THE noise in the auditorium at the Lilian Baylis Technology School in south London is excruciating. It is capitalism in full cry. Sixteen students of various hues, all aged around 13, have spent the morning designing and setting up their own virtual businesses. When the whistle blows, they have five minutes to pitch to five independent student buyers. Then another whistle, a session of full and frank criticism (“He charged me £500 for the hotel room and her only £10”), an award for the student who has sold the most and certificates for all. Afterwards, the participants say that they found it really hard to please customers—but over half of them have decided they want to set up their own businesses when they grow up.
Kennington is a not particularly salubrious part of London. Many of the students at Lilian Baylis come from poor families, a quarter are refugees and most belong to ethnic minorities. This virtual-market exercise was one of a number of events organised for schools by Entrepreneurs in Action, a not-for-profit outfit created to open young people's eyes to possibilities in the business world. In his time its founder, Derek Browne, who did not shine at school, has been an international athlete and an investment banker. “I want to raise these kids' self-esteem,” he says, “and show businesses that there is a lot of talent where they don't always look for it.” He is part of a broader effort to involve businesses more closely with schools, especially in poor areas.
Lilian Baylis is doing well: in 2005 it ranked in the top 2% of secondary schools in England for “contextual value added”, ie, raising students' achievement above the level suggested by their background and previous attainment. But this is hard to do. The problem, says Gary Phillips, the headteacher, is that mainstream academic exams, which many children find hard to engage with, and teaching other skills, including creativity and problem-solving, do not mix easily.
Britain seems as far from resolving that dilemma as it was 62 years ago when universal secondary schooling was introduced. Yet striking the balance between technical and academic education, and making sure that both are worth the paper they are written on, is the biggest challenge facing Britain. It matters every bit as much for social peace and cohesion as it does for economic competitiveness.
At its Etonian or Wykehamist best, British education is superb, but that is not the sort most children are getting. The run-of-the-mill stuff suffers from problems that go back a long time, including poor basic skills, a tendency for students to leave the minute they finish compulsory schooling at 16 and the lack of a coherent and valued system of vocational training. The result, as chart 4 shows, is that Britain has a fairly good stock of graduates but is undersupplied with mid-level skills.
Start with basic literacy and numeracy. More than one-third of British adults have left school with no formal qualifications. About one-sixth are functionally illiterate and one-fifth innumerate, meaning they cannot read and write or deal with numbers as well as an average 11-year-old.
All this is bad enough in itself, but it is especially dire if you are hoping to compete by producing high-value-added, innovative goods and services. According to the OECD, Britain ranks only 13th among its 30 member countries for the share of people aged 55-64 who have completed secondary school. In younger age groups it is doing even worse: for those aged 25-34 it ranks a worrying 23rd. Although more young people are staying on at school, Britain is being outclassed by countries such as Ireland or South Korea.
The Labour governments of the past decade have been trying hard to improve things. More teachers were hired, and all were told how to teach. Targets were set, a raft of new programmes was launched and lots of computers were put into classrooms. Spending per pupil all but doubled, from £2,000 in 1997 to £4,000 in 2005. Poor students aged 16-19 were given a weekly cash allowance to persuade them to stay on at school. A £40 billion programme to rebuild or refurbish every secondary school in the country over 15 years took off in 2006.
But a passionate ideological debate about selection in English education (Scotland, Wales and Northern Ireland have their own systems) has got in the way. Politicians have been so intent either to defend or to oppose selection by academic ability that they have failed to set up a system of rigorous and useful qualifications for those whose interests are not academic. Standards have suffered in the name of inclusion, and vocational training has been chaotic. Meanwhile the great divide between public and private education has remained as important as ever.
With the targets and the cash eventually came attempts to give schools more autonomy, identity and outside sponsorship. Parents were promised more choice. Some schools, including Lilian Baylis, chose to apply for “specialist” school status. Failing schools in poor areas are being replaced by “academies”, sponsored and part-financed by businesses or charities. Following contentious legislation in 2006, all schools will be encouraged to bid for “trust” status, linking with other schools or businesses to create schools with a distinctive ethos and considerable autonomy from local-education authorities.
At first glance, all this has produced some impressive results. More young people seem to be hitting the targets, taking exams, staying on at school and going on to university. An increase in primary-school skills should eventually improve results all along the line.
But secondary schools remain a problem. The proportion of students obtaining five good grades in the GCSE exams taken at the age of 16 has risen from 45% in 1997 to 57% in 2006. But of those whose GCSE subjects included English, maths, a foreign language and a science, all once core subjects in the curriculum, the proportion gaining good grades has dropped from 30% five years ago to 26% last year. In other words, students appear to have done better because they have been picking easier subjects. Something similar has happened with A-levels, taken at 18, where a quarter of all exams are now thought to be worth an A, against 12% 15 years ago.
GCSE entries for foreign languages have fallen by 37% in five years, according to CILT, the national centre for languages. Much of that drop is due to the removal in 2004 of the requirement to learn a foreign language. Interest in single sciences (physics, chemistry, biology) has also plummeted. The number of students taking physics at A-level, for example, has halved since 1988, according to the Centre for Education and Employment Research at the University of Buckingham. Chemistry, too, is on the slide as students choose broader and less rigorous science courses.
In response to its critics, the government is pursuing reforms in three areas. First, it is overhauling Britain's vocational education. To boost skills and encourage teenagers to stay on at school it is introducing a new system of diplomas, giving 14-19-year-olds the chance to enrol in a work-related course, with a core of basic skills taught alongside. A government report estimates that perhaps 40% of teenagers will abandon GCSEs over the next ten years to study for diplomas instead, offered by secondary schools or nearby colleges of further education. But so far no one seems clear what the courses will entail, and some fear that schools may not have the resources to teach them. Some argue, too, that students should not be shunted off into exclusively vocational training but keep the option to go back into the academic stream.
A second line of attack is to improve the skills of those already in the workforce. In December a commission headed by Lord (Sandy) Leitch proposed spending more money on training and giving employers a bigger say in what the training should be.
The third reform is to give able academic students tougher options. A new, more challenging layer is to be added to A-levels, and more state schools will offer the broader International Baccalaureate.
Higher education too is in the firing line. It has expanded far faster than the ability of taxpayers to pay for it. Gone are the days when only the elite aspired to university: some 40% of the age group now go on to higher education. Red brick has given way to concrete slab, polytechnics have been granted university status, and the lines between universities and colleges of further education are blurring.
Britain is home to two of the world's top ten universities, according to the world ranking drawn up by Shanghai's Jiao Tong University. Oxford and Cambridge are the only non-American institutions on the list. To stay there, and to continue to attract, as British universities do, more than 15% of the world's international students in higher education, the sector's finances need reforming.
Higher education has traditionally been free in Britain. As student numbers increased and government support remained much the same, funding per student fell by 36% in real terms between 1989 and 1997. A tuition fee of £1,000 a year (waived for poor students) was introduced in 1998. Five years later, in a move intended to shake up higher education as well as pay for it, the maximum fee was increased to £3,000 from 2006. Students were offered loans and universities told to provide bursaries for poor students.
So far, few universities have chosen to differentiate themselves on the basis of the fees they charge, or to charge different fees for different courses. The £3,000 is not enough to allow for much manoeuvring. Universities also get a continuing government subsidy of £4,000 or so per undergraduate, as well as much higher fees from foreign students, money from research contracts and income from endowments. But these do not cover costs at the top universities: Oxford, for example, reckons that on average it takes more than £12,000 a year to teach an undergraduate.
So universities are racing to find other sources of funds. Alumni who have not heard from their alma mater in years are suddenly bombarded with calls. Alison Richard, vice-chancellor of Cambridge University, taught at Yale and had the opportunity to observe the legendary management of that university's endowment. Cambridge has now smartened up its arrangements.
Universities need many sources of finance if they are to remain independent and competitive, including profits from commercial activities. Many have established science parks to attract big research contracts and set up “incubators” to encourage small firms to spin off discoveries into commercial ventures.
The customer is king
As higher education has expanded, it has become increasingly obvious that not all universities, and not all degrees, are equal; and now that students are paying for their education they are beginning to behave more like consumers. At some universities they are demanding more for their money—more hours of tuition, harder assignments. Many also seem likely to choose courses with the largest possible future earnings potential. In the past, a university degree in Britain promised a bigger income premium than in most other OECD countries. Now that its scarcity value has gone, says Anna Vignoles of London University's Institute of Education, initial average returns to degrees are very small. But those who study “hard” subjects such as accountancy, law, medicine, engineering or maths continue to enjoy a premium. That may start a swing back to those subjects.
A similar invisible hand may also work in the market for vocational qualifications. Until now, most of these have attracted little in the way of extra pay, and some have actively put off potential employers: the Institute for Fiscal Studies, a think-tank, calculates that low-level vocational qualifications actually inflict a pay cut of 5-20% on their holders, who are labelled as dummies. As the financial value of some university degrees sinks towards zero, training as a plumber or an engineer will look more attractive. And such jobs cannot easily be transferred abroad.
Britain, unlike Germany, has never had a coherent system of vocational education, despite all the talk about the importance of skills and human capital. Critics say that new paper qualifications have raised young people's hopes, but have not led either to university or to a job. That is particularly true among some of Britain's ethnic minorities.