Economic Demand for Higher Education—A Sound Foundation for Further Expansion?

Submissions by the Confederation of British Industry (CBI) and others to the government's review of higher education suggest yet further expansion of undergraduate provision. This article examines the economic rationale for an additional increase in graduate output, and suggests that the economic case may be poor. Data on the employment of the current graduate labour force indicates some under‐utilisation, and there is reason to expect that simply boosting the supply of graduates will not, of itself, transform employers’competitive strategies. It is therefore possible that the social, as opposed to private, rate of return on investment in such expansion could well prove disappointing. The use of graduates to fill the‘technician gap’is also reviewed. The authors suggest alternative areas of educational provision, such as basic literacy and numeracy support, which might show a more positive cost/benefit than further publicly‐funded expansion of undergraduate education.