Take money from universities to support technical education, says Policy Exchange

A new report calls for up to half a billion pounds to be diverted from universities at the Spending Review to boost the quality of high level professional and technical courses in FE Colleges across the country.

The report, Higher, Further, Faster, More, by leading think tank Policy Exchange says, that while UK universities are some of the best in the world, they are sitting on significant financial reserves, and public spending is currently skewed too much towards Higher Education to the detriment of Further Education. This is hampering the growth of the training desperately needed for a range of technical and professional jobs in the UK labour market.

The report finds that funding for higher education institutions has increased markedly since the introduction of tuition fees, with a rise in overall income of 26 percent since 2009/10 and universities sitting on £12.3 billion of unrestricted reserves – worth around 48 percent of the entire annual budget for the HE sector. By contrast, Further Education colleges have seen a significant drop in their revenue, with the adult skills budget having been cut by 24 percent since 2009-10. According to the National Audit Office, more than 1 in 4 of the entire FE college network could effectively go bankrupt within a year.

It calls for BIS to redirect up to £532 million of the Higher Education Funding Council (HEFCE) grant to improve the quality of higher level technical qualification on offer at FE Colleges, National Colleges and Institutes of Technology. Any remaining grant funding should be directed towards universities with the smallest financial reserves.

The report also proposes an expansion of the university student loan system, as well as the introduction of maintenance support, to FE students. This would mean that for the first time all young people will have equal access to finance to support further study, whether they choose a university or a high quality technical pathway.

The paper points to a number of startling statistics to highlight the lack of technical graduates in the UK and the impact this could have on the future of the labour market:

  • The Royal Academy of Engineering forecasts that the UK economy requires 830,000 more engineers by 2020
  • 28 percent of firms who need technicians qualified in science, technology and engineering or maths already report difficulty in recruiting
  • CITB stats suggest 224,000 new construction jobs are set to be created throughout the UK in the next five years

The report makes a number of other recommendations including:

  • The ability for the new Institutes of Technology, announced in the Government’s recent Productivity Plan, to award their own technical degrees rather than have to partner with a university
  • The expansion of Industrial Partnership bodies – groups of employers in specific sectors – to be the main route to design and approve all new technical qualifications, including higher level Apprenticeships

Jonathan Simons, Head of Education at Policy Exchange, said:

“The case for training and for skills has never been more important – to help create 3 million Apprenticeships, to fuel the Northern Powerhouse, to boost social mobility and to drive economic growth.

“The UK is home to world beating universities that we should all be proud of. But as well as degrees, we also need many more people with high class technical and professional skills – and that means a flourishing further education system.

“It is clear that higher education is significantly better funded than its further education counterpart. Universities have substantial cash reserves which could be much better utilised than sitting in banks. That is why we think a proportion of the government grant to universities should be reallocated towards offering more students higher level technical qualifications at further education institutions, and why the student loan system should be expanded so that young people have access to finance to support their higher level study whichever route they choose.”