funds. Also, new apprenticeship specifications, designed to improve ‘quality’ allow much greater flexibility over training providers .

But if the fall in apprenticeship starts is disappointing the types of schemes and age of apprentices continues to be much more worrying. Despite government pressure, almost half of all starts continue to be at intermediate (GCSE level). On a more positive note the number of Higher level apprenticeship starts continues to increase significantly, representing almost 1 in 4 of all starts – but equally significant, less than half of these are starts by under 25-year olds. Likewise only around a third of Advanced Level starts are by those under 19.

The continued demise of apprenticeships will mean that policy makers will now focus on the new Tech-levels being unveiled from 2019 and designed to be delivered full-time in further education colleges. Yet as this site has continued to argue, as Britain becomes a post -industrial economy, where employers put increasing emphasis on ‘generic’ rather than traditional occupational skills and where the ‘middle jobs’ with which apprenticeships have been associated, continue to ‘hollow out’, there’s little to suggest that another round of vocational qualifications will be any more successful in providing proper employment opportunities for those young people not able or not wishing to spend three years at university.

For a more in-depth analysis of the apprenticeship crisis Download

Key Stage 4: what price a campaign?

It’s over 5 years now since Michael Gove’s decision to bow to his critics and retain GCSEs. But despite this humiliating reversal, Gove, who had arrogantly lectured the education establishment on the need to introduce new English Baccalaureate certificates in key subjects, still managed to impose his educational priorities and undermine much of what was once considered to be ‘the teachers exam’.

He set about replacing modularised assessment allowing student friendly learning and assessment with, where ever possible, a two- year ‘end of course’ traditional written exam, ending ‘tiered’ papers and introducing a new grading system designed to ensure much more differentiation between those students scoring higher marks. All of this has been in the name of ‘rigour’. Though not receiving anywhere as much attention, A-levels have been reformed in similar ways, with AS level no longer being a midway point to allow greater flexibility.

Gove, influenced by US English Literature professor ED Hirsch who argued that American schools have a ‘knowledge deficit’ – with many student, being denied the things ‘they need to know’, also insisted on clear content specifications, outlining very clearly what students should be taught. For example, ‘at least one play by Shakespeare, at least one 19th century novel’, to quote from the original English Literature draft.

Gove also sought to differentiate academic knowledge from practical, applied and vocational learning, publishing plans to prevent ‘GCSE equivalent’ vocational qualifications being counted in school league table scores claiming these are much less demanding academically and require less curriculum time.

Gove, soon to be sacked as education secretary, moved on to wrecking other things – 5 years is a long time in politics, but students have had to live with his legacy. This summer’s cohort have been the first required to sit the new specifications in all subjects – while schools have been faced with new performance measurements in Ebacc and Progress 8 subject combinations.

It must be said that, though quick to celebrate Gove’s 2013 climbdown, campaigners and education unions have not done very much to obstruct the new exam’s passage – devoting little campaigning time and resources. The creative and performing arts community have set up umbrella groups to try and prevent these areas of learning falling off curriculum provision in state schools, while employer organisations have criticised the over emphasis on ‘factual’ learning rather 21st century workplace skills. But there are still no real alternatives for key stage 4 (and 5) – at least none that have enjoyed popular support. What price a campaign?

Lost students

Last week Education Datalab published worrying statistics on the number of school students who had been taken off roll and failed to take their GCSEs – some 22 000 more would have been eligible for post-16 study this year.

https://ffteducationdatalab.org.uk/2018/06/whos-left-2018-part-one-the-main-findings/

Yet while young people may finish their mainstream secondary schooling at the end of year 11, it’s now a statutory requirement to continue within education or participate in some form of work-based training until the age of 18. But other data suggests that a significant number do neither of these. DfE figures for the academic year 2016 show only 88% of 17-year olds (1 in 8) remaining in full time study with another 7.5% learning in the workplace.

In the meantime, there were over 60 000 16 and 17-year olds classified as NEET, while out of 173 00 16-17-year olds ‘not in full-time education’ during the first 3 months of 2018, 1 in 4 were recorded as unemployed and approaching 1 in 3 ‘economically inactive’ – though this should not be interpreted to assume that they were not ‘working’.

If the obligation to participate in education or training is being ignored by a small but significant minority, it’s unclear how local authorities can enforce this. Or, with young people voting with their feet, whether they should?

Higher productivity for the many, or just the few?

For many people, increases in education provision and education performance have contributed to a growth in economic productivity – the increased output per worker.

But it’s the level of investment in physical rather than human capital that’s more important. From the mid-20th century, for example, the ‘Fordist’ production line increased output and reduced prices, but it also deskilled many workers. More recently though, it’s been argued that as production gets more sophisticated and new technologies are introduced, the number of ‘knowledge workers’ will rapidly expand – as a result, governments have increased university participation rates. But the number of graduates has vastly exceeded the number of highly skilled, well paid jobs, with some studies estimating 40% of graduates are over qualified for the work they do.

Yet raising productivity through increasing investment, particularly in the manufacturing sectors continues to be at the centre of Labour’s agenda. This has been reiterated this week in John McDonnell’s call for the Bank of England’s Monetary Policy Committee to be given responsibility for achieving ‘productivity’ targets. (Why a future Labour government would want to maintain the Bank’s ‘independence’ is unclear)

https://www.theguardian.com/commentisfree/2018/jun/20/britain-investment-revolution-labour-party

Raising productivity in manufacturing through the introduction of robotics and artificial intelligence, though increasing output per worker will, under current conditions, inevitably continues to lead to a reduction in the size of the manufacturing workforce. This means that almost everybody is now employed in the service sector; but increasingly the new employment is in low skilled, low paid, ‘low productive’ jobs – thus concern grows about the increasing inequality of the ‘second machine age’

It’s also wrong to rely on traditional (neo-classical) economic theory and argue that increases in productivity will lead to higher wages. Even those employed in the high tech ‘cutting edge’ sectors receive a fraction of the extra value they create.

Giving ‘productivity’ targets such a major role also leads to other problems. An obsession with measuring productivity levels of teachers and NHS professionals has led to a regime of imposed performance targets. Advertising staff developing new techniques to encourage us to buy more of one product rather than another, do not increase the real welfare of society. While spending huge amounts of time coaching their students in exam techniques, so they can outperform other students does not have any educational value. In short, using ‘productivity’ as a barometer for social and economic progress is a minefield. We need to move on.