Higher Education

Lord Johnson of Marylebone Excerpts

Thursday 7th March 2024 Lords Chamber

[Lord Johnson of Marylebone (Con)]

My Lords, the Chancellor may not have used his Budget speech to tackle the funding crisis but, as the noble Lord, Lord Blunkett, said in his excellent speech, at least he mustered some praise for our universities. That was a welcome change of tone at a time of often scepticism, bordering on hostility, towards higher education.

There is of course nothing new in the criticism that too many go to university—we have heard it again today—or that too much public money is wasted on low-value courses. Such attacks have been a constant in the history of the expansion of higher education and everybody is well used to it. I do not want to fall into the trap of complacency, and I certainly agree with the noble Lord, Lord Londesborough, that there is a case for cracking down hard on pockets of poor provision in the sector, which affect a minority of students on a minority of courses. We want to ensure that value for money is produced by this system.

However, I do not think that we should succumb to a general cynicism about higher education; nor do I think that we should return to a system of rationing higher education and limiting access to the number of students who progress from level 3 to levels 4, 5 and, particularly, degree level 6. Why do I say this? I say it because there is a very well-established skills bias in knowledge economies. Job creation takes place overwhelmingly in roles requiring graduate skills and, in the UK, this is happening at a time when we are already suffering from marked skills shortage, where we do not have enough highly skilled individuals to fill many vacancies. Our real problem as an economy is skills shortages. This really matters if we care about levelling up. Unless we continue to develop the pipeline of highly skilled human capital, we will see increasing inequality as wages rise more rapidly for those whose skills will be in stronger demand. We must not lose sight of how imbalanced our economy is. The FT recently calculated that, if you strip London out of our GDP per capita figures, the average Briton is worse off than the average resident of Mississippi, the poorest state in the United States.

The second reason is that we are living in an era of unprecedented technological disruption. As the noble Lord, Lord Blunkett, said, there are massive changes ripping through our economy due to two big waves of innovation; the first is a digital innovation wave, built on AI, supercomputing and automation; the second is a deep-science innovation wave based on biotechnologies and nanotechnologies. Our ability to surf those waves depends on the absorptive capacity of our firms and the adaptability of our people.

We are already seeing massive labour market disruption. As the noble Lord, Lord Blunkett, said, these powerful technologies, a number of which are converging at the same time—not just AI, but big data, cloud computing, the internet of things, virtual reality and blockchain—are driving change in all aspects of our lives. As the World Economic Forum’s Future of Jobs report found in its survey of employers, 44% of workers’ skills are likely to be disrupted over the course of the next five years. It is only the quality of our education system that will determine whether the UK will benefit from these innovations and whether it will be able to join the ranks of countries developing the next technologies. The most highly innovative knowledge economies around the world—look at South Korea, Israel, Japan and Canada—have boosted tertiary participation rates to well above ours, to the order of 60%, 70% or even more. Our ambition should be to join this vanguard of knowledge economies, not to give in to the dismal voices calling for student number controls that will hold back our productivity, widen inequality and throw sand into the engines of social mobility.