University expansion is a failed policy

A response to Andrew Adonis

June 15, 2021
Jeff Gilbert / Alamy Stock Photo
Jeff Gilbert / Alamy Stock Photo

Does Falmouth University represent a glimpse of the future of higher education, or a cautionary tale about the risks of over-expansion?

In his column for Prospect last week, Andrew Adonis argued the former. His rationale was simple: in the years since he personally signed off Falmouth's conversion to university status as education minister in 2005, it has expanded enrolment to over 6,000 students and pre-pandemic its graduates commanded an employment rate of 96 per cent, marginally higher than the 94 per cent rate for all universities. Indeed, so successful has the "Falmouth model" proved to be that he argues it should be extended to 46 large towns in England still without a university, while Tony Blair's target of half of school leavers going to university should be extended to 70 per cent. 

The fundamental problem with this argument is that it makes the classic error of mistaking outputs for outcomes. It is hardly surprising that—during two decades of unprecedented political and cultural focus on higher education as the route to social mobility—young people were convinced to attend a newly minted university on the beautiful Cornish coast. Nor is it particularly impressive that Falmouth graduates benefited from a high employment rate during the tightest UK labour market in recorded history. What matters, for students themselves, the taxpayer funding them, and local area, is whether studying in Falmouth leads to better outcomes than if students had done something else.

The best evidence we have—the Department for Education's Longitudinal Educational Outcomes (LEO) dataset on post-graduation earnings—suggests that this is not the case. Controlling for social and demographic factors, Falmouth generates a negative graduate earnings premium, meaning the average Falmouth graduate would have earned more if they chose not to enrol and did something else instead. According to analysis of LEO by the Institute for Fiscal Studies, male graduates of Falmouth University earnt 15 per cent less and female graduates earnt 7 per cent less on average at 29 years old than if they had not gone to university (and accumulated £50,000 worth of debt) at all.

If towns like Swindon, Hartlepool, Doncaster and Blackpool were given their own universities, as Lord Adonis recommends, why would this be any different? The answer is that in all likelihood it wouldn't be. The only institution that ranks lower than Falmouth for female graduate earnings at 29 years old—the University of Bolton—also converted to university status during the Blair years of expansion. Many other low-earning universities are former polytechnics based in towns, such as Glamorgan, Wolverhampton and Bedfordshire University, based in Luton. They may take more students than they did in the 1990s, but that does not mean they deliver more value to students or society as whole.

The uncomfortable truth for Adonis is that the data no longer supports the case for higher education expansion. In the late 1990s, when Tony Blair made the original 50 per cent pledge, far fewer people attended university and graduate premiums were higher. It was short-sighted, but not totally unreasonable, to believe that university expansion would lead to social mobility. But today we know better. Analysis of LEO data by my think tank Onward in 2018 found that around one in five graduates are no better off five years after graduating than if they had chosen a non-university route, such as an apprenticeship, instead.

This is particularly the case for the kind of degrees that Falmouth has expanded to offer in such numbers. Creative arts and design courses are the second most popular degree in the UK, with around 150,000 full-time undergraduates enrolled last year, but they have the lowest returns of any subject. A majority of creative arts graduates are earning £25,000 or less—the threshold at which they start paying back the taxpayer—a decade after they graduate. And the rapid expansion of creative courses in recent decades is one of the main reasons why more than three-quarters of students will now never fully pay back their student loans, leaving the Treasury with an expected write off of taxpayer liabilities worth £28.8bn in 2049-50, according to current forecasts.

Of course, higher earnings are not the only reason why people study and creative arts courses offer society much more than just an economic dividend. This is particularly true in a place like Falmouth, whose renowned college of art sat at the heart of a vibrant creative community that produced some of the best British artists of the last century. But it did so well before it converted to university status and sextupled the size of its student body compared to 1990s levels. The mistake is to think that artistic endeavour, or a whole other panoply of vocational pursuits, are best served through university expansion and funded by debt.

It is the height of folly to promote local universities as the answer to "levelling up" when we now know they often offer graduates lower incomes compared to alternatives. Degree apprenticeships, for example, were introduced in 2015 as an alternative to university degrees and have already been shown to offer a significant earnings premium, yet leave apprentices unencumbered with tens of thousands of pounds of debt. That is where we should be looking if we want to boost the prospects of disadvantaged young people, not to a failed model of higher education expansion.