IMPROVING THE QUALITY AND QUANTITY OF GRADUATE-LEVEL SKILLS

Transcription

1 Improving the quality and quantity of graduate-level skills April 2014 FC5 APRIL/2014 Heading IMPROVING THE QUALITY AND QUANTITY OF GRADUATE-LEVEL SKILLS Access to productive and skilled employees within the labour market is a key requirement for manufacturers of high-value goods and services. Manufacturers rely on the recruitment of graduates to fill many highly skilled roles within the industry.

2 Improving the quality and quantity of graduate-level skills April 2014 FC6 Heading Contents Introduction: Improving the quality and quantity of graduate-level skills 1 Backing Britain: Improving the quality and quantity of graduate-level skills 2 Improving the quality of graduate supply 5 Increasing the quantity of higher-level skills supply 11 Increasing both STEM applications and acceptances 14 Accessing higher-level skills from the stock available 17

3 Improving the quality and quantity of graduate-level skills April Introduction: Improving the quality and quantity of graduate-level skills As the economy picks up and manufacturers order books start to fill, recruitment is on the rise. The challenge for companies is finding the skilled employees to fill these roles; figures on the number of hard-to-fill vacancies reveal that manufacturing, as an industry, is struggling. Furthermore, manufacturers widening growth ambitions are putting increased pressure on demand for higher-level skills. Even if the industry continues at its current pace, looking to 2020, manufacturing will need almost one million workers to replace those leaving the industry. Looking beyond 2020, demand for skills, and in particular higher-level skills, will escalate and will be influenced by factors such as technological developments, environmental impacts and restructuring the way work is organised. Our report looks at some of the current skills issues the industry is facing and actions being taken. It finds that graduate recruitment plays a key role in meeting the skills needs in the medium term, but this is not without its challenges. Government is failing to put the building blocks in place to support manufacturers to take action, and companies have expressed concerns with regard to the quality and quantity of those leaving higher education with the necessary skills. With 2020 looming we also find that companies are taking immediate action to address higher-level skills needs, with a particular focus on investing in Higher Apprenticeships, supporting existing employees through university and recruiting graduates from overseas. Once again companies are facing challenges in seeking the higher-level skills provision they need and battling through a complex and burdensome migration system. We make recommendations to support manufacturers in their quest to grow without being held back by skills shortages. Among these are actions for the higher education sector including more placement years for undergraduates and graduates to gain industry experience, and more part-time and short-term provision that is specific to manufacturers needs. We make recommendations to government to introduce a direct financial incentive for businesses offering placements, to pick up the pace on the development of Industrial Partnerships and to give greater certainty and stability on apprenticeship funding. We recommend that the government focuses its efforts on increasing sponsorship of students by employers. We repeat our calls to reinstate the post-study work route to widen the talent pool to manufacturers. We have messages for industry too: to take advantage of information and support that s on offer, and to work with organisations such as LEPs and regional Sector Skills Councils to engage with the higher education sector. Businesses also need to improve at articulating their skills needs to higher education providers. Taken together, these recommendations will drive action that will improve both the quantity and quality of higher-level skills creating a skills base for manufacturers to ensure they can Make it in Britain.

4 Improving the quality and quantity of graduate-level skills April Backing Britain: Improving the quality and quantity of graduate-level skills At the beginning of the year we published a report, Backing Britain: A manufacturing base for the future. 1 This report showed that amidst the challenges the UK economy has faced, and the uncertainty that both businesses and policymakers have grappled with in recent years, one positive trend has emerged companies are bringing production back to the UK and manufacturing more in Britain. Our Make it in Britain survey suggested that companies view the UK in a positive light in terms of workforce skills, with almost four-fifths of respondents identifying the level of skills in the workforce as an advantage to being based in the UK. 2 Chart 1: What s great about Britain. Average score of business environment for manufacturing where 1 = strong disadvantage and 4 = strong advantage Branding & reputation of UK made goods Quality of suppliers Intellectual property protection Skills in the workforce Being part of the EU market Proximity to customers Transport infrastructure Ease of moving goods in & out of country Quantity of suppliers Labour cost Planning regulations Cost of energy The increasing demand for higher-level skills Previous EEF research found that four in five manufacturers are experiencing recruitment problems. Whilst these affected all areas of the business, they were particularly acute for skilled trades, professional roles and managerial positions posts that require higher-level skills. Moreover, manufacturers growth ambitions to launch new products and services and enter into new markets is putting pressure on demand for higher-level skills including craft, technician and production-related technical skills. Working in manufacturing is not just a case of making end products but also of fulfilling roles within areas such as supply chain management, branding and marketing, exporting, and programming. As a result we are also seeing increased demand for design skills, sales and marketing, and foreign languages. 3 Even without further expansion, if the industry continues at its current pace, manufacturing will still need almost one million people by 2020 to replace those leaving the industry (Chart 2). If we are to even come close to meeting this replacement demand, we need to both increase the flow of skills into the industry and better utilise the stock of skills within our existing workforce. In this report we look at the use of Higher Apprenticeships and supporting existing employees through university to address some of these stock issues. We also consider how we can both improve and increase the flow, looking particularly at the recruitment of graduates. 4 Source: EEF/GfK Make it in Britain Survey 2014 There are, however, significant challenges. Previous research and government-commissioned industry reviews have consistently highlighted the ongoing problems faced by manufacturers. Whilst quality is good, it can be improved; and the supply of skilled workers needs to increase significantly and rapidly. As such, a quarter of firms responding to our Make it in Britain survey identified finding skills as a key challenge to producing in the UK. 1 EEF, the manufacturers organisation, Backing Britain: A manufacturing base for the future (2014) 2 EEF/GfK Make it in Britain Survey EEF, the manufacturers organisation, Skills for Growth (2012) 4 Having explored in depth the recruitment of apprentices in our 2012 Skills for Growth report, we have chosen to focus this report on graduates and engagement with higher education institutions

5 Improving the quality and quantity of graduate-level skills April Chart 2: Projections for employment and replacement demands by occupation in UK manufacturing, Actual (000s) Net change Change Replacement demands Total requirement Managers, etc Professionals Associate professionals Administrative and secretarial Skilled trades occupations 1, Caring, leisure and other service Sales and customer service Process, plant and machine operatives 1, Elementary occupations Total 4,944 2,518 2, Source: Working Futures Fulfilling growth ambitions through recruitment of graduates Manufacturers clearly rely on the recruitment of graduates to fill their higher-level skills roles. 64% of companies have recruited a graduate in the past three years. Given the demand for skills we reported previously, it is unsurprising that graduates who are most in demand from manufacturers are those who hold a degree in an engineering discipline, with 63% of companies having recruited an engineering graduate in the past three years and 66% planning to do so in the next three years. The remaining STEM disciplines the sciences, technologies and mathematics were also in demand, with a particular focus on physical and computer sciences. In addition, there is significant demand for business and administration graduates, suggesting that employees with a strong level of commercial awareness and business acumen are required to complement graduates with the technical skills that engineering graduates are most likely to acquire. (Chart 3) This also reflects the growth ambitions of manufacturers we referred to earlier.

6 Improving the quality and quantity of graduate-level skills April Chart 3: Manufacturers demand for engineering graduates is on the rise. % companies reporting recent and planned recruitment of graduates Engineering Business & Admin Studies Technology Physical Sciences Computer Sciences Mathematics Languages Creative Arts & Design Law Biological Sciences Social Studies Plan to recruit graduates in the next 3 years Recruited graduates in the past 3 years 0 Source: EEF Higher Education Survey Such trends can also be seen in the demand for apprentices, with 66% of firms planning to recruit a manufacturing and engineering apprentice in the next 12 months, as well as 38% planning to recruit an apprentice outside manufacturing and engineering. Again this emphasises the point that manufacturing is far wider than simply manufacturing and servicing products. Such significant demand brings two fundamental challenges: 1 To improve the quality of current graduate supply 2 To increase the quantity of graduate-level skills supply We address both of these in the following sections as we explore the challenges that are faced, and the action that is currently being taken, and consider what more needs to be done.

7 Improving the quality and quantity of graduate-level skills April Improving the quality of graduate supply Whilst manufacturers rely on the recruitment of graduates to fulfil their skills needs, they also face challenges in doing so. We have identified five key challenges faced by manufacturers when recruiting graduates and identified the action being taken by industry to overcome these. CHALLENGES RELATED TO IMPROVING QUALITY OF GRADUATE SUPPLY Graduates lacking industry experience Graduates lacking manufacturing knowledge Location of graduates and manufacturing companies Retention of graduates Difficulties making contact with universities and graduates Current challenges when recruiting graduates Graduates lacking industry experience One of the common features manufacturers are looking for when recruiting a graduate is experience in industry. Applicants lacking relevant experience remains a key barrier faced by employers when recruiting. 5 With apprentices, this experience typically occurs throughout the apprenticeship training, as the apprentice is placed within a business and learns through on-the-job training which complements the learner s off-the-job learning at a college, for example. The added benefit of this is that the apprentice generally undertakes their training at the company that will then employ them permanently. Graduates cannot be guaranteed to have such experience. However, there are ways that it can be gained, including the undertaking of an industrial placement or sandwich course and internships. It is widely acknowledged that a placement year improves employability, but the number of placements on offer is in decline. Moreover, only a handful of universities tend to offer placements. 6 Such offerings are, however, reasonably common practice amongst manufacturers, with four in ten currently offering industrial placements (compared to three in ten in 2012), a handful in the process of 5 EEF, the manufacturers organisation, Skills for Growth (2012) 6 Professor Wilson, A Review of Business-University Collaboration (2012) offering placements and one in five wanting to do so. A similar trend can be seen for internships (Chart 4). Chart 4: Manufacturers offer internships and placements to give learners industry experience. % companies offering internship and placement opportunities. Offering internships to undergraduates and graduates Offering industrial placements (sandwich courses) to undergraduates 0% 20% 40% 60% 80% 100% Source: Higher Education Survey Currently do Used to but not any more Actively planning to do No plans, but would like to do Never done In addition, manufacturers are seeking alternative routes to offer industry experience to prospective students, through programmes such as Year In Industry, which is run by the Engineering Development Trust (EDT). The EDT places students with companies particularly in the areas of engineering, science and IT. Such programmes have

8 Improving the quality and quantity of graduate-level skills April received positive feedback from manufacturers; however, manufacturers are keen that more prospective higher education students spend a year in industry prior to university, specifically those planning to study a STEM discipline. Many manufacturers referred to similar models in other European countries. As such, European graduates are seen as more rounded and ready for the world of work, having spent a greater amount to time in industry. As a result, over a third of manufacturers have recruited an EU (ex UK) graduate in the past three years and just under a third plan to do so in the next three years. Size matters when it comes to firms ability to offer such opportunities to higher education (HE) learners. Larger companies are more likely to offer placements (69%) than medium and small firms (36% and 25% respectively), reflecting the barriers that manufacturers face in offering these opportunities. Companies are most likely to cite time (37%) and cost (34%) as barriers. These barriers are likely to be the reason why a number of companies say that whilst that they currently aren t engaging in such activities they would like to do so. Overcoming these barriers plays a critical role in increasing the number of young people into industries such as manufacturing and engineering. Some 63% of manufacturers think increasing the number of placements and internship opportunities at universities will increase the number of learners studying STEM subjects. This focus on increasing supply is explored in the next section of this report. Graduates with industry experience adapt quickly; the real world is not alien to them. We constantly offer work placements to young people and the benefits are manifold; students bring fresh ideas and are familiar with the latest technologies. Ralph Saelzer, Managing Director, Liebherr Sunderland Works Ltd. Clearly then, manufacturers demand graduates with industry experience, but graduates can only gain that experience if companies offer opportunities through internships and placements. We also need to add HE institutions into the mix, as HE learners are only able to undertake placements if this is part of the offering of the course. Whilst engineering courses at HEIs generally have a better reputation for offering placements, more are needed. We understand that this could be a challenge as employers are required to offer those placements. Whilst larger companies are more able to do so, our findings show that SMEs continue to cite time and cost as a barrier. A brokering service could support businesses and universities to deliver more placements and help firms plan a mutually beneficial year in industry. However, we must ensure that there is no duplication of the work that is already being done, and existing platforms should be used. Recommendation: All higher education courses should include an optional placement year for undergraduates to ensure they gain industry experience before qualifying. Recommendation: A brokering service should be introduced to drive this increase in placements. To prevent duplication an existing platform the Talent Retention Solution should be expanded to offer such a service. Whilst a brokering service may help to address the time barrier, there is also a need to address the cost issue for SMEs. This is best achieved through a financial incentive such as the Apprenticeship Grant for Employers (AGE), which was introduced to encourage firms to take on apprentices. However, the Apprenticeship Grant is not without its challenges; providers draw down the funding on behalf of the employer, adding an unnecessary layer of bureaucracy. Recommendation: To offset the cost of offering placements, a direct financial grant should be available for SMEs. This subsidy must be made directly to the employer and not through an intermediary. Graduates lacking manufacturing and engineering knowledge Manufacturers have different skills needs, and these can often be niche and specialised. Employers have a role in continuing to develop the skills of graduates

9 Improving the quality and quantity of graduate-level skills April when they are in employment; however, they have a certain expectation that graduates leave university with the fundamentals of their chosen discipline. This includes those studying a technical discipline such as engineering. However, there are concerns that this is not always the case. Higher education courses must meet the needs of industry. Eight in ten companies say that designing and delivering courses that meet industry needs should be a priority for higher education providers. As well as ensuring that the theoretical content of higher education provision meets the needs of industry, the technical learning also needs to be relevant to industry. Part of this is ensuring that the facilities and resources utilised by learners are representative of the equipment they will be using in industry. There are a number of ways in which companies can seek to influence provision sharing resources and facilities, guest lecturing in universities, involvement in designing courses, offering funding for a specific faculty. Whilst manufacturers are taking action in all areas to influence provision, this activity is limited and tends to be dominated by larger companies. For example, whilst 20% of larger companies said that they fund specific faculties, only 5% of small firms do so. Such patterns are consistent with involvement in other activities such as guest lecturing and involvement in designing courses (Chart 5). However, firms of all sizes are sharing resources and facilities, with size being neither an advantage nor a disadvantage. Unipart Group and Coventry University A faculty on the factory floor Unipart Group recently joined forces with Coventry University to develop a new Engineering and Manufacturing Institute on Unipart s manufacturing site in Coventry. The 32m project will see the creation of an international centre of engineering and manufacturing excellence, which will be the base for a sustained programme of innovative teaching and learning, product development and research activity. Unipart itself is contributing 17.9m towards the new facility, with an additional 5.6m towards student scholarships and product R&D, and for new undergraduate and postgraduate programmes in manufacturing. The facility will create a faculty on the factory floor, allowing students the opportunity to be connected directly to the latest technology on the manufacturing front line. This will develop the next generation of highly skilled, specialist engineers and operational leaders needed for the industry. Students will have direct access to Unipart s operations, allowing them to work on live issues in a real-world manufacturing production environment. Chart 5: Manufacturers seek to influence provision, with larger companies far more able to do so. % companies saying they are currently involved in activities to influence provision, by company size % Small Medium Large Funding for specific faculty Guest lecturing Involvement in designing courses Sharing resources and facilities Source: Higher Education Survey

10 Improving the quality and quantity of graduate-level skills April When asking manufacturers how best they could influence the design and development of higher education courses, four in ten said through the future creation of Industrial Partnerships. These, we suggested, would be sectoral, employer-led bodies taking end-to-end responsibility for the skills system, and importantly, qualifications. Just over a third thought that Sector Skills Councils would be an effective channel in which to influence provision and one in three suggestion trade associations (Chart 6). Chart 6: Manufacturers see various channels through which they could influence higher education provision. % companies citing the most appropriate channels to influence HE provision Through the future creation of Industrial Partnerships Through Sector Skills Councils (e.g. SEMTA, Cogent) Through Trade Associations Businesses working with larger companies as partners Businesses working with similar-sized companies as partners Through LEPs Businesses doing it themselves Businesses should not be involved Source: Higher Education Survey % It is clear that companies see a number of partners as potential channels through which they can influence provision, but currently there is no infrastructure in place to make this happen. Sectoral Industrial Partnerships (IPs) would appear to be the natural successor to the Employer Ownership of Skills Pilots. These proposed IPs could take the lead in laying down the foundations for this, and partnerships are beginning to emerge through the introduction of Trailblazers, with industry experts leading the new Apprenticeship Standards. We think Industrial Partnerships would go further, however, involving a wider range of stakeholders and overseeing the entire skills landscape, including higher education. Recommendation: Government should produce a Roadmap to convert the current Apprenticeship Trailblazers to sectoral employer-led Industrial Partnerships by These Partnerships would have the responsibility of ensuring that skills provision is relevant to businesses of all sizes. Retention of graduates and the impacts of location Whilst we have found similarities in the demand for graduates and apprentices, differences have emerged in companies ability to retain graduates compared to apprentices. This came out strongly in our focus groups. Anecdotal evidence from our members suggests that apprentices are staying in companies far longer than graduates. Our 2012 Skills for Growth report found that three-quarters of companies retain all their apprentices after training. 7 However, many manufacturers suggested that graduates see them as a stepping stone to another opportunity. Location is seen as a fundamental reason for this reduced ability to retain graduates (as well as for the ability to recruit graduates in the first instance). There is, however, a clear difference between the views of larger companies and those of SMEs, with the former seeing graduates as more fluid willing to move away from their place of study to occupy a vacancy within the company. At the other end of the spectrum, smaller firms feel that their location is a key barrier to both attracting and retaining graduates. For that reason they prefer to seek skills from universities nearby. Four in ten prefer to recruit graduates from local universities. 7 EEF, the manufacturers organisation, Skills for Growth (2012)

11 Improving the quality and quantity of graduate-level skills April Guttridge Limited The impacts of location on attracting and retaining graduates Guttridge Limited is a leading UK manufacturer of Bulk Materials Handling Machinery. Guttridge designs and manufactures a range of screw, chain and belt conveyors as well as bucket elevators, dischargers, feeders and bulk bag systems. Guttridge is located in Spalding in Lincolnshire; its Managing Director Noz Talukdar says the company s location is a major barrier in both recruiting and retaining graduates. The continued difficulties the business has faced has led the company to consider whether to run a parallel recruitment path by investing in locally sourced apprenticeships, to complement the graduate recruitment, in a drive to acquire the higher-level skills the company needs. Guttridge is taking positive action to showcase the opportunities within the local area to attract and retain graduates. The company is looking at how it can promote to the wider area in any job advert it places, talking about nearby cities which are easily accessible through existing transport links, and supporting new employees to find accommodation in these nearby towns and cities from day one. Low awareness of opportunities amongst graduates Manufacturers wish to recruit from local universities, but smaller companies in particular are struggling to promote themselves to prospective future employees. Three in ten companies said that a low awareness of their business amongst universities and graduates is a key barrier to using universities to access skills. Some companies are taking action, although numbers are relatively low. For example, only a quarter of companies are getting involved in recruitment days or careers fairs which is seen as a light-touch approach to engagement. Manufacturers need to take action to raise awareness of local job opportunities to prospective employees, such as undergraduates. Over half of companies said universities should prioritise increasing their students awareness of labour market opportunities. It is clear then that manufacturers see universities as needing to play a part in raising awareness of employment prospects amongst learners. However, this needs to be a two-way street: businesses and higher education institutions need to work together to promote the opportunities within manufacturing. Involvement in careers fairs should be just one channel through which companies are promoting themselves and their opportunities to prospective employees. However, it is clear that small firms will need support to help them undertake such activities, and would benefit from an intermediary body to broker this relationship. Recommendation: LEPs and Regional Sector Skills Councils should be tasked to bring together local businesses and institutions delivering higher education provision to showcase the opportunities within local industry to graduates and university employees. This should include jointly hosting careers fairs and recruitment days to increase awareness of careers within manufacturing. Nonetheless, companies need to take advantage of the support that is already out there. For example, manufacturers should make better use of platforms such as the Talent Retention Solution (TRS), which allows businesses of all sizes to advertise their graduate positions (as well as internship and placement opportunities) on the portal. Part of this challenge is to ensure that employers are aware that such platforms are available. EEF has recently developed a partnership with TRS for that very reason, so we will be better able to cascade information about such opportunities directly to manufacturers. Companies are also developing innovative ways to retain graduates by supporting potential future employees through university. A quarter of manufacturers are sponsoring students through university, and a handful are looking to do so. However, there is a disparity between the numbers of large companies sponsoring students (43%) compared to small firms (15%). In focus groups with members we asked what the sponsorship model was; this ranged from sponsoring students through all three years of their degree to sponsorship through the final year of their degree. In all instances sponsorship leads to the learner being employed within the company on completion of their studies.

12 Improving the quality and quantity of graduate-level skills April During our discussions it was clear that many small and medium sized firms see the model of offering a placement year to a student then sponsoring them through their final year at university as attractive. Some had simply not thought about sponsorship in this way before. Large OEMs with supply chains struggling to recruit graduates are supporting their suppliers to attract the best possible graduates. Some OEMs are over-recruiting and over-training the number of graduates (and apprentices) they need and placing the remainder in their supply chain. This ensures that their suppliers have access to the highest-quality skilled employees also. Proposals for such models have been put forward, and implemented, in a number of bids under the Employer Ownership of Skills Pilot, and the feedback we are receiving is positive. We now need to see more of this happening. 8 Employer Ownership of Skills Pilots OEMs supporting supply chains Along with Siemens, Nissan and 35 other companies in the UK, BAE Systems received some 1.4m from the Employer Ownership of Skills Pilot funding. BAE Systems then matched this funding. Since 2013, BAE Systems has been training additional apprentices for companies in its North West supply chain. As well as this, 88 graduate interns were to be given opportunities across the UK, with the company also offering two-week work experience placements for 32 young people not in education, employment or training. 8 However, employers are having some difficulties making and maintaining contacts with universities. For example, 14% say that one of the key barriers to engaging with universities to influence provision is a lack of university contacts. Yet over a third (37%) seek to influence HE provision through ongoing relationships with university employees, such as heads of departments. This suggests that once contact is made, it can be productive and beneficial. Medium and larger sized firms are more likely to be successful at making such contacts and building relationships. This is often a reflection of a long-term relationship that companies and local higher education institutions have built up over the years. We at Liebherr Sunderland have no difficulties at all making contact with regional universities. The universities themselves are actively getting in contact with us. Ralph Saelzer, Managing Director, Liebherr Sunderland Works Ltd. For some, however, it is a challenge. It is intrinsically linked to the previous one, with university employees themselves not always aware of local opportunities, particularly amongst SMEs. This lack of understanding and communication mirrors that at primary and secondary education levels. However, from discussions with companies it is clear that the difficulties are far more acute when attempting to engage with primary and secondary schools. Difficulties making and maintaining contacts with universities Three-quarters of manufacturers think that one of the main priorities of higher education institutions is to build relationships with employers. Building relationships lays the foundations for other forms of engagement as discussed above: offering placements, involvement in designing courses and guest lecturing. 8

13 Improving the quality and quantity of graduate-level skills April Increasing the quantity of higher-level skills supply In the previous section we explored how to improve the current supply of graduates into the industry. In this section we look at how we can also increase the supply of higher-level skills.this can be achieved by boosting the pipeline of (STEM) higher education learners, and through better utilisation of the current stock of skills. Boosting the pipeline of STEM higher education learners Manufacturers have clear views on how to boost the pipeline. Encouraging young people to study STEM subjects at GCSE and A level and improving careers advice in schools and colleges are seen as the best ways to increase the number of STEM students at higher education level. Companies also see increasing the number of work experience, internship and placement opportunities as ways to increase the number of STEM learners as well as increasing the pathway opportunities through the roll-out of University Technical Colleges and Studio Schools (Chart 7). The need to increase the pipeline of STEM learners is not a new concept, and neither are the channels through which this can be achieved. Indeed, the Perkins Review of Engineering Skills9 clearly puts the spotlight on boosting the pipeline, making a number of recommendations which are currently being taken forward through the establishment of Task and Finish Groups. However, given the enormity of this issue, and the clear indication from our members that it needs to be addressed, we take each recommendation, as stated by our members, in turn to consider whether government is progressing in these areas. We use a traffic light system to signal whether it is a case of go, go go, or whether we have come to a complete stop. Chart 7: Manufacturers views on how to increase the number of STEM learners at HE. % companies reporting ways to increase the number of STEM students at HE level Encouraging young people to study STEM subjects (e.g. the sciences) at GCSE and A level Improved careers advice at schools and colleges, including face-to-face advice Increasing the number of work experience and internship opportunities for young people Increasing the number of STEM university courses offering industrial placements/sandwich courses Increasing the number of University Technical Colleges and Studio Schools specialising in STEM Capping the repayment of loans for STEM students who go into STEM occupations Publishing data on salaries in STEM subjects accessible to potential students % Source: Higher Education Survey Prof J Perkins, Review of Engineering Skills (2013) 90

14 Improving the quality and quantity of graduate-level skills April Is the right action being taken to boost STEM learning? More young people studying STEM subjects at GCSE and A level In 2013 the number of young people taking GCSE maths, biology, chemistry and physics all increased (11.1%, 4.7%, 4.2%, 2.1% respectively). This is likely to have been driven by the introduction of the English Baccalaureate (EBacc). The EBacc is a performance measure which shows where pupils have secured a grade C or above across a core of academic subjects. However, the number of learners achieving A*-C grades fell in these subjects. The number of learners taking these subjects at A level also increased in 2013, although a significantly lower number of females are taking subjects such as physics compared to their male counterparts. Whilst reforming qualifications may go some way to increasing attainment in key subjects, government must also drive up the quality of teaching. We repeat our calls made in our Skills for Growth report here to continue offering bursaries to attract top-class graduates into teaching and to allow all schools to employ professionals, such as engineers, to teach STEM subjects, whilst teacher shortages in these subjects remain. Improved careers advice at schools and colleges An Ofsted report published in late 2013 found that three-quarters of the schools visited for the survey were not carrying out their duty to provide impartial careers advice effectively. It also found that careers advice in schools is not explicit, that the National Careers Service is not promoted well enough and that there is a lack of employer engagement in schools. Six in ten manufacturers think better, informed careers advice will attract more young people into the industry. Young people need to understand the wide range of opportunities within manufacturing and this will only happen through appropriate advice and guidance. Business engagement is key, and employers are ready and waiting to get involved. The recent government announcement to strengthen the requirement for schools to build links with employers is welcome. However, we now need to see action on this. Publishing data on salaries for STEM subjects somewhere accessible to potential students Unistats contains a vast amount of information on university courses and the outcomes of taking these courses. Learners can search by subject and institution to determine which courses and HEIs offer the best returns in terms of employability and pay. We would, however, like to see a STEM specific site to really promote studying STEM at HE level. Platforms such as STEMNET could be used to deliver this. This should also be accessible via the use of apps to widen its accessibility to young people. In addition, the National Careers Service should signpost its visitors that are seeking information on STEM opportunities to this site.

15 Improving the quality and quantity of graduate-level skills April Increasing work experience and internship opportunities for young people We continue to see the value in work experience at Key Stage 4 and remain disappointed at the decision to remove compulsory work experience. However, some positive steps have been taken to incorporate more work experience opportunities at Key Stage 5 through Study Programmes and the Technical Baccalaureate including an extended project which will require close work with industry. Our Skills for Growth report found that employers face a number of barriers to offering work experience. Some are perceived barriers such as concerns around insurance liability and CRB checks. However, manufacturers continue to tell us they are struggling to make, and maintain, contacts with schools. This is particularly the case for small firms. Increasing number of University Technical Colleges and Studio Schools The number of University Technical Colleges (UTCs) continues to grow, with the Chancellor announcing at the last Spending Review the opening of a further 20 UTCs per year. The majority specialise in STEM, and the first waves of UTC leavers achieved good results. Numbers of Studio Schools are also on the rise, with these schools replicating a real working day. Both models continue to include a great amount of employer input. Employers are involved in the design and development of the curriculum, and offer work placements. Undoubtedly many of the students from these education institutions are then employed by those companies involved. Increasing number of STEM courses at HE level offering placements The Wilson Review found that the number of placements on offer is in decline, with only a number of HEIs delivering courses with placements. Nonetheless, prospective students are now better able to find courses that include placements through the Unistats website. This allows learners to search university courses that specifically offer placements, many of which are in STEM courses, in particular for engineering. However, as we stated in the previous section, we still need more, and as such repeat our recommendation for all higher education courses to have, at the very least, an optional placement year.

16 Improving the quality and quantity of graduate-level skills April Increasing both STEM applications and acceptances When talking about increasing the number of STEM learners too often we focus on applications and not acceptances. We must, however, address both. In doing so we must also look at the capacity and capital of universities to deliver STEM courses. Are the numbers increasing? Between 2010 and 2013, the number of engineering applications of 18 year olds in the UK increased by 8.7%. Engineering has fared better than many other subjects during this period (See Chart 8). Chart 8: Applications to university by 18 year olds in the UK by subject Physical Sciences Vet Sci, Ag & related Engineering Subjects allied to Medicine Social Studies Combined Sciences Maths & Comp Sciences Biological Sciences Law Medicine & Dentistry Philosophical Sciences Business & Admin Creative Arts & Design Education Social Sciences Technologies Mass Comms & Documentation Linguistics, Classics European Languages Non-European Languages % % % % 0.00% 10.00% 20.00% Source: UCAS The Perkins Review of Engineering Skills also found positive trends for engineering degrees in recent years, as well as increases in Maths and Physics entrants. However, some sub-engineering disciplines are falling including electrical and electronic engineering as well as manufacturing and production engineering. Have tuition fees had an impact? Fees have changed significantly in recent years, particularly the most recent decision to almost triple fees to a maximum of up to 9,000 per year for those enrolled in the academic year. Prior to this, the academic year saw fees increase from 1,000 to around 3,465. The total number of applicants from England for all subjects increased rapidly between 2006 and 2010 (before the first fee rise), then slowed in 2012 and fell in 2013 (when the fee changes were introduced). Engineering degrees also took a fall in , but in picked up again, leaving a question mark over whether the fee increases have had a negative impact on the uptake of subjects such as engineering. In fact engineering degree applications have risen considerably more than other subjects and many of which have seen a substantial fall (Chart 8). Six in ten manufacturers believe the increases in tuition fees are driving young people to make more informed decisions about their careers. This emerged strongly during our focus groups with employers, who stated that new graduate recruits had thought carefully about the value of their degrees and the potential job opportunities of studying certain disciplines.

17 Improving the quality and quantity of graduate-level skills April We must look at acceptances also We often tend to focus on applications but what is important is to look at acceptances also, and explore the differences between these two figures. There is little benefit in significant increases in engineering degree applications if universities aren t accepting them. If we look at engineering degree applications against acceptances we can see a gap has emerged in recent years (Chart 9). This suggests that whilst we may be increasing the number of learners applying to study the STEM disciplines at university, this does not always translate into STEM learners, or indeed STEM qualifiers. To an extent, this gap is likely to reflect the previous student number controls applied to universities. Universities have flexibility to recruit more students but need capacity to do so At the end of 2013, the government announced that it would remove student controls. Whilst this decision received a number of positive commentaries from stakeholders, Universities UK (UUK) has expressed some concerns over the cost of relaxing student number controls. Whilst UUK has said it is confident that higher education providers would be able to cover the cost of provision, significant increases in student numbers would require additional capital infrastructure and this is where cost could become an issue. Government has recognised the need for more places to serve demand from STEM applicants. In September 2013, the government announced 200m STEM capital funding for the academic year, acknowledging that the cost of delivering courses such as engineering is far greater than other disciplines. Indeed the Engineering Professor s Council (EPC) estimates that it costs around 12,000 per student to deliver undergraduate engineering programmes, yet HE institutions are only able to charge up to 9,000 in fees. The Band P premium will continue to play a key role in ensuring the future sustainability of engineering programmes. This is currently around 1,500. To take advantage of this funding, higher education institutions must match-fund any allocation on at least a one-to-one basis resulting in the total STEM capital investment being at least 400m. However, there remain questions over whether this will be enough to supply the number of STEM students demanded by industry. Moreover, the funding has only been allocated for a single year ( ) and therefore some universities may not expand engineering and science departments on this basis of such time-limited funding. Chart 9: Applications and acceptances for engineering degrees 35,000 Applications Acceptances 30,000 25,000 20,000 15,000 10,000 5, Source: UCAS

18 Improving the quality and quantity of graduate-level skills April The investment from the government is to be focused on infrastructure to support the teaching of STEM subjects. As we stated in the previous section, the resources and facilities used by HE learners must replicate those of industry as closely as possible. Limitations to funding may prevent this from becoming a reality. Higher education providers may then need to seek alternative capital finance, either provided from within their organisation or from external sources, which could include businesses. Universities may find themselves relying on business partnerships, such as those that already exist like the Coventry University Unipart example we highlighted in the previous section. Recommendation: Whilst increased investment from industry may support universities in their bids for part of the 200m funding allocated for in the short-term, government must take a longer-term view on how to ensure universities have sufficient capital funding to deliver high quality STEM courses. More business engagement with higher education providers is needed There are numerous benefits to increasing engagement between businesses and universities many of which we have identified in previous sections of this report. However, we need to see more of this Businesses can influence higher education provision through engagement activities sharing resources and facilities, guest lecturing, involvement in course design. Employer engagement can enhance the employability of graduates offering internships and placements gives students the industry experience employers demand. Partnerships with businesses can enable universities to secure finance for faculties and departments. We also touched upon how some companies are sponsoring students as a means of attracting them into the company. Almost a quarter of manufacturers sponsor students through university. However, there is a significant disparity between the ability of larger firms and small firms (to sponsor students through university (43% and 15% respectively). Incentivising more employers, particularly smaller ones, to support students through universities further increases industry engagement with both universities and students further and we need more of this. However, there are barriers to sponsoring students through university, particularly for smaller companies. In discussions with members, a lack of information on how to sponsor students through university was a problem. We found that with sharing best practice and discussing various models that were used, companies were beginning to consider how they too may invest in sponsorship. Employers need easy access to such information. Recommendation: Government should look to expand the role of either the National Apprenticeship Service (NAS) to include information about the recruitment of graduates, including sponsorship, or expand UCAS, which is learner-facing, to include information for employers also. Whilst some companies consider the cost of sponsoring students through university a barrier, manufacturers must consider the returns on investment of doing so. Manufacturers tell us that the average cost of delivering an engineering apprenticeship is around 80k, of which they can draw down around 17k of public funding. Yet, companies are not as willing to make such investment in graduates. At a time where skills remain scarce, companies should see sponsorship of students as an investment in future skills. However, government needs to ensure the right building blocks are in place to support businesses in making this investment. Recommendation: Government is already incentivising innovation in skills development through the Employer Ownership of Skills Pilots. This model should also be used to encourage employers to invest in undergraduates. Skills funding which is made available to employers on a competitive basis should allow for such investments.

19 Improving the quality and quantity of graduate-level skills April Accessing higher-level skills from the stock available Even if we boost the pipeline of STEM learners, we are not going to meet the replacement demand needed between now and 2020.Therefore we also need to focus on making it easier for manufacturers to access higher-level skills from within the current available stock. In the immediate term, we have found that manufacturers are taking three courses of action in particular. We have identified these as: 1) Supporting existing employees through university 2) Offering Higher Apprenticeship programmes 3) Recruiting graduates from overseas Once again, whilst action is being taken, companies face challenges in undertaking all three of these activities. Supporting existing employees through university Companies are seeking further opportunities to support existing employees through university, with 56% of manufacturers currently doing this and a number wanting to do so. Anecdotal evidence from our members tells us there is a particular appetite amongst employers for short-term and/or part-time courses at higher education institutions. Such models provide companies with flexibility and allow them to retain existing employees for part of the time whilst the employee acquires additional, higher-level skills. Despite this expected demand from employers, the number of part-time entrants to university at both undergraduate and postgraduate levels has fallen. In fact, since , part-time undergraduate entrants have decreased by around 40% whilst postgraduate programmes have fallen by around 27%. 10 The announcement by government to extend fee loans to part-time students studying engineering, technology and computer science, who already have a degree in a different discipline, was a positive step. This will allow those already in the workforce, who have attained a previous degree qualification, to study a discipline that will enable them to pursue a career in manufacturing and engineering. Whilst this to some extent addresses the supply side issue, there is another challenge that remains. Part-time and/or short-term provision must be relevant to fast-moving industries such as manufacturing. Manufacturers seeking part-time and/or short-term provision tend to be those requiring specialist, niche skills, which are more difficult to source. However, we found that some companies are successful at demanding such provision. Nevertheless, this can take a significant amount of time and effort, not only for the employer, but also the employee. Recommendation: Higher education institutions should increase the part-time provision currently on offer to better meet the needs of industry. Government must incentivise this by increasing the level of support available for such courses. Where there is limited local demand for specific provision, HEIs should make better use of distance and open learning. Not only can this be a lower cost, but the increased flexibility is attractive to employers and learners alike. 10 HEFCE, Higher education in England: Impact of the 2012 reforms (2013)

20 Improving the quality and quantity of graduate-level skills April Teeside University Flexible higher education for the engineering industry Teeside University s Open Learning Engineering (TUOLE) centre is the second-largest provider of open learning engineering education after the Open University. For 25 years Teeside University has been creating high-quality opening learning materials for the engineering industry. It offers a realistic way to deliver necessary training and education to employees who are unable to attend conventional classroom-based courses. More than 30,000 students worldwide have studied engineering and technology courses that Teeside University has designed and developed in conjunction with industry. Open learning can be an extremely cost-effective means for businesses to provide their employees with the knowledge they need. The flexible courses offered are equally suited to ongoing professional development of senior technical managers as to supporting established vocational training such as higher-level apprenticeships. With increasing demand for such forms of flexible learning there is much more to be said and done in this area. The role of technology in education is wide-ranging; distance learning and the roll out of MOOCs (Massive Open Online Courses) is just the start. This is an area EEF will explore further later in the year. Offering Higher Apprenticeship programmes Increasing demand for higher-level skills has led companies to look at alternative routes to seek skills they would normally have acquired through the recruitment of graduates. The focus for an increasing number of manufacturers is Higher Apprenticeships; a quarter of manufacturers currently offer Higher Apprenticeships, and an additional 13% are planning to in the future (Chart 10). Chart 10: Manufacturers are investing in Higher Apprenticeships. % companies offering Higher Apprenticeships or considering doing so Source: EEF Higher Education Survey Yes, at the number we need Yes, but we would like to increase numbers No, but planning to in the future No, we considered but rejected the idea No, and we have not considered this We may consider this now we are aware of Higher Apprenticeships With one in five companies saying they are considering offering Higher Apprenticeships having completed our survey, awareness is also a factor. It is perhaps unsurprising that more than half of companies say that better information on Higher Apprenticeships would encourage them to offer such training. The go-to place for information on apprenticeships is undoubtedly the National Apprenticeship Service (NAS), which our previous research found was used by half of our survey respondents. 11 Whilst information is available concerning the benefits of Higher Apprenticeships and frameworks, the real questions for businesses tend to be with regard to quality and cost. Quality provision that meets industry needs is a dominant issue. Four in ten companies would consider offering Higher Apprenticeships if funding was directed through the employer. This would ultimately make the employer the customer, and enable them to buy the skills provision they need. This is a concept EEF has long called for, and manufacturers calls were answered recently with the government consulting on mechanisms through which apprenticeship funding can be routed through the employer. Businesses now 11 EEF, the manufacturers organisation, Skills for Growth (2012)