Opinion: Let us leave no stone unturned to meet student demand

This year’s unprecedented rise in applications from people of all ages who want to study at university should come as no surprise. The number of 18-year-olds will peak in 2009-10. Recession and a tightening labour market have historically incentivised interest in higher education. This time the recession is deeper, more prolonged and global – and the correlation with demand for university places even more pronounced.

To be fair, ministers and the Treasury are in hock to a demand-led student support system premised on the sale of student debt, something that has proved impossible. The hope has to be that Lord Mandelson, First Secretary and the man in charge of the Department for Business, Innovation and Skills, has the Government clout to prevent the embarrassment of qualified students turning to the dole queue rather than university in September.

It does not have to be like this. David Blanchflower, the economist and former member of the Bank of England’s Monetary Policy Committee, has urged the Government to do more to fund the expansion of higher education to combat rising unemployment.

Whatever green shoots may be seen in the economy, the labour market will run behind any recovery. With the certainty of 3 million Britons being unemployed, the failure to provide temporary short-term funding for university places in 2009-10 will have consequences – not least for the already burgeoning budget of the Department for Work and Pensions.

Rising demand for university places has revealed trends that the Government, with its laudable commitment to social mobility, should welcome. The number of male, particularly black male, applicants has increased significantly. Applications from the over-25s and the over-40s have rocketed. The biggest rise in applications has been seen in the poorest socio-economic group. What’s not to celebrate?

Sadly, the rise in applications has been treated like a toxic asset. Ministers bang on in Parliamentary Answers about an increase in numbers and university admission being a competitive process. This is not good enough. The Government’s original commitment to 15,000 additional places in England in 2009 has been cut to 10,000. This is nothing like sufficient. The Universities and Colleges Admissions Service now talks about applicants waiting a year if they don’t get a place in 2009. But if there are insufficient funded places this year, where will they come from in 2010? What is the point of increasing the numbers of unemployed when individuals could be studying at university?

What should really keep ministers awake at night is the nature of the applicants who are most at risk of not getting into university: those with lower entry grades, who consistently prove that they have just as much potential to gain a graduate qualification if given the chance; those from non-traditional backgrounds, who rely on clearing for places; and students whose family and personal circumstances mean that their only real choice is their local university or no university at all.

Million+, working with economics consultancy London Economics, has calculated the funding required to support 5,000 extra students in 2009. After factoring in variables for teaching costs, completion rates, maintenance grants, maintenance and fee loans plus their repayment, we estimate that the total cost to Government of every 5,000 additional full-time students entering a standard three-year programme is £90.06 million. This figure takes into account three years of study and the loan-repayment period post-graduation, but ignores savings in unemployment benefit, the lifetime premium gained from the higher taxes paid by graduates, and the well-evidenced, but intangible, familial and societal benefits associated with graduate qualifications.

Ed Balls, the Schools Secretary, has allocated £655 million to keep 54,000 16-19-year-olds in education or training in 2009. If the same sum were applied to university places, more than 30,000 additional full-time students could be funded. If additional funds were used to support a mix of full-, part-time and foundation-degree students – a mix of provision we need – numbers could be increased further.

Ministers suggest that the real problem is the cost of student support. They need look no further than the European Investment Bank (EIB), already used by Lord Mandelson to provide loans to the UK’s car industry. The EIB’s remit includes the promotion of the knowledge economy and social inclusion. It is already providing loans to one of the German Lander and to Hungary’s Government to introduce a partial fee-loan system for university funding.

If the UK Government is unable to find the investment required to fund the student-support system and meet the aspirations of people who want to study at university in the middle of a global recession, it should leave no stone unturned. If the EIB can provide the means, BIS should take it.