Education: Contribution to Economic Growth

Viscount Hanworth Excerpts

Thursday 5th December 2013 Lords Chamber

[Viscount Hanworth (Lab)]

My Lords, I begin by expressing my dismay at the obtuseness of many of the analyses that attempt to quantify the economic benefits of increased expenditure on our education. Such studies are well represented in the literature emanating from the Department for Business, Innovation and Skills. They are typically cast in the form of economic cost/benefit analyses. The costs are expenditures, both public and private, that are entailed in seeing an individual through the ultimate stages of their education. The benefits are in the form of a discounted flow of cash representing the present value of the individual’s enhanced lifetime earnings. The balance is termed a net lifetime benefit, and the sum of individual benefits, aggregated over the set of people in question, is deemed to be the net economic benefit. There is an implicit suggestion here that the per capita net benefit thus derived is a meaningful measure of the returns to be expected from a marginal increase in the expenditure on a particular form of education. It is suggested that this should provide the appropriate guidance for governmental educational policies.

We should, of course, expect much more from education than the individual financial rewards that it might generate. The economic benefits of an educated working population surely extend far beyond the realm of personal finances. This is notwithstanding the fact that, in economic accountancy, it is deemed to be appropriate to measure all benefits in terms of the eventual increases in the incomes of consumers.

We also have to contend with what economists describe as the problem of externalities; economic benefits and the other effects of the education of individuals accrue not only to themselves but also to others. The problem of externalities is commonly known as the fallacy of composition. The fallacy arises when the whole of something cannot be identified with the sum of its parts.

There is another more fundamental methodological criticism that I should like to aim at the studies that I have mentioned. The studies that purport to account for the levels of personal or national income commonly employ regression analyses. These attribute the value of a dependent variable, which is income in these cases, to a linear combination of various measurable factors, which are weighted by numerical coefficients. There is an unspoken assumption that these factors are amenable to independent variation, achieved perhaps by the intercession of some governmental policy. Thus, for example, it is asserted in one of the documents of the Department of Business Innovation and Skills, that,

“a 16 percentage point increase in those educated to degree level could lead to more than £1bn annual savings in reduced crime costs in the UK”.

That is an instance of what is described in philosophical jargon as a counterfactual conditional. It is a statement that asserts that if realities were other than what they actually are, then such-and-such a consequence would ensue. The difficulty here is in the need to invent a plausible alternative reality. The alternative reality would comprise not only the 16% increase in the numbers of graduates; there would be many other accompanying circumstances. There could plausibly be an increase in the unemployment of the graduates, which might lead them to commit crimes. If this speculation sounds silly, it is no sillier than the original proposition.

There are many other instances that could be cited of spurious quantification expressed in quasi-mathematical language. They are certain to bamboozle many readers who lack the confidence to gainsay them. An example of dubious quantification that is dominating the current debate on educational policy is the list of the so-called PISA rankings on national educational achievements that has been published by the OECD in recent days. The Education Secretary, Michael Gove, has been using these rankings to berate his predecessors and his critics. On closer examination, the PISA methodology appears to be seriously flawed. However, a cursory glance at the rankings indicates that they are, to a significant extent, inversely correlated with the degrees of inequality in the countries concerned.

If this is not the way to guide and to evaluate our educational policies, then what other methods should we pursue? I propose that we should take a narrative approach, which should be informed by a detailed knowledge of past and present circumstances. This would dwell on past successes and failures. We should allow ourselves some modest self-congratulation, but the principal aim should be that of avoiding the pitfalls already encountered and of overcoming the enduring failures. This is far too big a task to attempt in a brief speech, but I can at least talk briefly of some of my own perceptions.

I believe that we must go back at least to the Butler Education Act of 1944 in order to explain the current status of education in Britain. The Butler Act proposed three different types of secondary school: grammar schools, secondary technical schools and secondary modern schools. The technical schools were intended to foster the scientific and technical education that would sustain our industries, thereby enhancing our economic growth. However, they never materialised. This was partly on account of a lack of resources and a lack of teachers who had skills in the relevant areas. The technical schools were also opposed by some trade unionists who felt that they would encroach on the apprentice system.

Within this tripartite system, there was an order of merit. Grammar schools, which were to have an academic orientation, would take the brightest of the students; secondary technical schools were to take those of middling ability; and secondary modern schools were to take those who by and large were destined for menial industrial labour. As it transpired, there was no provision in the middle ground for training that was both academic and technical. The legacy of that deficiency has endured to this day. In particular, we have no meaningful system of technical apprenticeships. We seem nowadays to be intent on using a revived system of apprenticeships mainly to obtain placements for young people who might otherwise be unemployed. The reaction of the Labour Party to the socially divisive system of grammar and secondary modern schools was to create comprehensive schools to cater to all students together. However, the comprehensive schools have never satisfied the need for a technical education,

The philosophy of outsourcing that has been adopted by many British companies has led them to regard technical skills as commodities that can be purchased on the open market. They have failed to train and nurture people with the skills that they depend upon, and consequently in many cases the firms have rendered themselves technically incompetent. The problem was well illustrated in the speech of the noble Baroness, Lady Sharp.

At this juncture, I remark that British culture has fostered some decidedly anti-intellectual sentiments. In certain quarters there has been contempt for teachers. There are echoes of such contempt in the pronouncements of the current Secretary of State for Education. Michael Gove has threatened a more rigorous system of school inspections that will weed out incompetent and underperforming teachers. He has also proposed to give head teachers and school governors arbitrary and unbridled powers to determine the remuneration of their staff. It seems that the visitations of the Ofsted inspection regime are to be redoubled at a time when teachers are liable to be afflicted by a plethora of governmental educational initiatives. It is such interference by successive Governments and the derogation of the teachers’ skills that has been responsible for many of the problems in the educational sector.

People work best when they have ownership of the processes that they mediate and when they are able to maintain their self-respect. Under such circumstances, they are liable to work with enthusiasm and to perform beyond the formal call of duty. It is remarkable that our teachers have been so steadfast in the face of so many onslaughts.