Higher Education (Hansard, 10 June 1985)

§ Mr. Freud
asked the Secretary of State for Education and Science (1) whether he will explain the assumptions and methodology behind the table in annexe B of the Green Paper "The Development of Higher Education" in respect of the social rate of return on investment in higher education;
(2) whether the figures given in annexe B of the Green Paper "The Development of Higher Education" in respect of the social rate of return for investment in higher education represent the nominal or real rate of return.

§ Sir Keith Joseph
Calculations of the social rate of return assume that education can be viewed as a social investment, yielding benefits in terms of the increased productivity of an educated work-force from the outlay of resources devoted to tuition and any output lost because of the students' absence from the work-force. The rate of return is the implied yield (or internal rate of return) from this outlay. Since all the costs and benefits for the estimates published in the Green Paper are expressed in terms of the prices prevailing at a common date, the figures quoted represent real rates of return, and do not require adjustment for inflation.
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Social rate of return estimates in relation to education usually assume that gross earnings are a suitable measure of productivity, and the DES analysis uses data from the general household survey to calculate the earnings differentials of graduates over non-graduates. This assumption has some weaknesses. Firstly, labour market distortions will cause earnings to diverge from productivity to some extent. Secondly, part of the increased productivity of a graduate may reflect factors other than the return to education, most notably innate ability. An attempt is made to meet this objection by using alternative assumptions as to the proportion of the earnings differential that is attributable to education rather than to other influences. Finally the present earnings differentials of past graduates may be a poor guide to the future earnings differentials of present graduates.
Despite limitations of this kind, which are acknowledged in the Green Paper, rate of return analysis does

Teachers/lecturers^* and graduations ♯ gained in higher education, including postgraduates and sub-degrees

Country Year Teaching staff (000s) Graduations (000s) Graduations per teaching staff

France^† 1982 43 203 4.7

Germany 1981 177 204 1.2

Italy 1981 49 88 1.8

Japan‡║ 1981 221 580 2.6

United States║ 1979 ¶822 1,748 2.1

United Kingdom •basic▀ 1982 66 170 2.6

enhanced^* 1982 66 218 3.3

^* Teachers/lecturers—total numbers except for the United Kingdom which covers full-time university staff plus full-time equivalent staff in the public sector.

† Represents teaching staff in "L'enseignement Supérieur". Excludes establishments not run by the Ministry of Education.

‡ Includes correspondence courses.

║Includes private sector.

¶ In 1980 there were 396 thousand full-time teaching staff.

•Excludes Open university.

▀Excludes students successfully completing courses leading to professional qualifications.

^* Includes a first estimate of successful completions of courses leading to professional sub-degree HE qualifications in public sector institutions.

♯ The term 'graduations' refers to all those qualifying in Higher Education as is standard practice with international comparisons.

SourcesDepartment of Education and Science. UNESCO Statistical Yearbook, 1984. Répéres et Références Statistiques, 1984.

§ Mr. Freud
asked the Secretary of State for Education and Science what information is available to his Department in respect of (a) the costs of producing a graduate and (b) the comparative advantage of higher education in the United Kingdom and the United Kingdom's competitors; and whether he will explain the assumptions behind any such comparisons as are available.

§ Sir Keith Joseph
The Department's estimates of the costs of producing a university graduate are published in table 3 of annex B of the Green Paper on the Development of Higher Education into the 1990s (Cmnd. 9524).
Comparable estimates for CNAA graduates cannot yet be provided, although table 4 of the Green Paper annex does provide some information on costs per student in the polytechnics. Further information on average course length and on wastage rates in the polytechnics would be required to derive measures of the cost per graduate. The Green Paper estimates are based on cost information provided by universities to the UGC and by polytechnics in the polytechnic finance officers group annual report. 334W provide a framework within which data on the costs and benefits of higher education can be brought together and usefully summarized; and it can be used to highlight features and trends worthy of more detailed investigation.

§ Mr. Freud
asked the Secretary of State for Education and Science what information is available to his Department as to the number of graduations per member of staff in higher education in England and in competitor countries.

§ Sir Keith Joseph
Some figures have been put together in the following table, but they are not comparable between countries and I would advise against drawing any conclusions from them. Teaching staff for the United Kingdom are on a full-time equivalent basis but for other countries only total numbers are available (full-time and part-time). Furthermore, teaching staff in higher education divide their time between teaching and research, the extent of which varies considerably between countries.
Information on average course length and wastage is derived from data provided by the University Statistical Record.
Comparsions between the United Kingdom and its competitors are problematical for various reasons including differences between the countries in the scope of their higher education systems, the entry requirements, the resources devoted to teaching as opposed to research, and the standard of qualification achieved.

§ Mr. Freud
asked the Secretary of State for Education and Science if he will estimate the reduction in (a) the number and (b) the percentage of arts and humanities student places in higher education required to achieve a net increase in the output of science and engineering graduates of (i) 1 per cent. (ii) 100 and (iii) 1,000 assuming that student numbers and expenditure on higher education remain constant overall for (x) higher education as a whole, (y) polytechnics and (z) universities.

§ Sir Keith Joseph
The information requested is as follows:
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Hypothetical estimated reduction in total number of arts and humanities places (1983–84 baseline)

Universities (GB) Public sector higher education (GB) All higher education(GB)

To achieve a 1 per cent. rise in the output of science Nos. (OOOs) 1.38 0.670 2.05

(excluding medicine) and engineering graduates percentage 1.2 0.6 0.9

Nos. (OOOs) 138 67 205

To achieve a 100 per cent. rise Percentage 118 56 86

Nos. (OOOs) 1,382 667 2,049

To achieve a 1,000 per cent. rise Percentage 1,176 558 865

Notes:

Figures assume that the average recurrent cost of teaching provision in science (excluding medicine) and engineering is 40 per cent. greater than the cost of arts and humanities (ie all other subjects) provision in each sector. No allowance is made for any differences in completion or pass rates or in average course lengths between subject areas, nor for the transitional costs of switching provision between subject areas. The calculations take no account of future movements in graduate output already projected under present plans. The totals (third) column assumes equal proportional change in each sector.

Teachers/lecturers^* and graduations ♯ gained in higher education, including postgraduates and sub-degrees
Country	Year	Teaching staff (000s)	Graduations (000s)	Graduations per teaching staff
France^†	1982	43	203	4.7
Germany	1981	177	204	1.2
Italy	1981	49	88	1.8
Japan‡║	1981	221	580	2.6
United States║	1979	¶822	1,748	2.1
United Kingdom •basic▀	1982	66	170	2.6
enhanced^*	1982	66	218	3.3
^* Teachers/lecturers—total numbers except for the United Kingdom which covers full-time university staff plus full-time equivalent staff in the public sector.
† Represents teaching staff in "L'enseignement Supérieur". Excludes establishments not run by the Ministry of Education.
‡ Includes correspondence courses.
║Includes private sector.
¶ In 1980 there were 396 thousand full-time teaching staff.
•Excludes Open university.
▀Excludes students successfully completing courses leading to professional qualifications.
^* Includes a first estimate of successful completions of courses leading to professional sub-degree HE qualifications in public sector institutions.
♯ The term 'graduations' refers to all those qualifying in Higher Education as is standard practice with international comparisons.

Hypothetical estimated reduction in total number of arts and humanities places (1983–84 baseline)
		Universities (GB)	Public sector higher education (GB)	All higher education(GB)
To achieve a 1 per cent. rise in the output of science	Nos. (OOOs)	1.38	0.670	2.05
(excluding medicine) and engineering graduates	percentage	1.2	0.6	0.9
	Nos. (OOOs)	138	67	205
To achieve a 100 per cent. rise	Percentage	118	56	86
	Nos. (OOOs)	1,382	667	2,049
To achieve a 1,000 per cent. rise	Percentage	1,176	558	865
Notes:
Figures assume that the average recurrent cost of teaching provision in science (excluding medicine) and engineering is 40 per cent. greater than the cost of arts and humanities (ie all other subjects) provision in each sector. No allowance is made for any differences in completion or pass rates or in average course lengths between subject areas, nor for the transitional costs of switching provision between subject areas. The calculations take no account of future movements in graduate output already projected under present plans. The totals (third) column assumes equal proportional change in each sector.