Time to admit we need fewer students

Your applications don’t get a reply. Running the university debating society or rowing team doesn’t seem to make any difference to your CV. And even your parent’s friends are too worried about accusations of nepotism to try and offer any work experience.

It has always been tough for new graduates to take their first steps towards a satisfying career, and we have all had plenty of rejection letters along the way. But this year it is likely to be harder than ever. Graduate vacancies are falling at 30pc annual rate, double that of the wider economy. With universities on the brink of bankruptcy, soaring student debts, and shrinking demand for the “product”, surely it is time the UK admitted that our higher education system is a mess that works for almost no one.

In reality, we need fewer students, and we need to be honest about that before it is too late.

There has probably never been a worse year to graduate than 2024. Another 900,000 twenty-somethings will come out of university this summer armed with new degrees, and enthusiastic to embark on their careers. The trouble is, no one really wants them.

According to a report by Bloomberg this week, analysis by the jobs website Adzuna has found that vacancies for graduates fell by 30pc over the last year, compared with a 15pc fall in vacancies across the economy. Even worse, salaries are completely flat this year, meaning that new graduates will struggle to pay their soaring rent, and other costs, even if they are lucky enough to get a foot in the door.

Even if they do land something, many of the traditional graduate training schemes that used to provide a gateway into the world of employment have withered away, with few older people still in the office, little mentoring, and few opportunities to learn new skills, or impress your new colleagues. It is a bleak outlook, and one that is getting worse. The demand for graduates is steadily falling, and even when they are hired their careers are not being shaped in the way they once were.

Unfortunately, we probably should not be too surprised by that. Over the last few years, the UK has created a stagnant, high-tax, over-regulated economy where nothing can get built, new businesses struggle to raise capital, and where even the servers that tech or other companies might need to expand are blocked because they might spoil someone’s view, or there isn’t enough electricity, or they might get in the way of our Net Zero targets. We shouldn’t expect an economy with so many obstacles put in the way of scaling businesses and borderline hostility toward enterprise to create lots of new opportunities for graduates.

Yet surely we also have to admit that we are producing far too many people with new degrees? Of course, the Labour Party’s typically top-down, state-directed solution is simply to mandate that more and more roles require a high-level qualification. It has already floated a plan to make child-minding a graduate only profession, and perhaps even estate agency, although it is hard to think of anything you could study for three years – apart from creative writing I suppose – that would make you better at hustling through a few property sales.

It probably won’t stop there. After a few years in office, a Starmer government will no doubt have made personal fitness training, or hairdressing, or driving for Uber, graduate-only professions, with a regulator for each industry to ensure compliance, and heavy fines for anyone who breaks the rules.

But that will only make the whole mess even worse. A quarter of a century after Tony Blair prioritised “education, education, education” and embarked on a massive expansion of the sector, complete with new forms of funding, we now have a university system that is completely broken. Many institutions are close to bankruptcy partly because no government any longer dares to increase the fees.

They are furiously plugging the gaps in their budgets with more and more overseas students, exacerbating the immigration crisis, yet it is still possible one or more may declare insolvency some time this year.

Meanwhile, the levels of student debt are running out of control, with £206 billion outstanding as of March last year, according to a House of Commons report, and with the total now forecast to go over £400 billion by the 2040s (and of course the real total may well be far higher). Even worse, the punishing rates of interest charged mean that those few graduates who are lucky enough to get a job and embark on a career now face marginal tax rates well above 50pc once they start earning even a fairly modest salary. And now there are not even enough jobs for them to go into, meaning even less of all that student debt will ever be repaid, and creating yet another black hole in the public finances that a future government will have to deal with.

This is madness. Even if one had purposefully set out to create a system that works for no one aside from, perhaps, some vice-chancellors, the outcome would likely have been better than the current mess.

Britain needs a much smaller, better financed university sector, where there are fewer graduates, more well-paid non-graduate jobs, and where our world-class universities are able to stay afloat without expanding places to international students. If it could also become a pro-growth, pro-enterprise nation, that would help too.