University degrees – are they worth the cost?

college graduates group

By Heather Cameron

Often cited as the best path to a successful career, university degrees continue to come under the spotlight with questions over their actual value, particularly with tuition fees now starting to increase.

Millions of young people who received their exam results last month will be weighing up their options. But what was perhaps once a fairly straightforward decision for many, is made far more complex by the modern financial burden of undertaking a degree, coupled with the availability of alternative routes without the prospect of accruing tens of thousands of pounds worth of debt in the process.

Cost

It certainly isn’t a cheap option to pursue a university degree. For 2017, many colleges/universities across the UK will be able to charge tuition fees of up to £9,250. And this doesn’t include the living costs of student life. The National Union of Students (NUS) has estimated that the average annual cost of living in England (outside of London) for students is £12,056.

Recent YouGov Omnibus research, which surveyed more than 500 current students and recent graduates, found that one in three recent graduates disagreed that the “costs of going to university were worth it for the career prospects/learning I gained”. It also identified ‘significant pessimism’ among both graduates and students over loans and whether they will ever be free of the burden of repayments during their working life. A large proportion (41%) don’t expect to ever pay off their student loan.

However, it was also noted that many recent graduates may have false expectations about how much they will have to pay back. More than four in ten (41%) said they didn’t understand how the interest rate on student loans works.

Research into the number of ‘contact’ hours a student receives over the course of their degree has been suggested to support the opinion that it is not good value for money. The average humanities student will have around 10 hours per week of scheduled ‘contact’ time in lectures and seminars, although it is often less. And there is much variation across subject areas, which is not reflected in tuition fees. According to an economics lecturer at the New College of the Humanities in London, “It certainly seems like humanities students are subsidising Stem [science, technology, engineering and maths] students.”

Job prospects

In addition to the cost of doing a degree featuring in the decision to pursue this path, the employment prospects following a degree have also received attention.

A recent study from the Institute for Fiscal Studies (IFS) found that there is a great deal of diversity among graduate earnings. While almost all institutions have graduates with earnings above the 20th percentile of the non-graduate earnings distribution, and most institutions have graduates with earnings above the non-graduate median, graduate earnings for men at more than one in 10 universities were lower than for non-graduates. And earnings for graduate women were found to be worse at nine institutions of the 166 included.

The findings also show that that graduates who came originally from wealthier backgrounds earned significantly more than their poorer counterparts ten years after graduation, even if they had studied the same course at the same institution.

This also raises questions over the value of a degree, particularly for those students from poorer backgrounds.

Having a degree certainly doesn’t guarantee a job with a competitive salary at the end of it, or indeed even a job at all as previous research has shown. Nevertheless, the IFS findings do highlight that higher education does pay for the majority, with graduates more likely to be in work and earn more than non-graduates.

Satisfaction

Satisfaction with degrees among students has shown to be relatively high overall. The latest annual Student Academic Experience Survey reveals that most students believe they are learning ‘a lot’ and perceptions of teaching quality are rising.

However, the survey also shows there continues to be a downward trend in perceptions of value, which has been highlighted as a particular concern. The percentage of students who think university is not value for money has almost doubled in the last five years.

The wellbeing of students also continues to be relatively low compared to the rest of the population and the majority oppose the high-fees model of funding.

Final thoughts

The cost of pursuing a degree along with the evidence on graduate earnings suggests that higher education may no longer be the leveller it once was perceived to be. Rather, it may appear that university degrees are once again becoming a path only for those from the richest households.

Clearly there is a lot for policy-makers to consider.


If you enjoyed this blog post, you may also like our previous post on graduate employment.

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Understanding the value of public money could be key to council tax reform in Scotland

This week saw the publication of a report by a cross party commission on the state of local government funding, specifically examining the council tax in Scotland. For many years the council tax has been declared as unfit for purpose by politicians in Holyrood. However little has actually been done in the way of reform. As things stand, following John Swinney’s budget announcement, council tax bills remain frozen for the 9th successive year.

The need for reform

The system has been  called regressive, ineffective, and anti-poor (among other things). But while most agree that the council tax in Scotland cannot continue in its current form, there is much disagreement about the new direction for the council tax, and about local government funding more widely.

The council tax freeze in Scotland has meant that in addition to budget cuts, councils have also been under pressure from reduced income. This is not to the advantage of the worst off, as some might assume. Instead, the uneven banding system means that while middle band payers spend 4% of their wages on council tax, those in the highest two bands only spend 2%

Houses-on-coins-by-Images-MoneyThe impact of the freeze

Despite the council tax only making up 2% of council income, it is estimated that the freeze has cost local government in Scotland more than £500m in the last year, and over £2bn since the freeze was introduced. That’s £2bn, commentators argue, which has not been spent on hospitals, schools, policing or community investment at a local level.

However a visible rise in tax bills while services are being cut back would be a difficult one to spin. As observed during a seminar I recently attended,  people feel council tax increases more acutely than other tax increases because they receive the bills through their door. Other taxes are less visible, or happen before the point of cost. VAT rises or stamp duty rises, for example, are not regarded with quite as much hostility by the general public as council tax rises.

At the same time, people don’t seem to realise what they are getting for their council tax, or how much public expenditure actually costs. This needs to change if politicians are going to be truly allowed to reform council tax and to replace it with any number of the other options outlined in the commission’s report.

Alternative options include:

  • a more equal income-based system, only partly based on house value
  • a more localised option, where local authorities are afforded the freedom of selecting numerous smaller local taxes, which would increase accountability and transparency of where the money is going
  • a re-investment model where income taxes are increased, but the value is redistributed to services within a person’s local area, so people know the money they are being taxed on is going directly local services.
  • cutting costs and reallocating tax fund distribution by relocating services, to reassess which services fall under the remit of local government and which should be taken back under national control and adjusting the money given to local government accordingly

Participative budgeting models have also been mooted, but how this would work in practice is not clear at the moment.

Discussion today, or dysfunction tomorrow

One thing is for sure: council tax needs to be reformed, and the report appears to suggest there are two choices:

  • discuss it openly and robustly now to come to a sensible conclusion with appropriate implementation frameworks and a timetable to transition; or
  • wait until local government is not financially functional and the choices are made out of necessity, as a quick fix, with short term goals and outcomes which potentially make the situation worse rather than better.

Value, cost, framing and how people view taxation will be key to these strategies.


Our popular Ask-a-Researcher enquiry service is one aspect of the Idox Information Service, which we provide to members in organisations across the UK to keep them informed on the latest research and evidence on public and social policy issues. To find out more on how to become a member, get in touch.

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Costs and benefits of the National Living Wage

English money

By Heather Cameron

Britain’s bosses have been urged by the government to prepare early for the introduction of the National Living Wage (NLW) in April next year.

Firms are advised to follow four simple steps:

  • know the correct rate of pay – £7.20 per hour for staff aged 25 and over
  • find out which staff are eligible for the new rate
  • update the company payroll in time for 1 April 2016
  • communicate the changes to staff as soon as possible

Support

This push coincides with a new poll revealing that 93% of bosses support the Living Wage initiative, with a majority believing it will boost productivity and retain staff.

This is supported by new research by the University of Strathclyde and the Living Wage Foundation (LWF), which uses real-life case studies and evidence from employees working for accredited Living Wage employers. It suggests that paying staff a living wage leads to many business benefits – such as staff retention, more efficient business processes, improved absenteeism and better staff performance.

Potential benefits

Many of the findings highlighted relate to research on the London Living Wage (LLW). Among these include:

  • 50.3% of employees receiving the LLW registered above average scores for psychological wellbeing, a sign of good morale, compared to just 33.9% of non-LLW employees studied
  • an average 25% reduction in staff turnover was reported for organisations moving to the LLW
  • and 70% of employers studied reported reputational benefits through increased consumer awareness of their commitment to being an ethical employer

Estimates show that 4.5 million employees will see a rise in their wages as a result of the introduction of the NLW in 2016, with a further 2.6 million gaining from spillovers. By 2020, 6 million employees are predicted to have received a pay increase.

Up to one in four workers are expected to experience a significant positive impact from the NLW. If the result is indeed a happier workforce, perhaps the knock-on effect for businesses will be improved productivity.

There will however be variation across different parts of the UK and across different households, depending on how the NLW interacts with the tax and benefit system (it should be noted that many estimates were made prior to the u-turn on welfare reform). And let’s not forget that the NLW is not for all as under-25s will not be eligible.

Costs to employers

The impact on employees and therefore employment generally, will also depend on the actions firms take to prepare for the NLW in order to mitigate costs.

Indeed, the research from Strathclyde and LWF recognises that implementing the NLW will inevitably involve initial costs to businesses and could represent an issue for some companies more than others.

According to the Federation for Small Businesses, a negative impact on business is expected by 38% of small employers, with many expected to slow their hiring and raise prices.

It has been estimated that the NLW may lead to an increase in the unemployment rate by 0.2% points in 2020; resulting in around 60,000 more people unemployed and total hours worked per week across the economy around 4 million lower.

Businesses may also look to employ those under the age of 25 who won’t be eligible for the NLW. This could particularly impact on those sectors with a high proportion of lower paid employees, such as social care – a sector that is already under financial pressure.

The roll out of the Living Wage has certainly raised concern over potential costs for councils, which are having to deal with increasing budget cuts. The Local Government Association (LGA) has estimated that the NLW could cost local authorities £1bn a year by 2020/21.

So while increasing wages for low paid workers may seem like a no-brainer in the bid to help reduce in-work poverty, the full impact on employees, employers and therefore the economy, remains uncertain. Only time will tell what the true impact of the NLW will be.


Further reading: if you liked this blog post, you might also want to read our previous blog on the Living Wage

Our popular Ask-a-Researcher enquiry service is one aspect of the Idox Information Service, which we provide to members in organisations across the UK to keep them informed on the latest research and evidence on public and social policy issues. To find out more on how to become a member, get in touch.

Follow us on Twitter to see what developments in policy and practice are interesting our research team.

Debating the cost of alcohol to society

“Society is paying the costs – alcohol-related harm is now estimated to cost society £21 billion annually.”

So said David Cameron, launching the UK government’s alcohol strategy in 2012.

The prime minister was echoing the widely held view that alcohol is a financial burden on taxpayers. The British Medical Association has put the costs of alcohol harm in Northern Ireland and Wales at £680m and £1bn respectively, while the Scottish Government believes the annual cost of excessive alcohol consumption to be £3.6bn (equivalent to £900 for every adult in Scotland).

An alternative view

But now the popular view of alcohol as a drain on taxpayers has been challenged. A new report from the Institute of Economic Affairs (IEA) claims that the net cost of alcohol to the state is minus £6.5 billion.

The report found that the direct costs of alcohol use to the government in England – including NHS, police, criminal justice and welfare costs – amount to just under £4 billion each year, whilst revenues from alcohol taxes amount to over £10 billion. And it claims that even if the government halved all forms of alcohol duty, it would still receive more money in tax than it spends dealing with alcohol-related problems.

Commenting on the findings, the report’s author, Christopher Snowden said it was time to stop regarding drinkers as a burden on taxpayers:

“Forty per cent of the EU’s entire alcohol tax bill is paid by drinkers in Britain and, as this new research shows, teetotallers in England are being subsidised by drinkers to the tune of at least six and a half billion pounds a year.”

The report received a hostile reception from Alcohol Concern. Deputy chief executive Emily Robinson told the Daily Telegraph:

“Non-drinkers suffer the consequences of alcohol related problems every day; whether that’s from drink driving accidents, being the victim of crime or anti-social behaviour, family breakdown, waiting in Accident and Emergency departments for their turn, even through to the costs of street cleaning town centres after a Friday night.

She went on to argue that policies, such as minimum unit pricing (MUP), were needed to tackle the harm caused by alcohol.

A setback for minimum unit pricing?

The IEA report appeared on the same day that the European Court of Justice (ECJ) advocate general advised that the Scottish Government’s policy on MUP breached EU competition and free trade laws.

The proposal to introduce minimum retail pricing for alcohol appeared in the Scottish Government’s 2009 alcohol framework, and in 2012 the Alcohol (Minimum Pricing) (Scotland) Act 2 paved the way for the introduction of a minimum price of 50p per unit. The policy was challenged by the drinks industry, which believes that there are more effective ways of tackling harmful drinking.

While the advocate general’s advice may influence the ECJ’s final decision, The Scottish Government is standing by its policy. “While we must await the final outcome of this legal process,” said Scotland’s First Minister, Nicola Sturgeon, “the Scottish Government remains certain that minimum unit pricing is the right measure for Scotland to reduce the harm that cheap, high-strength alcohol causes our communities.”

The devolved administrations in Wales and Northern Ireland have set out plans to introduce their own MUP legislation. In England, the 2012 alcohol strategy included a commitment to introduce an MUP for alcohol. However, in 2013 the coalition government decided not to proceed with this, and instead to impose a ban on the sale of alcohol below cost price.

Last year, a report from Sheffield University suggested that below cost price policy would have small effects on consumption and health harm, while an MUP set at  a level between 40p and 50p per unit, was estimated to have an approximately 40-50 times greater effect. The research appears to support evidence from Canada, the first country in the world to introduce MUP, indicating that MUP could bring significant health benefits.

With the IEA report introducing a provocative new perspective, and the final judgement on MUP awaited, it’s unlikely that ‘last orders’ will be called any time soon in the debate on alcohol’s impact on society.


 

Enjoyed this article? Read our recent blog posts on the night-time economy and on ten years of the Licensing Act.

Follow us on Twitter to see what developments in public and social policy are interesting our research team.


Further reading*

Alcohol pricing and purchasing among heavy drinkers in Edinburgh and Glasgow: current trends and implications for pricing policies

Understanding the alcohol harm paradox in order to focus the development of interventions

Understanding the development of Minimum Unit Pricing of alcohol in Scotland: a qualitative study of the policy process

Alcohol’s harm to others

The cost of binge drinking in the UK

*Some resources may only be available to members of the Idox Information Service

World Alzheimer’s Day: can we reduce dementia risk?

Older woman with Alzheimer's in a chair

Image courtesy of Flickr user Vince Alongi using a Creative Commons license

By Steven McGinty

On the 21st September, Alzheimer’s organisations across the world will be carrying out events to raise awareness about Alzheimer’s and dementia. The event, a key part of World Alzheimer’s Month, was launched by Alzheimer’s Disease International (ADI) in 1994, with the aim of highlighting the tremendous work carried out by Alzheimer’s organisations.

Each year, a new theme is selected for World Alzheimer’s Month, and this year the focus will be on how we can reduce the risks of developing Alzheimer’s and dementia. In support of this event, I’ve decided to look at some of the statistics on dementia, as well as review the latest evidence on reducing the risks.

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