Here is what I said in Parliament on the 9th July about this important idea and how it relates to my own proposals for the future of higher education.
“In a lecture to the RSA in January, I set out the case for employer co-sponsored degrees, so I am delighted by my right hon. Friend the leader of the Labour party’s announcement of his backing for new high-level technical degrees that, as he said, would be delivered in partnership with industry, co-funded and co-designed by employers.
In the furore around the £9,000 tuition fees, not so much attention was given to an early decision of the coalition to close down Labour’s work force development programme. After just three years, it had created 20,000 co-sponsored degree programmes a year, with an average employer contribution of nearly £4,000.
The scheme was different from other higher education funding, because instead of having central allocations, employers and universities had to bid for funds. That element of competition created the incentive to design courses that employers really wanted to help pay for, and employer contributions could be varied according to ability to pay and the course on offer. We need something like that, and more of it, today.
At the moment, we have a persistent degree-level skills shortage in parts of the economy, but we also have record numbers of students going to university. However, a third of graduates are not working in graduate jobs five years after they graduate. They are up to their neck in debt, but higher education has not delivered what they expected.
The problem is not that we have too many graduates; it is the mismatch between supply and demand, which arises because employers have too little influence over the process. As the CBI said last July, we need more partnership-based provision, with greater business involvement in colleges and universities, as well as to boost apprenticeships.
But the market in “learn while you earn” models, such as higher apprenticeships and more flexible degree programmes, is underdeveloped.
There are other reasons why we need the change. The welcome expansion of higher education has had a less welcome aspect, in my view. Universities have increasingly concentrated on the most expensive model of higher education—the full-time honours degree studied away from home.
More than ever before, higher education is a one-shop deal for 18 and 19-year olds. Our graduates are the youngest in the OECD. There are two consequences. With an uneven schools system, such as that described by my right hon. Friend Mr McFadden, there is no chance of young people competing equally at 18, so social mobility suffers.
At the same time, there are fewer and fewer routes for the later developer, the student from the weak school and the young person whose family did not value education, and mature and part-time numbers are shrinking.
Technical degrees have been spoken of as an additional route for the 50% of young people who do not go to university. I will be frank and suggest that they would be a better route also for a minority of those currently entering higher education.
In the proposals that I set out earlier this year, I showed how those could be delivered without student debt and with better value for money for the taxpayer. If we recognised that employed students do not need maintenance, and if we made the cash available not as debt cancellation, but as subsidy to the employer, we could create the finance for a good co-sponsored degree. I look forward to my own party’s development of the idea.
Businesses will contribute, as they have done in the past. If they can educate an employee whom they have chosen, on a course that they have helped design, which is delivered full-time, part-time, on site or by distance learning, according to their business needs, at times that suit their business, the cost of contributing to the education of the graduate will be much less than the typical recruitment costs of employing a new graduate, let alone the typical retention costs when the business or the graduate finds out that they have made the wrong choice.
I hope my party retains at least the flexibility and the competitive elements of the work force development programme. Not only did they help to ensure that both employers and universities worked in effective partnership, but they will avoid the need to create cumbersome structures to design and validate new degrees.
The Wolf report was in part a comment on my time as a Minister. What Professor Wolf said, rightly, was that the genuine attempt to create employer-led bodies to design qualifications, which was shared by all sides, had not worked in delivering the qualifications that we needed.
The innovative effort should go into ensuring that SMEs, not just the major employers, have sufficient voice and weight to negotiate with universities.
In the autumn statement, the Chancellor announced huge new funding to take the cap off university places.
As things stand, that will all go to three-year degrees studied away from home by young people.
Putting that money, or some of it, into the type of technical degrees now being discussed might be a much better use of the money.”