What effect will university funding cuts have on business?

The news that 1 in 3 prospective university places[1] will be lost as a result of higher education budget cuts will cost the UK’s small businesses £10 billion in lost skills[2], according to our estimates at Coverzones.com

The cuts to higher education places will leave some 250,000 students unable to go to university[3], and with the UK struggling out from the shadow of recession this could leave the country’s most vulnerable industries facing a skills shortage.

Currently higher education graduates account for 27 per cent of the UK’s working population[4], equivalent to £721billion of national GDP[5]. However, we fear that it is the smaller businesses who are likely to be the ones left feeling the pinch from the cuts, as they currently employ half of the UK’s workforce[6]. With technical and expensive to run courses, like engineering, expected to take the worst of the cuts the resulting shortage of key skills for Britain’s industry could be disastrous.

The UK’s knowledge economy is world-renowned; however our businesses cannot be expected to compete on an international level without the proper support for our graduates.

Labour pledged to open access to higher education to more students, but these cuts fly in the face of this. Course places are being cut across the country and small businesses, which rely on new skills being brought in, will suffer most from this. The British higher education system is instead seeing an increase in cheaper to run degrees which are replacing the core subjects which have traditionally formed the life-blood of the British economy.

If our smaller businesses are going to lead the UK out of recession, then they need a top-notch generation of workers to support them. However, the skills deficit which these cuts will leave will mean that the next generation of business leaders will be facing an uphill struggle.

[1] SOURCE: Higher Education Statistics Agency figures, January 2010

[2] SOURCE: Based on calculation of percentage of SME turnover from BIS figures, November 2009

[3] SOURCE: Universities UK figures, February 2010

[4] SOURCE: HM Treasury Leitch Skills Report, 2005 – National Archives

[5] SOURCE: GDP calculation based on information from International Monetary Fund

[6] SOURCE: BIS SME figures, November 2009