Lord McNicol of West Kilbride
To ask His Majesty’s Government what assessment they have made of the decline in graduate jobs and the extent to which it is a long-term trend that requires intervention.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, while the employment rate remains higher for graduates than for non-graduates, we recognise that there are challenges faced by young people leaving university. We are delivering for graduates by investing £1 billion in sector skills packages to create hundreds of thousands of jobs, by launching the jobs and careers service so that everyone can access quality careers advice and by delivering the youth guarantee so that 16 to 24 year-olds, including graduates, have the best support to enter work.
Lord McNicol of West Kilbride (Lab)
My Lords, I thank my noble friend the Minister for her Answer and agree with many of the points she has made. For a number of decades now, Governments of all shades have encouraged school leavers to go to university. I did not. I attended one of the old technical colleges, Dundee Institute of Technology, where I got an HND in building management. With the structural changes in employment opportunities for young people that we are now seeing, can we not do more to ensure that careers advice and the likes of technical education are better tailored for the generations of the future and the skills they will need in the new world of work?
Baroness Sherlock (Lab)
My Lords, my noble friend is a tribute to Dundee Institute, and indeed HNDs and the country, so we all have cause to be grateful for its investment in him. My noble friend is right that there are clearly challenges in the graduate market, but I want to say up front on AI that we do not yet see the evidence that this necessarily means a long-term decline in graduate jobs. AI is having a range of impacts; its impact is contested and it is different and it is changing as we go. However, his point is incredibly important, and the Government need to act to ensure that graduates and young people generally have access not just to entry-level jobs but to proper high-quality careers. That means investing in sectors which are producing growth, making sure we have the right skills, and that career services, both within education and in the new jobs and career service, are supporting people to make sure they develop the skills needed to go into the sectors where there are increasing numbers of jobs and those jobs are better paid. I am very optimistic. AI offers opportunities as well for young people. Young people are much more technologically savvy—than me anyway, I hope—and much more optimistic about the impact of AI, so there are real opportunities as well as challenges.
Lord Baker of Dorking (Con)
My Lords, instead of finding jobs for graduates, we should be trying to persuade more 18 year-olds not to go to university. In the colleges that I support, 25% of our leavers become apprentices compared to 4% from an ordinary school. Apprentices can earn as much as £30,000 a year at the age of 18. May I persuade the Minister that what she really ought to be doing is to persuade more schools to produce apprentices?
Baroness Sherlock (Lab)
First, I pay tribute to the work that the noble Lord has done in this important area of technical education, working with employers and looking at how we teach our young people. I am grateful to him, and I am sure the whole House is, for his track record in that area. Secondly, he does not need to persuade us, which is the good news. The Prime Minister has recently made a new ambition for two-thirds of young people not just to go to university but to go to university or to take up one of these gold-standard apprenticeships. That includes targeting at least 10% of young people to go into level 4 or level 5 study. We know that getting people into the right areas with the right skills means they are much more likely to get jobs. Most graduates get jobs, but so do people who come through good apprenticeships and significant numbers end up staying on with the employers who hired them—the noble Lord knows all of this, but I am telling the House. Our job as government is to recognise that there are challenges coming down the track. We need to be the country which sees the opportunities, skills up our young people to take them up, encourages and supports employers to train them correctly, works with those who are doing the teaching and gets growth in the areas that drive jobs. We are going after all of those.
Lord Londesborough (CB)
My Lords, the brutal truth is that the number of graduates in the UK has almost doubled over the last 20 years, far outstripping the supply of graduate jobs, and that was before the decline in the last five years. This gross mismatch in supply and demand has resulted in a mountain of student debt—£270 billion at the last count—much of which will never be repaid. Does the Minister accept that this is a raw deal not just for students but also for taxpayers, and that our universities need fundamental reform, particularly in the area of funding, to face up to economic reality?
Baroness Sherlock (Lab)
My Lords, one thing I want to say to any students or graduates out there is that the evidence shows that graduates are more likely to be in work, to be in higher-skilled work and to earn more. Graduates continue to experience higher lifetime earnings, and they are nearly three times as likely to be in high-skilled employment than non-graduates. Having said that, the most important thing is that young people get appropriate advice to choose the forms of study that suit them. This is not a message to say that people should leave school and go straight into work. We are increasingly going into an era when employers will need skills, especially in a world where AI could automate some activities but it could also augment others. We need people to have the skills, so I am with him about the need to get the right people going into the right kind of education and training. On the question of HE funding, the HE sector clearly needs a secure financial footing to face into the challenges coming down the track. We have therefore acted to increase tuition-fee caps for all HE providers in line with forecast inflation, but future fee uplifts will be conditional on those providers achieving a higher-quality threshold through the Office for Students.
The Lord Bishop of Chester
My Lords, I am grateful for the replies that the Minister has already given and for the work the Government are doing in this area. To pick up on the question of apprenticeships, what are the Government doing to promote graduate internships? In an economy like that of the north-west, which depends on small and medium-sized enterprises, those are a vital way into work. Specifically around healthcare, the noble Baroness will be aware of the Jisc report from November 2025, which says that six out of 10 first- degree employment is in the area of health, social care or education, so how can the limited hiring, particularly of nurses, be addressed?
Baroness Sherlock (Lab)
My Lords, on the question of internships and apprenticeships for those who are going into specialist areas, the DWP has been working to find internships or work experience opportunities for young people. We all know from the number of requests we get from them that it is an awful lot easier to get internships if you have money and connections. One of the challenges for us is to make sure we create opportunities for work experience and internships for those who do not have those things. We are doing a huge amount of work specifically with the one in eight young people who are not in employment, education or training, of whom some will be in the north-west—they are around the country, but they are more likely to be in areas of deprivation. So, we are looking at how we can support that. At the other level, for example for young people who have been on universal credit for 18 months looking for work and not getting it, at the end of that we will give them a guaranteed job for six months to make sure that they have that experience of work.
On the question of professional apprenticeships, the Government are prioritising young people but that includes apprenticeships up to level 7 for those who are under 22 when they begin. The right reverend Prelate mentioned nursing; sometimes they will be post-degree, but they will often be level 6, and there are young people who qualify as solicitors or accountants, for example, through the apprenticeship route. Again, we are interested in where we can grow jobs. I read an interesting World Economic Forum report about the areas that are growing, and one of the growth areas is nursing.
Baroness Garden of Frognal (LD)
My Lords, can the Minster assure us that university undergraduates are not only learning academic skills but skills that will be useful for work? Many years ago, when I graduated from Oxford and told them that I was marrying an RAF officer, I was told that I was unemployable, which was actually pretty accurate. Can the Minister say whether university career guidance is more positive these days than the guidance that I was given?
Baroness Sherlock (Lab)
For someone who was unemployable at the age of 21, the noble Baroness has not done too badly for herself, and I am sure that the RAF has also benefited from the work that she has done over the years. This is incredibly important. University career support has come a long way, as anyone who has had children or known others who have engaged with it will know. There is more and more engagement with local employers, and we on the DWP side are doing huge amounts with employers. Our aim is to try to make sure that, as we develop the skills requirement, we are working in areas of labour demand, and that we work with those who provide both FE and HE apprenticeships to make sure that the right skills are there, that people are going into the areas where there is growth and that they will get jobs. That is quite broad. A good degree takes somebody into lots of areas. Employers want a good range of skills, including creative thinking, analytical thinking and resilience, and those can come from any discipline.
Baroness O'Loan (CB)
My Lords, there is a national shortage of electricians, plumbers, plasterers and people of that nature, yet there does not seem to be any focus on the development of apprenticeships for those young people for whom a university education quite simply is not appropriate. Can the Minister comment on this?
Baroness Sherlock (Lab)
The priority has been on sectors, some of which will include a range of those skills. For example, the £1 billion that we are putting into sector skills will cover AI but also engineering, green energy and all kinds of areas that use a wide range of those skills. If the employers need them, we will support people to train to get those jobs.