Fears about the oversupply and overqualification of graduates are misplaced but too many students are studying the wrong subjects, research suggests.

Across Britain, the number of students enrolling at university has grown by 33 per cent in the past ten years to 2.5 million, boosted by a public policy assumption that more education is good for individuals and for society as a whole. A new study published by the Centre for Economic Performance concludes, however, that too many students are choosing the wrong subject, leading to an oversupply of arts graduates and a shortage of scientists and technology experts.

“The choice of higher education made by individuals does not correspond to the needs of the labour market in terms of field of study,” conclude Stephen Machin and Sandra McNally, the authors of the report, who are both directors at the centre. Although graduates overall continue to earn more over their lifetimes than non-graduates, evidence of the skills mismatch can be found in the increasing length of time taken by some graduates to find a degree-level job and the low or non-existent earnings premium some command when they do find employment.

The study, published in the journal CentrePiece, suggests that the remedy lies in charging differential fees that would allow universities to set student tuition fees according to how much a degree subject is valued by employers, or in the provision of differential bursaries.

— The drop-out rate among students has not improved in five years despite £800 million of public money being poured into universities to tackle the problem, the Commons Public Accounts Committee said last night. The proportion of students completing their higher education courses was 73.8 per cent in Scotland, 78.1 per cent in England, 77.1 per cent in Wales and 77.9 per cent in Northern Ireland.

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