However, perhaps much of this frenzied focus and speculation about the costs and structure of undergraduate general education is actually a bit of a sideshow, in comparison to the HE needs of the majority of those in the workplace and those who do not want a traditional HE experience. The important priorities for both the economy and individuals are not an expansion of three-year undergraduate degrees, but the need to improve workplace learning, increase apprenticeships at all levels, and up-skill the workforce. There is now an emerging global questioning of the costs and worth of mass three or four year undergraduate education, not just triggered by the recent 'banking recession'. 'Traditional HE' – the three/four year honours degree – based in a university or equivalent organisation, has now become the norm in developed countries for a range of occupational areas and subjects.

A mass HE system has only been in place in England for the past fifteen years, and possibly it is only after this recent experience that we can begin to evaluate its worth against a range of social, economic and cultural indicators. This is not just a theoretical evaluation as some of the c. £6 billion spent by HEFCE each year could be spent on other public goods, or other parts of the education system – early years education for example.

This does not have to be a crude cost-benefit analysis but an honest appraisal of how efficient (inputs/outputs) a mass HE system is in helping, for example, to meet key cross-party policy aims such as educating and training people for a more competitive and global future, and improving social mobility. And no, some of the university sector cannot simply argue university education is a 'public good' and then evade its widening participation role. In short, could other educational measures be more cost-effective and efficient in achieving these aims?

We know that in the UK about 6 million people in work have some form of Level Three qualification; and that the UK still lags behind Germany, France and the USA in productivity. There is also, mainly anecdotal, evidence that more UK graduates are actually progressing to lower-level vocational qualifications post-graduation. In Australia, more graduates now progress from HE to FE than from FE to HE. We also know that achievement of Level Three qualifications, including apprenticeships, lead to higher lifetime earnings on average; and only better returns for some graduates, dependent on subject and institution. However;we must avoid previous policy mistakes that tended to focus on qualification acquisition as an end in itself without recognising the need to bring about genuine improvements in skills levels.

So, how do we develop the necessary higher-level vocational and cognitive skills needed for a world that will demand lifelong connections with learning, without an over-emphasis on qualification accumulation?

Firstly, traditional HE is a good thing for the individual and society – graduates tend to earn more, are healthier and add more to civil society. However, traditional HE is expensive in its present form, is about to get more so, and probably inappropriate for some for a variety of reasons – social, economic or 'the wrong time'. Moreover, studying for a degree in History or English literature does not mean you will develop appropriate, work-ready 'employability skills'; that is not what that type of degree gives you.

What we need is a diverse HE system, including traditional HE, but also featuring credible alternatives such as higher apprenticeships and shorter, HE-equivalent periods of study, focussed on skill development both at college/university and in the workplace. This could include expanding the accreditation of in-house company training schemes, more recognition and accreditation of prior experience and knowledge, accelerated learning programmes, and more learning delivered and assessed in the workplace.

Secondly, Government needs to set the overall policy direction with a transfer of funds from the traditional HE market to the proposed, more diverse model, funded partly from the loan book. Others will need to play their part; employers becoming more innovative in their recruitment and CPD practices; schools/colleges improving their careers guidance, and sector skills councils introducing career and learning pathways such as those developed by the Sector Skills Councils (SSCs) Cogent and Lantra. The Universities & Colleges Admissions Service (UCAS) will also need to adapt. And the more prestigious universities need to stop complaining about their fairly benign widening participation targets and meet them in full, otherwise loan funding should be withdrawn.

So yes, the unthinkable – a reduction in traditional HE student numbers, but an expansion in a variety of other forms of HE and a re-framing of what 'higher education' means.

Unfortunately, at present this seems to be exactly what will not happen. Private providers are set to continue supplying 'cheap to deliver', bog-standard, traditional HE, in already over-supplied subject areas such as business studies and law, and even the spectre of 'liberal arts colleges' has surfaced.

These entrants may pressurise the newer universities to re-examine their costs and prices, possibly no bad thing, but they will do nothing to address the wider higher-level vocational skills needs for sectors such as engineering, construction and pharmaceuticals – and others – or the UK productivity gap.

Last, there is little point in spending several million pounds in transactional costs to create some form of HE quasi-market if the end result is more of the same, because that is not what the economy or our society needs.

What is needed is traditional HE, probably at a lower price and with tough widening participation targets, and a flexible, consumer and employer-led 'other system' – equally funded – that focuses on higher level skills development, part-time and blended provision, and credited learning in the workplace. And that vision can only be achieved by organisations such as FE colleges, working in partnership with HE institutions, rooted in their local communities and with strong links to local and regional employers. And over time hopefully featuring a proper HE credit accumulation and transfer system that includes individual learning accounts. So what is the future for HE? It's not clear, but if we're brave enough it should be a genuinely new role for FE, as Watson puts it:

The flexibility which a proper credit framework brings will be needed all the more in the light of current economic turbulence... this is not a technical issue: we have the systems. It is a cultural and moral issue: we fail to use these systems for reasons of conservatism, snobbery and lack of imagination.

By Nick Davy, Higher Education Policy Manager at the Association of Colleges (AoC)


Blue Skies: New thinking about the future of higher education, published by Pearson Centre for Policy and Learning today, contains the visions of 40 education experts on the future of HE