The University and College's Union argues for more graduates as the BBC follows suit

It's hardly surprising that the UCU commissioned research with conclusions that benefit its membership. But should the BBC and Times Higher Education follow suit without a hint of counter-analysis?

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More graduate debt?
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Anthony Masters
On 12 June 2012 13:05

The Institute for Public Policy Research (IPPR) and the University and College’s Union (UCU) have released a joint report that claims, according to this BBC headline, “The state gains 10 times what it pays for students”. The report’s conclusions will be fully unveiled at the UCU’s 2012 annual congress.

The central claim of the report, entitled ‘Further Higher? Tertiary education and growth in the UK’s new economy’,  is that following an approximate state expenditure of £5,000 for a student to achieve A-Levels, and £19,000 for that student to graduate through university, the “net return to the wider economy” is £47,000 for college graduates and £180,000 for university alumni. In total, the teaching cost for a graduate is £24,000, but their increased income is £227,000 over their lifetime, with the latter number being roughly ten times the former. This is the derivation for the headline proclamations.

Under revelatory illusions, the report itself is simply dressing up old facts with new language. It is well-known that those who attend university and graduate tend to earn more than those who do not. These extra earnings have usually been called the “graduate premium”. In their press release, the UCU switch between using the phrase “net gain for the economy” and “net return to the exchequer”, as if they were synonymous. Despite what the UCU or other unions may wish, the state is not the economy.

The graduate premium came to the fore in the debate over tuition fees, as Lord Browne claimed that the extra earnings following university were only £100,000 over the graduate’s lifetime. A 2007 study by PricewaterhouseCoopers (PWC) for the vice-chancellors’ union, Universities UK, claimed that the graduate premium was, in fact, £160,000.

The deductions of expected taxation explain the disparity between the total graduate earnings in Lord Browne's inquiry and the PWC report. The new discrepancy between the figures produced by PWC and IPPR is down to two very different uses of the word “average”. In short, Lord Browne’s and PWC’s figure is the median of all total earnings of graduates, whilst the IPPR use a mean average.

The dissimilarity in these figures is simply a result of the income distribution in the UK. People earn income, it is not distributed by central edict; but we may think about incomes being distributed in the statistical sense, as points plotted on a graph.

Income inequality has long been a rallying cry for political commentators, newspapers, unions and think-tanks, including the IPPR and the UCU. Professor Danny Dorling, an academic at the University of Sheffield, wrote a paper for the IPPR entitled: ‘A case for austerity amongst the rich’, where the chief complaint was British income inequality.  Returning to the matter of income distribution, the Institute for Fiscal Studies stated in their report, ‘Poverty and Inequality in the UK, 2011’, that: “the distribution is highly skewed, with 65% of individuals having household incomes below the national mean.” Hence, the greatest earners are skewing the mean average graduate earnings, which yield a distorting view of the graduate premium. In effect, the UCU and the IPPR are using the income inequality that they complain about and wish to minimise to justify greater state expenditures in their desired area.

Jerry Hardcastle, Director for Europe of Nissan, contributed the following warning to the report: “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, Brazil and China.” In terms of absolute student numbers, the five largest higher education systems in the world are: China, the United States, India, Russia and Brazil. It is not a surprise that China, the United States and India have the three largest student populations when they are also the three largest countries by population in the world. According to the Department for Business, Skills and Innovation, the university participation rate in England is about 46 percent. By comparison, the Indian university participation rate is approximately 20 percent. India is producing more graduates than the UK simply because its underlying young population is so much larger.

Lastly, the report recommends that the government “prioritise expanding the number of graduates entering the workforce across all subjects, including arts, social sciences and the humanities”. The 2007 PWC study on the graduate premium also investigated the different extra earnings from graduates with different degrees. It found that the graduate premium for medicine alumni was as much as £370,000, but only £34,000 for former students of the arts. This means that the earning potential following graduation was a lot lower for arts students, and the call for prioritization of such students runs counter to the “investment” rhetoric that the IPPR previously employed.

It is of no surprise that the UCU has commissioned research that reached conclusions which ultimately benefit its membership. However, it is surprising that the report’s findings have been reflected and repeated, almost mimetically, by the BBC and Times Higher Education, with their articles carrying no core of critique or counter-analysis.

Anthony Masters is a freelance writer, mathematics postgraduate at the University of Bath and a member of the Bath Conservative Executive. He writes here in a personal capacity

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