David Willetts: The OECD offers a vote of confidence in Britain’s universities

David Willetts is a Member of the House of Lords.

A significant feature of last week’s reshuffle was an attempt by Sir Keir Starmer to overcome battles between departments by giving one minister overall responsibility for a policy area and with a post in both departments.

One of the deep-seated departmental feuds is between the department responsible for welfare benefits and the one responsible for education and skills. The skills minister is always frustrated that the DWP rules on entitlement to benefits for people who are out of work don’t allow them to study or train properly and regularly – so they press DWP to ease the restrictions.

The DWP, meanwhile thinks that the Education department is trying to palm the cost of training people onto the benefits system when the DfE should fund it themselves.

The DWP thinks the best way to help an unemployed person is to get them quickly into some job, any job, so they are in the habit of work and off benefits. The DfE think that pushing people into work that doesn’t match their aptitudes or interests is a short-term solution which often leads to wasteful job churn, and instead they should provide training focused as far as possible on the type of jobs people actually want to do.

This argument has been going on for decades. Now Jacqui Smith is going to be having the argument with herself, because after the reshuffle she has responsibility for skills in both the DfE and DWP.  Perhaps she can do a Boris Johnson and draft two letters – one from DfE to DWP, and one the other way round – and decide which one she will send.

Starmer has presumably sent Pat McFadden to DWP as he still wants to get some savings on welfare. Politically it is harder for him now to cut rates of benefits. But he could achieve the same objective by tougher conditions. There could be a threat of loss of benefit if you are not actively involved in education or training to get a job.

This would be a big shift for the DWP which is wary of such training requirements for fear it ends up funding them. So in return, the DfE would be expected to put much more effort into providing extra skills training for people on benefits. The Apprenticeship Levy is a potential source of funds that could be used for this, as the Government has eased the previous restrictions on how it should be spent.

The use of the Levy is currently distorted by Degree Apprenticeships which are an expensive use of Levy funds for older employees who usually have significant educational qualifications already. Their courses, like other higher education courses, should be funded out of fees and loans. (This is particularly important because for any given subject degree apprenticeships are more socially selective, less open to ethnic minorities, and more male than the equivalent university courses.)

That would release Apprenticeship Levy funding for the people who need help the most – younger people getting level 2 or level 3 qualifications many of whom might be economically inactive If there is anyone who can deliver this deal it is Jacqui Smith who understands the reality of higher education and the effectiveness of its funding model.

Meanwhile, today also sees the OECD’s education guru Andreas Schleicher in town for the launch of their authoritative annual assessment of our educational system compared with other advanced Western countries. Today’s report gives us a fairly positive assessment both on schools and on higher education.

Conservatives are understandably keen to cite the evidence on our school performance but the rise of edu-scepticism about higher education means that the OECD’s equally valid assessment of our tertiary education is ignored. So here are the OECD headlines both for the UK and many of our competitors:

• “Unemployment for tertiary graduates is low.”
• “Tertiary qualifications pay higher earnings.”
• “Tertiary attainment in the UK is high and keeps rising.”
• “Stable earnings advantage of young adults in the UK.”
• “Fields of study have strong effect on earnings.”
• “Educational attainment and health are closely correlated.”

The OECD picture is one where there is a sustained graduate premium and much lower levels of unemployment for young people with higher education. My own investigation of these issues, using British labour market data, is in a pamphlet Are Universities Worth It – there is a link to it on my website.

One final observation. We should not plan to increase or to decrease the number of people going to higher education. It should be the well-informed choices of young people themselves armed with the best possible information, including on graduate earnings. The reason why more people go to higher education is not Blair’s 50 per cent target but because more people choose to.

So we should look at what young people think. Of the 25 year olds who have not gone to university 40 per cent regret it. By contrast 87 per cent who did go would choose to do it again. Conservatives should respect people’s right to choose. And often they choose higher education.