New research carried out by the Institute of Public Policy Research for the University and College Union has found that graduates contribute almost ten times what it costs the state to educate them to the UK economy.

The study shows that a £5,000 state investment in A-levels provides a net return of £47,000 to the exchequer, while just under £18,800 for the average degree returns an additional £180,000.  In other words, putting an individual through A-levels and university generates a £227,000 net gain for the economy.

Launched at the UCU’s annual congress in Manchester on Friday 9th June, the report (‘Further Higher? Tertiary education and growth in the UK’s new economy’) also warns that if the UK fails to produce more highly skilled workers it runs the risk of losing jobs abroad as well as failing to gain a competitive advantage in the new low-carbon industries.

The report claims that reforms resulting in fewer graduates will limit the UK’s ability to compete globally.  (In 2000, the UK had the third-highest number of graduates among the advanced industrialised nations; by 2008 this had dropped to fifteenth.  By way of contrast, China quadrupled its number of graduates between 1999 and 2005, and is on track to become the world’s biggest producer of PhD scientists and engineers.)

Of particular concern is the reduction in the provision of STEM courses in the UK, which has declined by 15% over the past six years.  The report quotes Jerry Hardcastle, Nissan’s VP for vehicle design & development: “In India, they are churning out hundreds of thousands of graduates and we are churning out a small number, and that will restrict our ability to expand.  If they’re not available here, the jobs will move to India, China and Brazil.”

80% of new UK jobs created between now and 2020 are predicted to be ‘professional’ posts requiring at least A-level or equivalent qualifications.  Yet the UK currently invests just 1.7% of public expenditure on tertiary education – behind France (2.3%), Germany(2.8%) and the USA (3.2%).  (The OECD average is 3.0%).

In addition, the cost of youth joblessness in terms of foregone tax revenues and unemployment benefit was recently estimated (in a report by the National Institute of Economic and Social Research) at £4.5bn a year – i.e. more than the UK’s entire further education budget for 16-19-year-olds.

As well as urging the government to recognise the economic return of investing in A-levels and degrees, the report exhorts government and employers to “urgently invest” in equipping the UK workforce with the higher skills needed in key growth sectors, and to this end proposes maintaining if not expanding the numbers of graduates entering the workforce across all sectors.  It also wants to see the government providing greater support for R&D, including university start-ups.

“Instead of cutting places at college and university, ministers should be looking to fast-track learners into the industries of the future,” says UCU general secretary Sally Hunt.

●  A recent report from the Higher Education Statistics Agency reveals that UK higher education institutions generated revenues of some £2.5bn from contracts with third-party organisations and other services.  According to the HE Business and Community Interaction Survey 2010/11, £1.1bn of this came from research contracts with businesses and non-commercial organisations, while the remaining £1.4bn was derived from consultancy contracts, facilities and equipment, continuous professional development courses, intellectual property, and regeneration and development programmes.