Show business that good graduates are well worth paying for

In a post-cuts landscape, David Docherty contends, the onus is on the academy to find ways to draw in vital corporate investment

November 4, 2010

Credit: Marcus Butts

The Browne Review hit a giant reset button for higher education in England, and a new operating system will fundamentally alter relations between the sector's components.

Universities 2.0 will be more like a market, with purchasing signals being sent out to prospective students by price, brand, quality and - crucially - by the success of graduates in securing jobs that pay well and are satisfying.

So what should be the role of those who set the market price by hiring and paying graduates - namely, employers?

Businesses and the public sector were in the remit of the review. But when it came down to it, Lord Browne and his colleagues found that no one had made a credible, let alone compelling, case for the former to contribute financially to the academy through some form of hypothecated tax.

The report takes an entirely market-driven approach to the relationship between higher education and business when it notes that "businesses benefit from employing highly skilled graduates and they pay for that benefit through higher wages".

Those arguing for a mandatory employers' contribution claim that business gains in productivity from good graduates. Most business leaders would say that they already pay these graduates, and that adding an employers' contribution would be an interesting way of driving the UK's biggest companies out of the country, reducing the overall tax take and curbing entrepreneurship.

Furthermore, the history of hypothecated taxes suggests that the money would disappear straight into the Treasury's coffers faster than Jeremy Clarkson in a Lamborghini. Besides, as Browne notes, if business were funding the system, its voice would be even louder than it is now - which is probably the opposite effect to the one that those proposing a mandated tax would wish for.

The real response to Browne must surely come out of entrepreneurial partnerships, not more regulation. There have been enormous strides made in the past 10 years, partly because of changes in attitudes within the sector, and partly through pump-priming from the Higher Education Funding Council for England and the research councils. And while the latter process is under review, the former will be needed even more.

Senior management in higher education institutions are, and must be, encouraged to think hard about solutions to the challenge of engaging business in a post-cuts world. Businesses are complex beasts - but if someone or something makes their business better and more valuable, they will invest in it when they can afford to (and sometimes when they can't).

Businesses already invest heavily with both time and money when they can see a return, sometimes up to £100,000 in total support for individual postdoctoral students. Cooperative Awards in Science and Engineering, sandwich courses, undergraduate and postgraduate sponsorships, internships and graduate-development programmes are in place in many universities and are clear evidence of employers' willingness to invest in talent. So is the £5 billion a year spent on training employees. Businesses care that the UK has some of the best universities in the world, seeing it as a source of competitive advantage.

In short, the post-Browne question is not: "How do we force these selfish bastards to contribute a fair share of their fat profits to pay for university students?" Rather, it must be: "How do businesses and universities partner more inventively in the interests of the country and develop high-quality graduates who have learned how to innovate?"

There is another historic change in the business-university relationship that will encourage innovative cooperation. Small and medium-sized industries are changing and becoming graduate-rich. The hundreds of creative businesses around Brighton, the silicon cluster in the M4 and the games industries in Dundee and Surrey are filled with graduates.

Obviously there are structural challenges in resetting the English university system, not least the role of higher education in regenerating regions and rebalancing the economy. Business will invest when it sees the benefit: universities must continue to show it.

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