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Your report on how government policy may be informed by an unsupportable human capital theory of educational economics (¡°Improvement by degree or innate talent?¡±, News, 26 June) made sobering reading. What it did not do, however, was consider the resulting likely variation in the level of state teaching funding received by different institutions.

The report suggested that a degree, rather than reflecting real gains in knowledge and skills alone, in fact performs, at least in part, the function of signalling what kind of person a student and potential employee is likely to be as a result of knowledge and skills gained outside higher education.

If signalling is partly true, then a prospective student selects their higher education institution with a view to maximising their degree¡¯s signalling value. A student with a degree from an institution with higher signalling value is more likely to gain a job and salary that allows them to repay their loans in full. In contrast, a student with a degree from an institution with lower signalling value (defined by league tables, mission group and so on) is less likely to land such a job or salary. It is these institutions and their students that will be responsible for the bulk of non-repaid loans.

In other words, current government policy for England and Wales directs teaching funding primarily to lower ranked institutions where it will probably not change life outcomes. Higher ranked institutions are already in effect operating as private universities in terms of where most of their teaching funding comes from.

How should this predicament be addressed? The real-terms fall in the Dedicated Schools Grant should be reversed to help state schools provide effective, life-changing education, as should the cuts to the Adult Skills Budget that funds further education for over 18s, which for many is a better option than higher education. The student numbers cap must at all costs remain for lower ranked universities, and every loan applicant should be required to?hold a minimum number of Ucas tariff points in order to qualify for public funding.

David Grumett
Chancellor¡¯s fellow in Christian ethics and practical theology
School of Divinity, University of Edinburgh