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Higher education, graduate retention and talent

Graduate brain drain to London will increasingly be mitigated by growing house price differentials

Higher education, graduate retention and talent

It’s younger people returning to city centres that has given them some of their new found vitality. This, in turn can be argued to have something to do with the rapid expansion of universities in many of our cities. Some of this growth arises from expansion into, and competition within, a global higher education market, but it’s equally arisen from domestic students too. In the last ten years, UK universities have piled on 20% more first degree students, rising from 458,000 in 2007-2008 to 548,000 in 2016-2017.

81_Higher education graduate retention and talent_pullquote_270x93But once you’ve got them, you’ve got to keep them. There are regularly-aired concerns about the ‘brain drain’ of talented graduates to London from other British cities. In 2016, Centre for Cities found that 22% of graduates had moved to London within six months of completing their studies – and 38% of graduates with a first or upper second class degree. There is good evidence that workers with higher skills are also more mobile, so (unfortunately) the better your city university, the more people you can expect to lose.

However, a 2017 Resolution Foundation report found that graduate mobility has fallen over the last two decades: the proportion of graduates moving for a job each year has almost halved from 1.8% to 1% since 2001 and that the proportion of under-35s moving regions and changing jobs had fallen by 20% in the same period. So, although graduates may wish to move, they seem more likely to stay where they are.

Homes for the North commissioned research looking at how to achieve a ‘brain gain’ and found that a focus on placemaking and the delivery of better quality homes would reap benefits (Figure 1). They also aimed to understand graduates’ motivations and found that those who resided in the north did so for their roots, while those who lived in the south were there for their career. Perceptions of housing affordability do also seem to be influential in decisions to stay put.

Figure 1: Top five reasons given for why respondents live where they do now

081Higher education graduate retention and talentFigure 01746x746

Source: ComRes survey of 2,000 graduates for Homes for the North, cited in Brain Gain (WPI Economics, 2016)

The additional costs which students now face from tuition fees, causing them to live at home for longer, is another possible effect. But the ability of cities to retain their graduates does seem to depend, at least partly, on whether they can provide the sort of lifestyle that younger people want, and graduate jobs that can compete with those on offer in London.

It also depends on relative housing affordability. House prices in London have, since the beginning of 2004, grown much faster than in the rest of the UK: by 118% since the beginning of 2004 in London, but by only 55% in the West Midlands and 41% in the North East. This increasing divergence may well explain why more graduates seem to be hesitating over moving south, and its persistence over time suggests that it is largely impervious to any attempts by London (and national) policymakers to control house price inflation in the capital.

That in turn suggests that the divergence could be a very long term feature of the UK economy – and if it is, London may have a real fight on its hands by 2040 to attract young talent. By contrast, other cities able to offer high-quality accommodation at a more reasonable price will continue to benefit from the millennial vibe.

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Jo Winchester
Executive Director, Student Accommodation Valuation & Advisory Services
+44 207 1822091
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