Economic inactivity and long-term sickness

Fresh UK labour market data out today that demonstrates the extent to which labour shortages and poor health are holding back the economy.

Unemployment figures alone don’t give a full view of what’s happening – we need to look at the full range of reasons people are excluded from the workforce. The big thing that’s changed? The enormous rise in the number of working age people inactive due to long-term sickness.

On the eve of the pandemic there were estimated to be 2.1 million such people. Now, there’s estimated to be 2.8 million, the most there’s been for at least 30 years and an increase of 45% since April 2019.

Student recruitment

Our view on the prospects for UK postgraduate student recruitment

UK labour market conditions are the key determinant of incentives to undertake postgraduate study for the home market. Here’s the latest ONS data on job vacancies in the UK.

Vacancies are now consistently falling from their (unprecedented this side of the millennium) high last year but nonetheless remain significantly elevated. There are currently 21% more vacancies than the 2015-2019 average and 78% more than the 2020 average.

HESA data showed a surge in PGT Home enrolments across the sector in 2020/21, as job vacancies plumetted, many were subject to furlough and anxieties about job security increased. Since then many institutions have experienced successive drops in PGT Home intake as labour market conditions have tightened.

Higher vacancies don’t just make it easier for the unemployed to secure a job, they also make it easier for those already employed to secure promotions and payrises (data also shows payrises are remaining strong). If you perceive your position in the job market to be strong, as it is for many people in the UK at the moment, you’re less likely to consider taking time out of earning to invest in further study.

Vacancies will likely continue to fall from here but UK-specific structural factors – namely Brexit and unusually high levels of long term illness – may prevent them from returning to the long term average for some time. If the Bank of England begins to loosen monetary policy next year, as has become more likely given better than expected inflation data released today, this may further slow the return to normality.

Even if vacancies return to near the 2015-2019 average by the start of the 2024/25 academic year, we should expect there to be a lag in this feeding through to prospective applicant perceptions. We should also expect that the elevated costs of postgraduate study compared to the 2015-2019 period (when postgraduate loans had been newly introduced, their value not yet eroded by inflation and sector-wide tuition fees were notably lower) will make it more difficult to achieve pre-pandemic levels of intake even when labour market conditions become similar.

The prospects for UK postgraduate student recruitment will improve in the medium term but we’re not out of the woods yet.

Tuition fees

Average Home Postgraduate Taught tuition fees

There’s a great deal of variety in the amount that UK universities charge Home students for postgraduate taught programmes but a look at the average over time shows a clear trend.

Excluding clinical programmes, by our measure the average tuition fee in 2021 was 80% higher than it was in 2012.

Based on data from the Reddin Survey, published by The Complete University Guide ( under Creative Commons License BY-SA.

Inflation Student loan

Inflation and the Postgraduate Master’s Loan

The maximum English Postgraduate Master’s Loan available has risen steadily since it was launched in 2016 but that hasn’t been enough to stop its real terms value being eroded by inflation since the pandemic.

The maximum loan for postgraduate students starting in 23/24 is currently worth £9,293 in October 2016 terms, a decline of 7% from its initial £10,000 value.


Updated modelling: Inflation and the English UG tuition fee cap

An update to our modelling of the English undergraduate tuition fee cap’s real terms value decline, based on the Bank of England’s latest CPI forecasts.

The BoE expects inflation to fall faster this year than it previously thought, though news today that CPI in March unexpectedly remained the wrong side of 10% may give pause for thought.

Of course, the C in CPI stands for Consumer. This rate represents costs for individuals, not universities. Whilst we might expect the two to move together fairly closely, a significant factor in the revision to the BoE’s forecasts for this year is the government’s changing interventions in residential energy costs. The Energy Price Guarantee doesn’t cover the commercial energy market of course, so these interventions won’t have a direct benefit for university balance sheets.

UCAS Statistics

UCAS January deadline statistics show drop in UK 18 year old application rate

This week’s release of UCAS’s January deadline statistics confirmed some alarming news. Total UK applications submitted have fallen in spite of rising demographics, lowering the 18 year old application rate for the first time in many years.

Examined by the tariff group, higher tariff institutions are continuing to receive ever higher shares of the total application pool despite already having reined in offer-making last year and many such institutions facing challenging capacity constraints. The lower- and medium-tariff institutions who are most likely to have capacity to grow meanwhile continue to be squeezed.

This mismatch in the distribution of supply and demand in the sector threatens not only many institutions themselves but also years of progress in raising entry rates and widening participation.

UCAS Statistics

Higher tariff institutions shrink their UK student intake

UCAS provider-level end of cycle statistics out today. As we already knew, entry rates for all UK nations have fallen along with total UK applicants accepted. It’s the higher tariff third of the sector driving this drop as they regain control over their intake and reduce offer making.


Measuring falling pay

No matter their grade, the real value of HE sector workers’ pay has been drifting downward for years and crashing since the pandemic.

Demographics UCAS Statistics

Medicine applicants dip

UCAS’s October deadline statistics, released this week, show that the total number of Medicine applicants has fallen by 9.7%, with the number of UK applicants having fallen by 10.8%.

This represents the first time that the number of Medicine applicants has fallen year-on-year since the 2017 cycle. You’ll recall that last year the number of new UK applicants decreased slightly but were outweighed by a surge in ‘reapplicants’. This cycle, these reapplicants have fallen back slightly and the drop in first time applicants has been much more substantial.

Note however that reapplicants still remain a significantly larger proportion of the total UK Medicine applicant pool than they did prior to the pandemic.

All other things being equal, we might expect the uptick in the number of 18 year olds in the UK population to manifest in growth in the number of Medicine applicants. First time applicants are however falling as a proportion of total 18 year olds, having hit their peak in the 2021 cycle.


Update: The falling value of the English undergraduate tuition fee

Last month we posted about the falling value of the English undergraduate tuition fee, charting how inflation was eroding the real terms value of the tuition fee cap. Since then, the Bank of England has published its latest forecasts for inflation over the next few years and is expecting CPI to peak at 13.1% at the end of 2022.

We’ve updated our chart to show the impact of this forecast, should it come to pass, up to the end of 2023.

In the forecast scenario, the £9,250 English tuition fee cap would be worth only £6,300 in 2012’s money by the end of next year. This would represent a reduction in funding of approx. 30% since the current funding regime was implemented.