Universities must focus more on adults, employers and market needs, Mike Campbell argues. Our prosperity depends on how many people are in work and how productive they are. In fact, productivity counts for about four fifths of growth. Yet our productivity is well below that of other major economies: we rank halfway down the Organisation for Economic Co-operation and Development's productivity league table. Each percentage point shortfall in productivity costs the UK £10 billion a year. At the same time, the UK has one of the highest returns to individuals for obtaining a degree in the OECD - above that of the US and Scandinavia, for example - despite the more than 50 per cent increase in the number of graduates since 1994.
The country needs more highly qualified people to compete in a globalised economy, and the labour market is likely to need at least 4.5 million more graduates by 2020. Higher standards of living require higher standards of learning. Yet in international terms we rank only 11th in the proportion of adults with graduate-level skills, and if we do not change tack, our position will deteriorate to 13th by 2020. We also rank 22nd in the proportion of gross domestic product we publicly invest in tertiary education.
That's why the Government has accepted, in its policy paper World Class Skills and in the Comprehensive Spending Review, new public service agreement targets and delivery agreements, including the need for 40 per cent of adults to be qualified to level 4 and above by 2020. This is equivalent to an extra 5.5 million attainments, or 450,000 a year. This is an enormous challenge and a huge opportunity.
But here's the rub. This expansion cannot, and will not, be achieved by the expansion of full-time undergraduate provision for two reasons. First, the number of 18-year-olds will decline by more than 100,000 up to 2020. Second, 70 per cent of our 2020 workforce is in employment now, so to improve the skills of the adult workforce we have to focus much more on part-time provision and on working with mature students. This means more engagement with the world of work, collaborating with employers; it means a greater focus on the vocational relevance of qualifications; a greater emphasis on continuous professional development; and more emphasis on employability skills, including literacy, numeracy and communication skills.
It means more of a focus on "economically valuable skills". This makes sound business sense, but it is also government policy. For example, the Higher Education Funding Council for England's 2007-08 grant letter made clear that most growth should be targeted at higher-level skills development of the existing workforce. We also expect a policy statement from the Government in the spring on higher education, innovation and workforce development, and already there are three higher level skills "pathfinders" operating to enhance the Train to Gain offer to employers.
Higher education has to give employers more power in the university world. Getting employees to embrace higher skills education in any great numbers depends on such culture change.
There are already examples of how higher education is changing the way it works, partnering with sector skills councils and employers. The Bank of New York has been involved in the development of Manchester Metropolitan University's part-time financial services degree. Lancaster University Management School offers an Ernst and Young sandwich degree.
We need more focus on adults, more work with employers and more recognition of the role of higher education in meeting the needs of the economy and labour market. Higher education can make a major contribution to building better businesses, a better paid and more employable workforce, and a more successful economy. As a nation, we need to upskill big time and in quick time.
Mike Campbell is director of development at the Sector Skills Development Agency and was the adviser to the Leitch Review of Skills.