BIS plans ‘reward structure’ as bill paves way for earnings league tables

The Small Business, Enterprise and Employment Bill will enable ministers to join up datasets

March 12, 2015

The coalition government’s small business bill contains new measures to gather graduate earnings data, designed to “create an incentive and reward structure” for universities by showing which are “delivering the strongest enterprise ethos and labour market outcomes for their students”.

The Small Business, Enterprise and Employment Bill will make it possible to link data on graduates’ income tax records with data about their background as students, providing information about graduate earnings by subject studied and – potentially and controversially – by university attended.

It is expected that the new data on graduate earnings would be published for prospective students as part of Key Information Sets.

The legislation follows calls last year from Conservative peer Lord Young of Graffham, David Cameron’s enterprise adviser, for graduate tax data to be used for a Future Earnings and Employment Record. Lord Young said that publishing information on future earnings “through league tables” would give students access to the “best educational and career prospects” as well as “promote competition and improvement amongst educators”.

The new measures may also raise fears among critics about the creation of potential disincentives for universities to offer subjects with lower graduate earnings, or even to recruit types of students with typically lower earnings, including women.

Although the Department for Business, Innovation and Skills downplayed the likelihood of gathering earnings data by university attended – instead suggesting earnings of graduates by subject would be the focus – the department’s fact sheet on the bill indicates otherwise.

The BIS fact sheet says: “The measures will enable information on earnings and employability to be evaluated more effectively which will inform student choice. They will also help to create an incentive and reward structure at universities by distinguishing the ones that are delivering the strongest enterprise ethos and labour market outcomes for their students.”

It is thought that the legislation came about after David Willetts, the former universities and science minister, persuaded Nick Clegg, the deputy prime minister and chair of a ministerial group on social mobility, of the need for better data to address social mobility.

Since leaving office, Mr Willetts has revealed that he advocated a plan for universities to buy the debt of their graduates, taking parts of the student loan book off the government’s hands and incentivising universities to improve graduate earnings prospects. Such a plan would involve calculating loan write-off rates for individual institutions, which relies on obtaining reliable data on graduate earnings by institution attended.

The small business bill is approaching its third reading in the House of Lords, one of the last stages before it becomes law. Although higher education is not mentioned directly, a clause in the bill would make it possible for HMRC data on individuals’ tax information to be shared with BIS, as well as the Department for Education. BIS would then be able to combine these HMRC data on graduates’ earnings with Higher Education Statistics Agency data about their background as students.

Nick Hillman, director of the Higher Education Policy Institute, said of the bill: “Some people will oppose it because certain routes will be shown to pay more than others.”

But he said it was “right to join up existing datasets so that we become better informed about different education routes”, although the results would have to be “contextualised and caveated”.

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