State 'gains 10 times what it pays for students'

Currently the cost to the state per student is £18,800, the report says.

UK graduates contribute to the economy almost 10 times what it costs the state to educate them to degree level, research suggests.

An IPPR think tank and UCU academics union report suggests graduates bring in £180,000 more than those with A-levels over their working life.

An average degree costs the state just under £18,800 per student.

It warns that reforms leading to fewer graduates will limit the UK's ability to compete globally.

The study, Further, Higher? Tertiary Education and Growth in the UK's New Economy, is published as the University and College Union meets for its annual congress in Manchester.

It notes that in 2000 the UK had the third highest number of graduates among advanced industrialised nations.

By 2008 it had fallen to fifteenth because competitor nations had been investing at a faster rate, the report says.

It gives the example of China which quadrupled its number of graduates between 1999 and 2005 and is expected to become the world's largest producer of PhD scientists and engineers.

And India is planning 800 new higher education institutions by 2020, the report adds.

At the same time, it notes: "Recent research has suggested that the number of students graduating in the UK is likely to fall further following tighter restrictions on student numbers, with 15,000 fewer higher education places in September 2012 compared with the previous year and around 25,000 fewer places in English universities."

It adds: "Recent UK reforms to the higher education system have led to reductions in courses available in key areas such as science, technology, engineering and mathematics (STEM) skills.

"A recent study found that the provision of single subject STEM courses has gone down by 15% over the past six years in England. This is concerning."

The report quotes car manufacturer Nissan's head of design and development Jerry Hardcastle, who issues a stark warning about the UK's economic future.

'Timely reminder'

"In India they are churning out hundreds of thousands of graduates and we are churning out a small number and that will restrict our ability to expand.

"We can't have any shrinking of mechanical engineering graduates - we need more engineering graduates. If they're not available here, the jobs will move to India, Brazil and China."

The report concludes that with the continuing economic slowdown, the UK needs to develop measures which will create a competitive advantage for the future.

This means ensuring it can meet industry's needs for skilled workers, especially in new growth areas, such as the low-carbon vehicle sector and renewable energy.

As the number of jobs requiring high skills increases, the number of graduates entering the workforce should be maintained and even expanded, the report says.

And it calls on the government to invest urgently, noting it invests just 1.7% of public expenditure on tertiary education, compared with 2.3% in France, 2.8% in Germany and the OECD average of 3%.

'Huge contribution'

UCU general secretary Sally Hunt said unless the UK produced more highly-skilled workers quickly jobs would be haemorrhaged abroad.

"This research shows the huge contribution A-level and degree holders make to our economy and instead of cutting places at college and university ministers should be looking to fast-track learners into the industries of the future."

A Department for Business, Innovation and Skills spokesman said the government recognised the importance of a highly-skilled workforce and that it was continuing to invest in this.

"More people than ever before will benefit from higher education in 2012.

"Our reforms put university funding on to a sustainable footing. We estimate that the cash going to universities could rise to £11bn by 2014-15, which is an increase of 10%.

"It's important that employers and the higher education sector work together to identify the skills graduates need for the future and work together to address these."