This blog is an edited transcript of a speech delivered by Sir Nigel Carrington, Vice-Chancellor at the University of the Arts, London at the PwC / HEPI conference on the 18th October following Professor Nigel Seaton’s speech, ‘How can institutions best account for the value they deliver?’.
PwC are longstanding supporters of research into the Higher Education sector, and without their support the conference would not have been possible. This blog is the second in a series of three speeches which were delivered at PwC. The third in this series will be a transcript of the speech delivered by Felicity Mitchell, Independent Adjudicator at the Office of the Independent Adjudicator.
The current Government’s discourse on the value delivered by higher education is too narrowly focused. The Value for Money Strategy of the Office for Students, launched at the HEPI / PwC conference last month, exemplifies this reductive interpretation. I take no issue with its core idea that students and graduates should benefit from their higher education studies. But the value higher education delivers to students does not equate to its total value to society and there are several ways in which the current policy understanding of value is severely deficient.
1. When this Government talks about value to students, it often means return on investment (ROI). Since education has a cost, it is legitimate to consider the direct return on that cost, especially as this has become more pressing with the expansion of UK students. Government can try to measure ROI to students via tax returns, and using the graduate salary data in LEO. But this has limitations, best shown with reference to graduates from Creative subjects:
- LEO data only covers early career earnings, and does not account for graduates in only part-time work;
- It does not adjust for regional earnings differences, so reliance on it could act as a drag on regional growth;
- At best, it measures graduate earnings during a period of economic stagnation or slow growth (the post-Great Recession years);
- It does not yet robustly pick up self-employment earnings. This means a university’s success in fostering entrepreneurial graduates working for their own start-ups would not show up, despite their £822m turnover in 2017-18;
- It does not take into account factors like prior attainment, parental background and social class. These are thought to be just as important in determining earnings potential, particularly directly post-graduation.
2. In any case, value to students is not primarily about return on investment in cash terms. Value means something different to students – it means the acquisition of knowledge and skills to succeed in the modern and future economy. Students are, in this regard, forward-looking, whereas analysis of historic tax return data can only ever look backwards.
In keeping with the recent UUK/ComRes research, University of the Arts London commissioned YouthSight to survey over 2,000 students and applicants, across the full range of subject areas, about their motivations and expected higher education outcomes. For 41% of respondents “the acquisition of knowledge and skills to realise my chosen career path” was the most important outcome. The figure rose to 61% for Creative Arts & Design. Only 23% of respondents said “earning a good salary” was the most important outcome from their degree.
So students want something far more complex and difficult to define than mere earnings, and are far more bothered about their career than about the money they’ll earn from that career.
3. Any forthcoming Spending Review should describe value for money, knowledge and skills outcomes with a much broader perspective.
HEPI recently pointed out the lack of evidence around the argument that students can adequately assess the value of their higher education experience during their studies, not least because many of the benefits are lifelong. Five or ten years after graduation, we may well find the proportion of graduates rating their university experience as offering good value would be higher, precisely because graduates have better health outcomes, are more likely to engage civically and have better long-term employment outcomes.
We should certainly not assume a low earning career means that an individual will necessarily regard their education as having been of low value. There is plenty of evidence that graduates who drive the creative industries are having fulfilling and economically worthwhile lives irrespective of earnings. Creativity drives social as well as individual happiness.
Students make their decisions based on this complex mix of factors and we should not replace that decision by some form of centralised workforce planning or preventing students from studying subjects that they value. Not everything can easily be measured in numbers. Research by Nesta and others informs us about the importance for the UK’s future productivity of future-proof skills, problem-solving, and higher-order cognitive skills.
4. Earnings and value to graduates only tell part of the story. Any assessment – even of financial ROI – must also take into account the spill-over effects of following a particular career: graduate earnings do not measure at all the value contributed by universities in terms of their delivery of government priorities including industrial strategy, societal and economic wellbeing and productivity.
London Economics concluded in 2018 that LEO data does not capture the spill-over effects of working in the creative industries. It concluded that the average gross salary earned in the arts and culture industry stands at £30,789 per employee, but that an additional £42,420 in gross salary per employee was accrued elsewhere in the economy as a result of these spill-over effects.
Other, similarly valuable spill-over effects are found in professions like nursing, teaching and social work, but no one argues that these degree-level subjects are unworthy of continued public funding.
Moreover, conventional methods of determining the economic impact of having a degree ignore the evidence that having a degree means graduates are less likely to be unemployed, less reliant on social security and use fewer NHS resources.
In fact the Government’s own earlier attempt in 2013 to understand the wider benefits of higher education participation made these same points, as part of a long list of “non-market” benefits to society and the individual. It is disappointing that this has not received the same attention in more recent Government interventions.
5. We need a much wider framework for value, beyond students themselves. The student, the state, and wider society all perceive value differently – and it is acceptable that their interests in higher education differ. The value created for individual students does not just derive from teaching: it is complemented by the outputs of a university’s mission to generate and apply new knowledge.
Our students are not our only beneficiaries. Universities are civic actors, interacting with and offering services to their local community. UAL, for instance, also adds value to society through advances in research (most notably in relation to building sustainable economies), the benefits of good design (including the application of design principles to civic society), and knowledge exchange with industry. We also add to the UK’s global soft power by attracting international students and international partnerships.
6. Students are at our heart – but the contribution of universities goes much wider
The risk of the current Government’s approach is that the total benefit to students (beyond jobs and salaries), like the total benefit delivered by universities, becomes seen by the regulatory framework as mere ‘collateral’.
Policy makers can examine the financial return on the state’s investment in higher education, but should be wary of valuing only what those metrics tell them. We should do what we can to measure graduate earnings, but we should evaluate the broader impacts of our activities cleanly and separately from graduate earnings. And we should acknowledge that the current metrics are not up to the purpose for which Government wants to use them.
So let’s also bring back into the equation the outcomes that universities deliver to industry, communities and civic health. We must develop a much more sophisticated narrative around the social and economic benefits of universities to the communities, whether local, national or international, with which they interact. We can try to measure these benefits in terms of metrics, but we must not fall into the trap of feeling that a benefit which cannot be precisely quantified does not exist.