The changing context for higher education
4.1 In this chapter we explore some of the most significant changes outside higher education since the Robbins report, which help to explain how and why higher education has developed as it has. We then explore the implications of potential changes over the 20 year timescale of our terms of reference for the future development of higher education. We look at the impact of:
4.2 In doing so, we do not accept a purely instrumental approach to higher education. Its distinctive character must lie in the independent pursuit of knowledge and understanding. But higher education has become central to the economic wellbeing of nations and individuals. The qualities of mind that it develops will be the qualities that society increasingly needs to function effectively. Knowledge is advancing so rapidly that a modern competitive economy depends on its ability to generate that knowledge, engage with it and use it to effect. Above all the country must enable people, in large numbers and throughout life, to equip themselves for a world of work which is characterised by change. Our examination of the future of higher education must therefore cover the changing context in which it will be operating.
4.3 Many of those who enter higher education towards the end of our twenty year time horizon will still be active workers and citizens well into the second half of the next century. We recognise the hazards of attempting to foresee what the world will be like over this timescale. We have taken account of the advice offered to us by government departments in our terms of reference and in their evidence, we have consulted extensively about the developments which others foresee and we have looked at international evidence. This chapter summarises our views on the aspects which we believe are most significant.
4.4 We start with a review of the changing economic context and, in particular, three features of it:
Increasing economic integration across the world
4.5 Looking back, while the UK has doubled its national income since the time of Robbins, other advanced economies have grown more quickly. We have become relatively poorer.
4.6 This leads to something of a paradox for higher education: on the one hand, the nation feels itself to be poorer and therefore less able to afford to fund higher education; on the other, as the economic necessity for high level education and skills increases, so does the need to maximise the proportion of the population with such education and skills.
4.7 Looking ahead, it seems reasonable to expect increasing integration of the world economy. The economic emergence of less developed countries and the strong commitment they often have to education will have major implications for countries like the UK.
4.8 Table 4.2 shows the scale of the recent economic growth of some developing countries.
analysing economic integration, the Organisation for
Economic Co-operation and Development (OECD) Industry
Committee has identified three major elements: the
organisation of production on a global scale; the
acquisition of inputs and services from around the world
which reduces costs; and the formation of cross-border
alliances and ventures, enabling companies to combine
assets, share their costs and penetrate new markets. We
have noted a number of additional factors: capital
markets have been integrated; the information which
allows benchmarking of commercial performance on an
international basis is widely available through
international travel and better communications; many
consumers have the knowledge, information and spending
power to make discriminating choices; and more countries
have now developed the infrastructure and technological
capability to compete against the established industrial
centres. The causes of increasing integration are
predominantly technological: changes in
telecommunications, information technology and transport.
Integration has also been fostered by political changes,
specifically the promotion of free trade and the
reduction in trade protection.
4.10 This is not to deny that nations have always interacted. Trade has increased steadily over many centuries, as shown in Table 4.3, although the position of individual countries varies.
4.11 But the consequence of increasing integration and the emergence of developing economies is that corporations are increasingly free to locate their operations, research and administration wherever in the world suits them best. While a corporations headquarters may well remain in its country of origin, it will design, build and market products and services on a global basis. This has changed the relationships between corporations and their suppliers and between corporations and the communities in which they are located; and the balance of available skills and labour cost in any given country that will attract and retain a global corporation.
4.12 As a result, in the UK, as elsewhere, there has been social change, growing income and labour market inequality. Some of the consequences are that:
Implications for higher
4.14 In our view, these economic changes have the following main implications for higher education:
4.15 The relevance of education to economic survival has been recognised by successive governments over the last century and has been a major influence on their education and training policies. With the global approach to production and service provision, the factors which will determine the economic future of the UK will be the quality, relevance, scale, and cost-effectiveness of its education and training, and the commitment of its population to lifelong education and training. It will increasingly be this element in national life which determines a nations relative prosperity and its ability to offer a high level of employment.
A transformed labour market
4.16 Increasing international economic competition, the emergence of once poor countries as major international competitors, new technology and social, cultural, political and legislative changes have all contributed to major changes in the UK labour market. Significant features include:
4.17 Other significant changes include, for example, an increase in the number of qualifications and of their use in employment selection. Teaching and chartered accountancy, for example, are now largely graduate entry occupations and it seems likely that other occupations, such as nursing, will move in this direction. This may be seen as an indicator of the need for higher skill levels, although to some extent it is a consequence of the expansion of higher education, and employers and professions seeking to attract their share of talent.
4.18 Looking to the short term future, employment growth is projected to be 0.8 to 0.9% a year over the next few years and all the labour market trends of the last few years are expected to continue.4 Within jobs there may be a shift away from routine processes within narrowly defined functions and towards teamwork which crosses functional boundaries. If organisations continue to remove layers of management, there will be an increasing range of responsibilities within jobs.
4.19 We recognise the fragility of attempts to forecast the demand for specific skills in the longer term. Recent history is littered with failures to forecast needs successfully, and as the pace of change in industry quickens, the task of forecasting is becoming still more difficult. But, even with the lessons of history to caution us, we believe that the broad direction of change for the long term can be described.