Leader: Employers will always be sold on graduate skills

There was something for everyone in this week's two big research reports: the Organisation for Economic Co-operation and Development's annual international survey and the Higher Education Policy Institute's examination of graduate supply and demand. The government took from them a justification for top-up fees, while the opposition saw a case for switching investment from higher to secondary education. In such a wealth of statistics, there is naturally scope for divergent interpretation, but neither version tells the whole story.

A more neutral conclusion would be that both studies paint a picture of an extremely successful higher education system while leaving politicians with as many questions as answers about its future development. These include the extent to which the economy (as distinct from individual graduates) will benefit from further expansion of higher education. But the reports certainly do not demonstrate, as the Tories claimed, the "futility" of the government's expansion plans. On the contrary, they suggest that pressure for more places will continue, regardless of official targets.

There are warning signals in the OECD's report - notably in the way the UK's traditional lead in completion rates has narrowed as funding per student has dropped - but the positives still far outweigh the negatives.

UK universities continue to rank near the top of the international league on practically every indicator, in spite of a financial squeeze more serious than most of their competitors have experienced recently. And while the UK has kept pace with the global trend for expanding higher education, the financial benefits conferred by a degree have not suffered. Only Czech graduates can expect a greater salary premium from their qualification.

Separate research by Peter Elias at Warwick University and Kate Purcell at the University of the West of England shows that the premium rose in the 1990s even though the proportion of school-leavers going into higher education more than doubled.

According to the HEPI review, even the ambitious expansion envisaged by Labour is unlikely to see the supply of graduates overtaking demand to any damaging extent. Meeting the aspirations of a larger 18-year-old population, more of whom are expected to pass A levels or their equivalent, will require far more places than any growth stimulated by government policy. But the jobs that will be created over the rest of this decade and beyond will be of the type that now recruits graduates. Whether all of them truly require degree-level skills is a moot point that further research by Elias and Purcell may shed light on, but so far employers have been sufficiently convinced of the benefits to pay more for graduates even in occupations that once demanded only A levels or GCSEs. There is no agreement, even in official publications, about whether the new jobs, let alone the much larger number of existing posts that will need filling over the next few years, require skills at the equivalent of A level or first degree. (Foundation degrees fit neatly into the middle ground if they can be sold to employers and prospective students.) But the fact is that higher education is a prerequisite in a growing number of fields and will no doubt remain so. Whether it confers necessary skills or is simply used as a selection tool, the penalty for not having the right qualification will rise with the proportion of graduates in the workforce. No matter how popular Tory proposals to restrict higher education places might seem now, it would be a brave politician who placed a cap on the lifetime opportunities of young people in such circumstances. The OECD report certainly shows the need for better secondary education, but success in this sphere would necessitate more, not less, investment in universities.