Demand For Higher Education To 2035 - HEPI

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Demand for HigherEducation to 2035Rachel HewittHEPI Report 134

About the authorRachel Hewitt joined HEPI as Director of Policy and Advocacyin November 2018 and has written about a wide variety of HEpolicy issues, including graduate employability, the financialsustainability of universities and measuring student wellbeing.Prior to joining HEPI, Rachel held a number of roles at theHigher Education Statistics Agency (HESA), including leadingthe review of data on graduate destinations and designed andset up the new Graduate Outcomes survey.

ContentsExecutive summary5Introduction91. Demography112. Participation153. Adding participation change to demography214. English regional breakdown255. Why does this matter?356. What other factors might impact these k3

4Demand for Higher Education to 2035

Executive summaryIt is well established that in recent years, higher educationhas suffered from an English demographic dip, due to lownumbers of 18-year olds in the population. As HEPI hasestablished in previous reports, this trend is due to changefrom 2021 onwards, where we see the number of 18-yearolds increasing again. However, this report shows for the firsttime that this trend reaches its peak in 2030 and from therebegins to decline. Scotland and Northern Ireland are currentlyat the lowest point of demographic figures in recent years andthe number of 18-year olds will start to increase from 2021.However, like England, this will not be an on-going trend. Infact, they do not reach the equivalent peak as England, andstart to decline from 2026.However, decreasing demographic figures by 2035 do notnecessarily equal declining demand for higher education. Theparticipation rate also plays a significant role in the demandfor higher education. Across England, Scotland and NorthernIreland (Welsh participation data is not available), participationin higher education has risen continuously in recent years.If we were to look purely at the demographic changes, between2017 (the latest year for which participation data is available)and 2035, there would only be small increases in England,of around 40,000 students and a decrease of around 18,000students in Scotland.However, taking into account the projected increases inparticipation, these figures would drastically increase inEngland, where around 358,000 more student places would bewww.hepi.ac.uk5

needed. Decreases would still be seen in Scotland but thesewould be limited to around 300 student places. Northern Irishfigures are not calculated due to the differences in their methodof calculating participation rates.By looking at regional differences in England, it is clear whichparts of the country contribute most to the increases inEngland. London sees both the greatest growth in terms ofdemographics and also has the highest levels of participationin England. This means universities in London and the SouthEast, who take the greatest number of students from London,are set to see the greatest increase in places required.These projections are particularly important in light of therecent conversations about reintroducing a student numbercap in England. While the stop-gap number cap brought infor the 2020/21 academic year was removed, following thedebacle around administering A-Levels in 2020, there arethose in Government who would like to see its return longerterm. The projections in this report clearly show that a numbercap would put limits on a growing group who want to go intohigher education.The regional analysis also provides evidence for the unequaldistribution of demand. However, assuming the demographictrends align with continued growth in participation, theprojections show that all areas of the country would seedemand for more places. This suggests that there would berisks in the long-term of Government letting any vulnerableinstitutions ‘go bust’.6Demand for Higher Education to 2035

While there are a number of known factors that could impactthese projections, they are likely to increase these figures ratherthan decrease. If the Office for Students’ access and participationtargets are to be met, we will need to see far greater numbersof disadvantaged students entering higher education, whichcould lead to faster growth of demand rates than anticipatedhere. Equally, the recession caused by the pandemic couldlead to larger growth in higher education, as school-leaversseek higher education to avoid entering the labour market atsuch a challenging time.www.hepi.ac.uk7

8Demand for Higher Education to 2035

IntroductionIt was only in 2018 that HEPI published its last paper lookingat the demand for higher education to 2030. Yet, in that time,much has changed. We have more clarity about what Brexitmeans but we are still not sure of exactly how this will play outfor higher education, including how it will impact internationalstudent numbers.1The impact of COVID-19 on universities has been radical, witha rapid move to online teaching and universities being left tomake best guesses about what might happen to their studentpopulation as the long-term impact of the pandemic plays out.The previous HEPI report, Demand for Higher Education to 2030,highlighted that 300,000 more places in higher educationwould be needed in England by 2030, if we were to keep up withincreasing demand combined with an increased 18-year oldpopulation.2 In this report we explore how the demographicsof the 18-year old population will change beyond 2030 and theimpact that participation levels will have on demand for highereducation. We will also look beyond England, to see how similartrends are changing across the UK.As well as exploring the change in demand across the UK, thisreport will also set out how demand might be spread acrossEngland. While the figures from the last report show significantrises, we know that the distribution of students across thecountry is not evenly spread. Equally, the rises seen in thelast report are not sustained once we get beyond 2030. Fromthis point onwards, we see a demographic dip in the 18-yearold population. However, as shown below, continued rises inparticipation are expected to abate the impact of this.www.hepi.ac.uk9

It should be noted that this analysis cannot account for theentirety of the student population. By looking at the youngpopulation, it excludes the mature student population(although this is a relatively small group). It can only takeaccount of home students and not students from the EU oroverseas (although this has been explored elsewhere).3 Dueto a lack of data, it cannot take into account the changes seenin Welsh participation rates. However, it can demonstratethe likely change in demand that is going to be seen acrossEngland, Scotland and Northern Ireland among most homestudents.10Demand for Higher Education to 2035

1. DemographyThe demand for higher education is largely dictated by thesize of the young population. This is even more pronouncedthan it used to be, due to the decline in mature learners since2010. While higher education is not only the pursuit of youngpeople, HESA data show that in 2018/19 87% of undergraduatestudents were under 30 and 80% were under 25.4This means that changes to the young population havesignificant impacts on the higher education sector. This hasbeen especially felt in recent years, when declining numbersof 18-year olds in the population have led to higher educationinstitutions being in fierce competition for the studentsavailable. Figure 1 shows how demographic trends will playout in the future.Figure 1: English and Welsh 18-year old population 20322033203420352036270,000MalesFemalesSource: Office for National Statistics (ONS) - Births in England and Wales5www.hepi.ac.uk11

Much of our focus in the last HEPI report on demand was onthe increasing population figures up until 2030. These showthe trend of low numbers of 18-year olds we are currentlyexperiencing is soon going to change and universities andpolicymakers will need to prepare for the increased demandthis will bring.However, now we can see further ahead, it is clear the peak ofincreased population of young people is only temporary. By2036, numbers will not have fallen as low as in 2019, but theyare on a steep decline and sit at an equivalent level to 2012 and2023.We can be confident in these trends, as those who will be 18 in2035 have already been born and we are seeing these trendswork their way through the earlier education system already.For example school numbers, which were expanding for anumber of years, are starting to contract again.As Figure 2 shows, the demographic changes in Scotland falllargely in line with those in England and Wales. However, thedemographics do not reach the same peak around 2030 andstart to decline much earlier, following a peak in 2026. Thismeans, unlike in England and Wales, the Scottish 18-year oldpopulation never reaches the peak of 2009. Male and femaledata is only included from 2019, as birth data by sex is notavailable before this point.In Northern Ireland, the demographic changes are also lesspronounced than in England. Between 2018 and 2021 there is alull in the 18-year old population, which rises to a peak in 2026.However, this also does not exceed the 18-year old populationof 2009.12Demand for Higher Education to 2035

Figure 2: Scotland 18-year old population esSource: National Records of Scotland - Vital Events: Births6Figure 3: Northern Ireland 18-year old population 2034203520369,000MalesFemalesSource: Northern Ireland Statistics and Research Agency: Birth Statistics7www.hepi.ac.uk13

14Demand for Higher Education to 2035

2. ParticipationParticipation is the other factor that has a significant impacton the demand for higher education. Participation levels inEngland have been steadily increasing, excluding a rise andthen equal decline when fewer students took years out beforetuition fees were increased. Figure 3 shows the growth in theEnglish Higher Education Initial Participation Rate for thepopulation aged 20 and under (the young participation rate).Figure 4: English Higher Education full-time and part-time initialparticipation rates (aged 20 and under)50%45%40%35%FemaleFemale and Male leSource: Department for Education Participation Rates in Higher Education:2006 to 2018, 26 September 2019www.hepi.ac.uk15

What is the Higher Education Initial Participation Rate?The Higher Education Initial Participation Rate (HEIPR) is anestimate of the likelihood of a young person participating inHigher Education by age 30, based on current participationrates. It is not a measure of participation by particular entrycohorts, risking misinterpretation in its analysis.8 Therefore,while it provides the best estimate of participation rates, somehave criticised it for over-estimating levels of participation.9 Inplaces, this report refers to both the HEIPR for students underage 30, and the young participation rate for those aged 20and under.For Scotland, data on the Higher Education Initial ParticipationRate is only available over a five-year period. In this time, we cansee that participation has risen fairly consistently. The overallrate of growth in participation has been slower than in Englandbut starting from a higher base and Scotland continues to havehigher levels of participation than England.Figure 5: Scottish Higher Education full-time and part-time initialparticipation rates (aged 20 and /152015/162016/172017/182018/19Source: Scottish Funding Council (SFC) HE Students and Qualifiers atScottish Institution, 31 March 202016Demand for Higher Education to 2035

Northern Ireland uses a slightly different measure to the Englishand Scottish Higher Education Initial Participation Rates. TheNorthern Irish age participation index only includes full-timestudents and only goes up to 21. While participation levelsfollow a less stable trajectory in Northern Ireland, participationlevels are higher than in Scotland and England and continueto rise.Figure 6: Northern Irish Higher Education full-time ageparticipation index (aged 21 and 08/092007/0840%2006/0741%Source: Northern Ireland Department for the Economy - Higher EducationAge Participation Index for Northern Ireland, 27 June 2019While Figures 4, 5 and 6 look at participation levels in Scotland,England and Northern Ireland over different time periods,Figure 7 compares the participation rates between the threecountries across the time period for which data is availableand the projected participation levels to 2035. The projectedwww.hepi.ac.uk17

participation levels are calculated based on participationannually rising in line with recent participation levels.Figure 7: Comparison of Scottish and English Higher Educationfull-time and part-time initial participation rates (aged 20 andunder) and Northern Irish Age Participation Index (aged 21 nglandNorthern IrelandScotland projectedEngland projectedNorthern Ireland projectedIt is notable that participation levels in Scotland and NorthernIreland are currently higher than in England, despite studentnumber caps being in place in both countries. However, the rateof increase is quicker for England than Scotland or NorthernIreland, meaning English participation levels for those aged20 and under are projected to overtake those in Scotland by2028/29 and those in Northern Ireland by 2031/32. This could18Demand for Higher Education to 2035

change if student number caps were removed in NorthernIreland and Scotland.The Higher Education Funding Council for Wales have plans tostart producing a Higher Education Initial Participation Rateagain, similar to those used in England and Scotland. However,as these data are not currently available, we have not been ableto track Welsh participation trends.www.hepi.ac.uk19

20Demand for Higher Education to 2035

3. Adding participation change to demographyAs we have seen, the young participation (initial entry) rate hasbeen fairly steadily increasing, though faster for women thanfor men.Looking back between 2007/08 - 2017/18 in England, the rateof increase in participation has grown on average by about 0.77percentage points a year. For the purpose of this analysis, wehave used this past participation level to assume an increaseover the next 18 years of 13.8 percentage points. This wouldlead to a young (aged 30 and under) initial entry rate of 64%in England, which is an increase of 28% over the present 50%.These projections suggest a significant rise in English demandfor higher education. However, we do not believe these to beunrealistic. This increase in participation would still set Englandat lower levels of participation for those aged 30 and underthan Scotland, for example. Equally, these projections arecalculated on the same basis as our previous report. To date,there have been no changes since that report that would deemthese projections inaccurate.In Scotland, the level of participation has increased over thelast five years by 0.5 percentage points a year. For the purposeof this analysis we have assumed here an increase over thenext 17 years of 8.5 percentage points, leading to a younginitial entry rate of 66% in Scotland, which is an increase of 15%over the present 57.5%. The Scottish figures are shown for allstudents, as breakdown by sex was not available.The predicted demographic changes are not calculated forNorthern Ireland, due to the different methodology used inparticipation rates.www.hepi.ac.uk21

Table 1 shows the increases in the number of young entrantsthat would be implied – first with only the demographic changes(third and fourth columns) and then assuming the increase inparticipation discussed above (fifth and sixth columns).Table 1: Estimated change in full-time England-domiciled andScotland-domiciled undergraduate entrants due to demographicchange and combining demographic change with increases landChangein entrantPercentagenumbers in2035 (based change to2035just ondemographicchanges)Changein entrantnumbersPercentagein 2035 (withchange tomale & female2035participationrate increaseof 46332.5%All33,549-4,440-13.2%-74-2.2%In England, with an average course length of around 3.3years, the 333,320 entrants in 2017/18 equate to about 1.1million students in total. The 11,823 additional entrantsarising from demography alone (with a static participationrate) will amount to around 40,000 additional students andthe 108,000 additional entrants, if participation continuesto increase at the medium-term rate, will require about358,000 additional places by 2035. Despite a demographicdip compared to the 2030 figures, the continued rises inparticipation lead to predicted increases in student numberseven beyond HEPI’s last report. There is a historical precedentfor the underprediction of future student demand, where22Demand for Higher Education to 2035

only demographic data is considered – although, of course,participation trends play an equally important role.10These calculations assume that participation continues on asteady trajectory, increasing by 28% between now and 2035.However, this trajectory is not guaranteed and relies on lookingat participation rates so far. In order to better understandwhat might happen if we were under or over-estimatingthese figures, Table 2 sets out what the increase would be ifparticipation were to increase by only 25% or up to 30%.Table 2: Increased and decreased percentage change inparticipation rateChange in entrantnumbers in 2035(with male & femaleparticipation rateincrease of 28%)Changein entrant numbersin 2035 (with male& female participationrate increase of 25%)Changein entrant numbersin 2035 (with male& female participationrate increase of 30%)All males48,86044,19851,969All females59,60353,91163,397108,46398,109115,366AllA 25% change would equate to a requirement of around324,000 additional places in 2035. A 30% change would equateto a requirement of around 381,000 additional places in 2035.In Scotland, with an average course length of around fouryears, the 33,549 equate to about 134,196 students in total.The loss of 4,440 entrants arising from a dip in demographyalone (assuming a static participation rate) will equate to aloss of just under 18,000 students, compared to 2017/18. Ifparticipation increases at the rate of the last five years, the losswill be less than 300 students. The decline in population meansthat Scotland could increase participation in higher educationwithout needing to increase the number of places available.www.hepi.ac.uk23

24Demand for Higher Education to 2035

4. English regional breakdownIn previous HEPI reports we examined what future demandwill be for England as a whole. However, we know this doesnot represent an even picture across the whole of the country.Birth rates differ geographically, as do levels of participation inhigher education.Figure 8 looks at the proportional split of the English 18-yearold population in 2035, broken down by geographical region.In 2035, more 18-year olds will be based in London than anyother region, whereas the North East will have the lowest 18year old population across England.11Figure 8: 2035 English 18-year old population by regionLondon19.5%South East15.3%13.0%North WestEast10.9%10.7%West Midlands9.6%8.6%Yorkshire and The HumberSouth West8.0%East Midlands4.2%North East0%5%10%15%20%Source: Office for National Statistics (ONS) - Births in England and WalesTable 3 sets out the numbers of 18-year olds across Englandin 2035. By combining these figures with the 2016/17 regionalparticipation levels (more recent regional participation datawas not available at the time of writing), we can calculateprojected change in entrant numbers in 2035, based on currentwww.hepi.ac.uk25

participation levels and the estimated increase in participation.If the current participation levels were to remain the same,despite an overall increase in student numbers, many regionswould be sending fewer students to higher education. Thisis due to the uneven distribution of the birth rate across thecountry, with London accounting for the greatest increasebased on the 18-year old population. However, accounting forthe projected increase in participation shows an increase inthe 18-year old population expected to start university in 2035across all regions.2035 additional entrantsbased on predicted 28%participation increase2035 entrants basedon predicted 28%participation increase2035 change in entrantsbased on current regionalparticipation rate2035 entrants basedon current regionalparticipation rate2016/17 regional initialentrants2016/17 regionalparticipation levelsDomicileregion2035 English 18-year oldpopulationTable 3: Estimated change in full-time English undergraduateentrants by domicile, due to demographic change and combiningdemographic change with increases in participationNorth East27,48840%13,60010,995-2,60514,074474East h e andThe Humber62,08840%28,75024,835-3,91531,7893,039West 70,72550%33,69535,3631,66845,26411,569North West83,82248%42,66540,235-2,43051,5008,835South 63%61,64579,57417,929101,85540,210London26Demand for Higher Education to 2035

By looking at the domicile of students and the region of theuniversity they attended in 2017, we can roughly modelthe number of places that will be required in each region in2035. Table 4 sets out the proportion of students that attenduniversities in each region, based on the domicile of thestudent. The highlighted cells show the proportion of studentswho stay in their home region to study.Tables 5 and 6 set out the change in entrant numbers just basedon demographic increases to 2035. It is important to note thatthis is only English students and does not include demand fromWelsh, Scottish and / or Northern Irish students.www.hepi.ac.uk27

2.5%0.7%0.7%Northern 5%6.7%11.4%61.0%3.4%Yorkshire andThe .3%4.6%East %4.0%5.8%West 4.7%5.1%East of %3.2%3.1%39.9%South 4%12.7%South .1%Northern %1.3%Source: Higher Education Statistics Agency (HESA) HE student enrolments by domicile and region of HE provider1.6%2.1%London2.3%2.7%East of EnglandSouth West1.3%West MidlandsSouth East3.3%East Midlands10.9%4.0%North WestYorkshire and theHumber13.0%North EastNorth EastNorth WestRegion of providerScotlandTable 4: Proportion of students who attend university in each English region, Scotland, Walesand Northern IrelandDomicile of studentWales28Demand for Higher Education to 2035

-80-75South West-180-11549560-210-230-445-1,485-90Yorkshire andThe 1,145220-275-1,500-325-95-150East MidlandsFigures are rounded to the nearest multiple of 5385South East45London-30East of England-115West Midlands-425East Midlands-95North WestYorkshire and theHumber-340North EastNorth EastRegion of providerWest Midlands-325-2101,030115-1,290-375-155-115-135East of 5-115-165-95-55-330South EastTable 5: Places required regionally, based on demographic changesDomicile of studentNorth Westwww.hepi.ac.uk29South West-2,060-465925115-140-130-70-50-115Northern -75-45-50-430-12526530-115-60-45-60-35Wales

Table 6: Total places required per region, based on demographicchangesRegion of providerNumber of new places required in 2035(based on 2017 participation rate)North East-735North West-2,200Yorkshire and The Humber-2,835East Midlands-1,400West Midlands-1,460East-1,365London6,415South East120South West-1,995Figures are rounded to the nearest multiple of 5Assuming the participation rate increased in line with recenttrends, Tables 7 and 8 show how many places would be neededfor new entrants by 2035.30Demand for Higher Education to 2035

210Yorkshire and theHumber86024030East of EnglandLondonSouth EastSouth West753551,1104305651752205,39515Yorkshire andThe 7401,15016035525East MidlandsFigures are rounded to the nearest multiple of 585305West Midlands90350North WestEast Midlands60North EastNorth EastRegion of providerWest Midlands1306402,3058053,4902857541525East of ,1151,59028012060270190South 53701003518020South WestTable 7: Places required regionally, based on increased participation rateDomicile of studentNorth Westwww.hepi.ac.uk31Northern 17537559521030545202105Wales

Table 8: Total places required per region, based on increasedparticipation rateRegion of providerNumber of new places required in 2035(based on predicted 28% increase)North East2,230North West8,340Yorkshire and The Humber4,620East Midlands7,270West Midlands8,175East7,880London23,260South East12,580South West5,820Northern Ireland105Scotland1,300Wales1,945Figures are rounded to the nearest multiple of 5To understand how this distribution compares to theavailability of higher education in each region, Table 9 showsthe additional demand each higher education institutionwould need to provide for on average, based on the numberof universities in each region. It is important to note that theuniversities in these regions vary by size, so the distribution ofplaces will not be even across higher education providers. Forexample, London has a mix of both small specialist institutionsand large higher education providers. The list also includesfurther education colleges that are registered with the Officefor Students for their higher education provision.32Demand for Higher Education to 2035

Table 9: Places required per higher education provider, based onincreased participation rateRegionNumber of higherProjected need foreducation providers places per providerin 2035 (based on28% increase)North East13170North West48175Yorkshire and The Humber32145East Midlands27270West Midlands34240East36220111210South East66190South West40145LondonSource: The Office for Students Register, as of August 202012www.hepi.ac.uk33

34Demand for Higher Education to 2035

5. Why does this matter?There are a number of reasons why it is important to considerthe future demand for higher education. Universities needto plan for the future and long-term projections of increasednumbers of students may help them navigate the challengingfinancial environment of the next few years.It is also important to consider in terms of student number caps.In England, student number caps (based on provider forecasts,with a 5% margin) were initially brought in for the 2020/21academic year, at the request of Universities UK, to stabilise thesector.13 However, as part of the response to the public criticismover the handling of students’ A-Level results, the Governmentlifted the student number cap so that universities were freeto take in all students who had achieved their grades and toensure certain groups of students were not disadvantaged bythe handling of A-Level results.This change was coupled with giving A-Level students their‘Centre Assessed Grades’ (which were largely based on teachers’assessment of students’ abilities), rather than the gradescalculated for them by the much criticised Ofqual algorithms(which moderated Centre Assessed Grades to mimic patternsof attainment achieved by schools in previous years). Thegrade inflation associated with giving students their CentreAssessed Grades, as opposed to algorithm calculated grades,means more students have met their offer conditions than isusual. Michelle Donelan, Universities Minister, has called onuniversities to hold places for all students who met their offerconditions and where this is not possible for this year, offerthem a deferred place for next year.14 This makes it less likely anumber cap will be brought in for the 2021/22 academic year,www.hepi.ac.uk35

as universities will already be committed to fulfilling offers fordeferred students as well as the latest A-Level cohort.However, there are some who would like to see the returnof student number caps in the longer-term. HEPI warnedof the potential return of student n

of disadvantaged students entering higher education, which could lead to faster growth of demand rates than anticipated here. Equally, the recession caused by the pandemic could lead to larger growth in higher education, as school-leavers seek higher education to avoid entering the labour market at such a challenging time.

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