The Free Market

A Landscape of Contradictions and Paradoxes

There are manifest schisms at the centre of the UK government and little joined up thinking. Dr Dick Evans explains why.

It has often been said that we live in a time full of contradictions and paradoxes many of which have been brought about by the operation of the so-called free market, questionable political interventions and ambiguous political slogans e.g. ‘the third way’, ‘choice’ and the latest nonsense the ‘opportunity society’. Many commentators see the continuing introduction of the market by successive governments into the public services as a cynical way of reducing costs in the public services and as a result reducing the demands on the taxpayer. Others, particularly the unions, see it as privatisation by the back door citing the Private Finance Initiative (PFI) and Public Private Initiative (PPI) as a ploy to shift to the private sector – the mantra being private is good, efficient, effective and more productive whilst public is the opposite. This government has now fully endorsed the market philosophy, which will witness private enterprises playing an increasing role in traditionally state run enterprises. Politicians justify the introduction of the market as creating greater choice and opportunity for all members of society e.g. patients, parents, learners.

The main problem with ‘choice’ and ‘opportunity’ is they require a great deal of resource particularly in terms of capacity and money and at present both of these essential factors are lacking in the public services. The government has assumed that increased funding is dependent on massive productivity/efficiency gains, which most certainly will not be realised. The main reason for failure to improve productivity is that many of the spending sectors do not realise that the productivity savings are built into their budget allocations and as a result have major problems when they realise that they are receiving less than they first assumed following the initial budget announcements. So it will be interesting to see how the chancellor reacts to this failure in improving productivity. Couple this with the impending financial downturn and reduced public expenditure it is difficult to see how the government will deliver on its promises to produce a world-class workforce. These duplicities again highlight the paradoxes at the heart of current political thinking and subsequent action.

At one level it’s about decentralisation and granting greater degrees of freedom, responsibilities and powers to the regional and local level whilst at the same time increasingly creating a highly centralist and prescriptive set of policies to control the public services. A plethora of targets are also operated alongside an array of stifling and punitive regimes of regulation, auditing and inspection. The more one analyses these contradictions the more perplexing the situation becomes. The government continues to micromanage the economy and yet seems to talk eloquently about empowering people, providing opportunities, liberating and deregulating the economy. But the reality is that this government has created a set of command and control structures across the public and private sectors with all their resultant inertia. No public service is exempt from this damaging and debilitating culture whether it be education/training, health, social work, prison and probation services all supposedly managed by a variety of quangoes and other largely unaccountable organisations. Similar constraints and growing bureaucracy are plainly visible and manifest in the private sector which reduces competiveness and weakens motivation and creativity. You only have to read the business press to see how government policies are impacting on the performance of the employment sectors.

In order to illustrate how operating the market in education and training creates problems I will provide two examples.

The first example is a classic one showing how contradictions and the resultant uncertainties arise from the mixed messages that emanate from various government ministers. In education there is a wish to increase the number of people entering higher education, (50% by 2010), and a parallel desire to create parity of esteem between the academic and the work based routes. The questionable wish to increase participation in HE will surely reinforce ‘academic drift’ as the consequent agenda for learners to stay on at school is at variance with the wish to increase participation on the vocational/work based routes. Full time attendance at school cannot provide realistic working environments and no amount of work experience can compensate for this deficiency. The result will be that the learners will continue to study the academic subjects and progress onto Higher Education (HE) via GCE and avoid the vocational/applied provision. The government thinking on vocational/ work-based provision particularly at the 14 to 16 stage is still unclear namely what is its context and purpose? What do they mean by ‘preparation for work, preparation to work and preparation in work’ recognising the limited opportunity for real work placements and experience?

The government needs to carefully define the purpose of vocational education especially at the 14 to 18/19 stage as well as the context for learning within vocational routes. There is a real danger arising from this expansion in undergraduate numbers that it will further exacerbate the current mismatch between graduate supply and demand. More of the same in terms of graduates will do little to address the current critical skill shortages particularly those required for technical and associate professionals. The most recent report from the National Employers Skills Survey (NESS) indicates that over 40% of employees manifestly lack the technical and practical skills. The survey also highlights that 37% of employers are concerned about the literacy and numeracy levels of new recruits particularly school leavers. This country has still to recognise and resolve the long-standing and complex issues associated with creating a qualified workforce that represents and matches the actual needs of employment across the service and manufacturing sectors in other words a demand led strategy. If this expansion in HE produces more graduates in certain employment areas that are already over supplied it will not address and resolve the current shortages in areas that are failing to recruit graduates either because there are too few graduates or they are attracted into other careers. Even the promise to recruit 100,000 students on Foundation Degrees (FDs) by the end of 2010 does not engender confidence that vocational higher education will become a top priority. The recent report from the Foundation Degree Task Force still raises concerns about the level of employer involvement in the FD initiative. There is a strong statement in the review that employers need to increase their financial contribution to the FD development. What is urgently needed is a long-term strategy that is demand led and pays close attention to valid and up-to-date labour market intelligence.

Another example that clearly illustrates the consequences of the operation of the market and its impact on critical skill shortages is the current situation in student numbers at university in strategically important subjects such as sciences, mathematics, modern languages and engineering. Commentators including those from learned societies, universities and industry have been warning of the crisis for a number of years pointing out the continuing and dramatic decline in student enrolments for these strategically important subjects. This example highlights the destructive nature of the operating the free market in certain critical areas of education, training and employment. University science departments continue to close as student applications decline. Latest figures from HESA show a decrease of 18% in physics enrolments between 1994/5 and 2002/3, with corresponding values of -33% in materials sciences and -18% in combinations in the physical sciences. Chemistry has remained fairly constant but significant numbers of departmental closures still occur and the Royal Society of Chemistry is predicting that the current 40 departments could contract to 20 or even as low as 6 within the next ten years. Chemistry is a strategically important subject both as a subject in its own right, as a key servicing subject to other disciplines and in many strategically important industries and yet here are predictions of its demise as a major discipline in universities. As with other key subjects a point will be reached soon where prospective undergraduates will not be able to study these subjects at a local and regional level – so much for choice? This concern is reinforced by the fact the over 79 departments of science and engineering have closed in the university sector over the last 6 years. Other high profile closures are currently catching the headlines e.g. Swansea, King’s and Queen Mary Colleges in London.

In spite of the recent Chancellor’s statement about increased funding for science it is too little and too late and carries the inevitable constraints and associated bureaucracy that follows from supposed funding increases. Even the best scientists in universities are required by the research councils to spend inordinate amounts of time writing grant applications in order to ensure enough money to guarantee the survival of their research. One scientist received a rejection letter for a research grant the same day he received a letter notifying him of winning a Nobel prize! No wonder that the brain drain continues with many gifted science researchers emigrating to America and increasingly to Australia. The reality is that science at all levels of the education system is in crisis and has been for a long time. The basic capacities are just not there namely: sufficient students studying the subjects; insufficient qualified staff many soon reaching retirement; continuing inadequate investment by government and industry in research and development. It will take a long time e.g. a generation to address and resolve these problems. To reinforce the fact that the government does not fully appreciate the current crisis in science the Secretary of State for Trade and Industry recently said following the outsourcing of 1100 call centre jobs to India that this country has a strong science base. Her comment would seem to indicate that India does not possess a technological and science base and was only capable of developing service industries or low skilled jobs. India is investing heavily in its infrastructure and also developing high tec businesses across a wide spectrum of industries e.g. pharmaceuticals, software development and biotechnology. There is a misconception that India and China will only be competitive in the industries that offer low labour costs e.g. call centres – but the reality is that both are also investing heavily and as a result rapidly developing knowledge based industries.

Similar examples abound in further education colleges. The funding methodology in the 1990’s created the “dash for cash” or “bums on seats” philosophy and this resulted in the reduction of places in low recruiting high cost provision such as construction technician/trades/crafts, engineering and vocational science.

In a recent statement the Secretary of State summed up the confused thinking of this government by saying “ Although the government doesn’t want to tell universities what to teach or students what to study, we do believe there needs to be a national debate about this. It simply can’t be dealt with by the market systems.” Interpreting this can only mean that the government intends to subsidise certain subjects, an action diametrically opposite to the tenets of the market philosophy.

These two examples highlight that there are manifest schisms at the centre of this government, which if not addressed will precipitate problems for tackling skill shortages and hence meeting the long-term needs of both the economy, economic competitiveness and employers. It also shows that government departments still do not work closely together. This is evidenced by the mixed and contradictoiy messages that emanate from the departments – so much for joined up government! Time will only tell if the current reforms to the 14-19 curriculum, the development of the vocational curriculum and the revisions to the National Qualifications Framework (NQF) will bring about the improvements so desperately needed for education and training in this country. Already the media following the publication of the Tomlinson Review are openly ‘equating the vocational provision for the less bright’ – so much for parity of esteem! In addition the Royal Society has expressed concern about the place of science in the Tomlinson Review.

The continued commitment to the free market most certainly will prevent the removal of structural barriers which in turn will deter prospective learners, active learners and employers from investing in their training and this will inevitably perpetuate the low-skill equilibrium culture that has dogged this country for so long.

An interesting footnote:

A quote from the Devil’s Dictionary by Ambrose Bierce (1911)

Opportunity: “A favourable occasion for grasping a disappointment”.

(Tony Blair please note)

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