We need to support our people to get the key skills that will enable them to benefit from technological change in the longer-term.
A) STEM for free
We have been talking about the need to improve skills in this country for a long time. We have made great strides in recent years, with apprenticeships now a key focus of government policy and more children (especially girls) studying STEM subjects at school and university. However, there is still a need to go further. In the Unlock Britain Commission, many of the commissioners stated that they were unable to expand their businesses because of a lack of STEM graduates and apprentices. Recent CBI studies say similar things. At the same time, the number of graduates working in non–graduate jobs is above 40% (according to the ONS), and HM Treasury currently assume that between 40% and 50% of the student loans taken out by British students will be written off. Put bluntly, we need to shift our spending away from expensive three year degrees in arts subjects at certain universities which do not lead to graduate jobs (and correspondingly generate a huge amount of resentment from the young person who takes on the student loan), and towards both STEM degrees and STEM apprenticeships. We should encourage more students to study these subjects – their opportunities and options going forward will be greater, and the country will benefit.
How would it work?
In a new digital age, turbocharged by the changes wrought by COVID-19, we are going to need STEM skills more than ever. How can we increase the number of high quality STEM students? In relation to graduates, a Nuffield Trust report from late 2018, stated that: “there is no evidence of a shortage of STEM graduates per se. Only a minority of STEM graduates ever work in highly skilled (HS) STEM occupations, and an even smaller proportion are employed in key ‘shortage’ areas. Any mismatch between the supply and demand for STEM workers cannot, therefore, be attributed to the number of students graduating with STEM degrees. Problems with the ‘supply’ of STEM workers are more likely to be explained by the willingness of graduates to pursue careers in STEM fields and the recruitment practices of employers”. It appears that the problem of STEM graduates in this country is two-fold – their perceived quality by employers willing to hire them, and their willingness to work in HS STEM occupations after graduation.
For those studying STEM undergraduate degrees at Russell Group universities, the student debt should be written off once they have worked for five years in (i) specialised occupations within STEM (the areas in which we know there are shortages and a need of higher quality) or (ii) in new Freeports or Opportunity Zones.
I would need better data to calculate the cost of doing this precisely, but my rough estimates for how much this would cost, on a yearly basis, are as follows: assuming c. 200,000 Russell Group students are studying STEM, and 50% of those going into HS STEM occupations, the cost of writing off this student debt would be c. £2.5bn – £3bn. This can be achieved without any new money. The money could be directly taken from within the HE budget, by reducing funding to courses (at all types of university) which do not offer high returns to students. Recently, the Onward think tank recommended reducing access to courses that deliver low economic value in terms of graduate earnings premia, by either making the charging of £9,250 fees conditional on course earnings potential or introducing a grade floor for low value courses to redirect students into routes with a higher return. This is a broadly sensible approach.
We need to encourage more FE colleges to provide more of these high-quality STEM courses – this will increase the number of HS STEM apprentices. FE colleges and relevant high level technical courses in STEM subjects (in which there is a shortage) need to have their funding significantly increased, as these courses are particularly expensive to run. In addition, for employers that take on these STEM apprentices the Government should extend the current 0% Employer’s NI rate for apprentices for 2 years if those apprentices are taken on as full employees.
Much of this may sound radical. However, it could be transformative. We would be creating a deep pipeline of top talent directly incentivised to stay working in STEM occupations after finishing their courses. It would help make Britain a much more attractive option to start up or grow a manufacturing business, strengthen our research base and our ability to industrialise it, and it would give a nudge to those taking on unnecessary student loans in degrees of limited value to perhaps do something else instead.
B) Digital Skills
Schoolchildren now develop good technology skills during their school education but may not have access to courses to teach programming, website development and other practical applications, including a greater understanding of the impact of AI on the future jobs market.
Young adults and older workers may struggle to keep up to date with technology developments and this can impact their ability to perform in current jobs and to future-proof their skill sets. There is a need to broaden access to the widest range of technological skills training, and this should start with an extension of digital courses offered by private schools and universities to state schools, which would enable us to equalise opportunities and widen digital skillsets in young people before they enter higher education and the workplace.
In addition to this, schools and universities could be incentivised to pool resources and ideas to develop a national digital training curriculum, which could deliver introductory-level digital skills for both young people and those already in the workplace.