Changes in education over time
Education levels have risen over time, in the UK and internationally. The share of students achieving at least five good GCSEs or equivalent increased from under 40% in the early 1990s to a high of 82% in 2012, while the share of the working-age population with a degree has more than doubled since 2000 – from just under 20% in 2000 to just over 40% in 2020.
Despite rising qualifications, England stands out internationally for nearly non-existent improvements in skills when making comparisons across generations. In virtually all OECD countries, literacy and numeracy skills are substantially higher among young people aged 16–24 than among the older generation (aged 55–65). England is the exception to the rule: while its 55- to 65-year-olds perform relatively well, especially in literacy, young people in England have not improved on these skills at all. That has left England ranked 25th out of 32 countries in terms of the literacy skills of its young people.
Despite spending increases in the last few years, education spending as a share of national income is no higher than in the early 2000s. Taking into account the likely taxpayer cost of non-repaid student loans, UK education spending in 2020–21 was worth 4.8% of national income. A decade earlier, following years of real-terms growth, education spending had peaked at over 5.6% of national income.
Today’s education inequalities are tomorrow’s income inequalities
Higher levels of qualification are strongly associated with better prospects in the labour market. Around nine in ten graduates are in employment between their mid 20s and early 50s. Employment rates of people educated to GCSE level or below are far lower: among those in their 30s, for example, two in five women and one in five men are not in work. Graduates also enjoy higher earnings, with the median 40-year-old graduate earning twice as much as someone qualified to GCSE level or below. Despite a huge increase in the share of graduates, this ‘wage premium’ has barely budged in the last five decades, at least for men. There is good evidence that at least some of this wage premium is due to the causal impact of education improving people’s outcomes, rather than just selecting and sorting people of differing ability.
People with lower levels of qualifications are also more exposed to slow earnings growth over their lives, with less opportunity for pay progression throughout their careers. Strikingly, the most common annual salary for low-educated 45- to 50-year-olds (i.e. those with qualifications at or below GCSE or equivalent) is between £15,000 and £20,000 – the same as for 25- to 30-year-olds with those qualifications.
The impact that education has on earnings depends on what and where people study, not just their level of qualifications. After accounting for a detailed set of characteristics, including prior attainment, women who study medicine or economics see an earnings boost of over 60% compared with similar peers who do not earn a degree. For women studying creative arts or agriculture, the average earnings premium is only around 10%. For men, graduates in some subjects have lower earnings than similar non-graduates. There are also major subject differences in the financial rewards to completing vocational education, with the highest returns in areas such as engineering, business or construction.
The financial rewards to education also depend on a young person’s own characteristics, which can perpetuate inequalities in the labour market. Young people from better-off families – and especially those who attended private school – enjoy much higher financial rewards from completing a degree than their peers from disadvantaged backgrounds, even holding constant attainment during school and at university as well as subject and institution.
Unequal access to, and success in, the education system
Despite decades of policy attention, there has been virtually no change in the ‘disadvantage gap’ in GCSE attainment over the past 20 years. While GCSE attainment has been increasing over time, 16-year-olds who are eligible for free school meals are still around 27 percentage points less likely to earn good GCSEs than less disadvantaged peers. Children from disadvantaged backgrounds also make slower progress through secondary school: in the 2019 GCSE cohort, just 40% of disadvantaged children who achieved the expected level at age 11 went on to earn good GCSEs in English and maths, compared with 60% of their non-disadvantaged peers. And while virtually all (95%) of non-disadvantaged pupils who achieved above the expected level at age 11 went on to earn good GCSEs, one in six of primary school high achievers from disadvantaged backgrounds missed out on the GCSE benchmark.
These gaps are even wider when looking at more rigorous benchmarks for attainment. Pupils who were not eligible for free school meals are around three times as likely as their more disadvantaged peers to achieve above the expected level at age 11 and at GCSE. They were also three times more likely to attend one of the most selective higher education institutions.
But the role of family background is not limited to the poorest – household income is a strong predictor of attainment for better-off families too. While around 40% of young people who just miss out on free school meals achieve good GCSEs, that rises to 70% of 16-year-olds in the richest third of families. Even within this better-off group, family income is an important predictor of higher levels of attainment: children in the 10% richest families are more than twice as likely as those in the seventh decile to earn at least one A or A* grade at GCSE. And while 71% of private school students had earned a degree by age 26, just 17% of those from the poorest fifth of families had reached that milestone. More than half of the latter group had not progressed beyond GCSE level.
The COVID-19 pandemic has significantly worsened overall outcomes as well as widening inequalities. The share of pupils leaving primary school meeting literacy and numeracy benchmarks fell from 65% in 2018–19 to 59% in 2021–22. (The government’s levelling up agenda aims to see this reach 90% by 2030.) Children from more disadvantaged backgrounds may have fallen twice as far behind as the average child, in part due to worse experiences with home learning. Disadvantaged children had less access to resources to learn at home. They were less likely to receive resources such as online classes during the first lockdown, and more likely to be absent more frequently and for longer than their better-off peers.
While girls consistently and substantially outperform boys in the education system, their educational success has not translated into gains in the labour market. Girls are around 10 percentage points more likely than boys to reach attainment benchmarks at various stages of the education system. This gap is long-standing: it has been clear in GCSE performance for over three decades now, and the number of women completing degrees has exceeded the number of men doing so since the 1990s. But while women are more likely to progress to higher education, they are less likely to select subjects such as computer science, engineering or maths. And women’s outperformance in the education system has not led to outperformance in the labour market – rather, somewhat lower wages early in women’s careers are then held back further relative to men once they have children.
Educational inequalities by ethnicity are nuanced – children from ethnic minority backgrounds typically start out behind white peers, but make much faster progress. By age 19, all major ethnic groups are more likely than white pupils to have earned A levels or equivalent qualifications. And by age 26, white British pupils are the least likely to hold a degree and the most likely to have stopped their education at GCSE or below. Despite the educational success of some ethnic minorities, however, young people from non-white backgrounds continue to face disadvantage in apprenticeships and in the labour market.
Educational attainment in London outstrips that in much of the rest of England. London benefits from both better performance and lower inequality than other parts of the country. All local authorities in London perform above the national average in the share of 11-year-olds meeting expectations in reading, writing and maths. The disadvantage gap in GCSE performance in Inner London is less than half as wide as that in the rest of the country.
Despite this, the biggest predictors of educational disadvantage relate to people, not places. Attainment gaps between the government’s new ‘Education Investment Areas’ and the rest of the country are only around a quarter as large as the gaps by eligibility for free school meals. A 16-year-old’s family income is more than four times as strong a predictor of GCSE attainment as their local authority of residence.
The development of educational inequalities during the school years
Differences in educational attainment emerge early in childhood and develop throughout an individual’s lifetime. Even prior to beginning school, there are differences in children’s cognitive and socio-emotional skills. During the school years, these educational inequalities crystallise; only 8% of young people who were not meeting expectations in reading, writing and maths at the end of primary school went on to achieve pass grades in GCSE English and maths.
Education spending in England has become less progressive over time. In 2000, primary school pupils in the most disadvantaged fifth of schools attracted around 20% more funding than those in the most affluent fifth. This premium rose to 35% by 2010, but the past decade has seen all of this increase in progressivity disappear due to both the shifting demographics of disadvantage and explicit policy choices in the school funding formula.
By contrast, the gap between private and state schools in per-pupil resources has doubled since 2010. In 2009–10, the average state school pupil attracted £8,000 a year of total funding (both day-to-day and investment spending). On average, private school fees (less bursaries) were around £3,100 higher. By 2020–21, state school spending had slipped slightly while private school fees increased in real terms, leaving the gap at £6,500.
Significant reductions in class sizes can have a significant effect on learning outcomes, but achieving big reductions in class size is expensive. To cut primary school class sizes from the current average of 27 pupils to 17 pupils would mean creating around 60% more classes, which would cost £6 billion in teacher salaries alone (assuming these additional teachers could be found).
Ensuring that all schools hire and retain effective teachers is key to mitigating educational inequalities. An excellent teacher at the front of the classroom is crucial, and having a good rather than an average teacher carries lifelong benefits for earnings as well as behavioural skills. But among the 10% most disadvantaged schools in England, nearly a quarter were assessed by Ofsted to have teaching that ‘requires improvement’ or is ‘inadequate’. In the 10% least disadvantaged schools, by contrast, virtually all teaching was rated ‘good’ or ‘outstanding’.
The current way of allocating pupils to schools disadvantages children from lower-income backgrounds and those in rural areas. The school choice system gives substantial weight to distance in deciding which pupils can access what schools. This pushes up house prices near the most in-demand schools, pricing out those on lower incomes. Meanwhile, children in rural areas have fewer schools to choose from in the first place.
Education inequalities beyond the school years
GCSE attainment is a crucial indicator of a young person’s eventual level of qualification. The better someone scores at GCSE, the more likely they are to hold advanced qualifications. It is extremely unlikely for someone in the bottom fifth of GCSE scores to earn a degree by their mid 20s. On the other hand, nearly 80% of young people in the top 10% of the GCSE distribution have a degree a decade later.
While there is some catch-up, a sizeable share of the population does not progress beyond (or even to) basic levels of qualifications. Nearly half of pupils who have not achieved at least five good GCSEs or equivalent by age 16 still have not obtained them by the age of 19. Only a third of those who have not reached this benchmark by age 19 achieve it by their mid 20s.
Between 2010–11 and 2020–21 there was a significant decline in the number of adult learners. The number of learners studying basic skills qualifications (at Level 2 or below) has nearly halved in the past decade.
Adults in the UK were a quarter as likely to start an advanced vocational qualification as adults in the US. Among OECD countries, the UK has one of the lowest rates of adults taking advanced vocational qualifications (Level 4 or Level 5) with only 1.5 adults per 1,000 population starting such a qualification in 2019.
Since the early 2000s, there have been large falls in spending on adult education. Spending in 2019–20 was nearly two-thirds lower in real terms than in 2003–04 and about 50% lower than in 2009–10. This fall was mainly driven by the removal of public funding from some courses, which has made it more difficult for adult learners to access funding for courses at lower levels.
Building a more equal education system
We set out seven ‘guiding principles’ for policymakers to support a more equal education system:
Look at the education system as a whole. Educational inequalities start early in life, but every stage of the system plays a role in shaping – and reducing – inequality. Reforms to the education system should consider the entire system, including how different stages interact. Targets that focus only on one stage of education can store up problems elsewhere in the system.
Early intervention is important – but it must be followed up. Intervening in the early years can be an effective and efficient way of supporting a more equal education system: preventing inequalities from opening up in the first place is often cheaper than trying to close gaps later on. But early interventions work best when they are followed up by investments at subsequent stages of education.
Creating opportunities for everyone. Academic education is better catered for (and better resourced) in the post-compulsory system than vocational education – even though over half of young people do not go on to A levels after completing their GCSEs. The education system must offer high-quality options to young people who pursue vocational options, especially to ensure that they develop the general skills needed to be resilient and adaptable to a changing labour market.
Invest in education. While delivering high-quality education is a complex process, adequate funding is a necessary starting point. Government spending on education has fallen significantly over the last decade, especially on further education, and funding for the COVID recovery package in England is likely to fall short of the scale of the challenge. There is increasingly clear evidence that spending really does matter for pupil achievement – though, of course, resources need to be used well to be most effective.
Ensure people are making informed decisions. The education system is full of choices – which school to attend, what subjects to study, which post-compulsory route to take, whether to return for adult education later in life. There are many factors that go into decision-making that cannot be directly influenced by education policy and there is not just one route to success. But we should ensure that people have clear, easy-to-access information about the routes available to them, so that they can make the best decisions for their own circumstances.
Education is not just about test scores. In our view, the overall role of an education system is to support children, young people and adults to develop their own talents and to reach their full potential. Imparting knowledge and skills is a fundamental part of this. But other outcomes from the education system matter too – children’s broader ‘soft skills’, their mental health and resilience, their physical health, their social and emotional development, and their ability to successfully navigate the challenges they will face in the workforce and in their lives are all important and deserve to be considered alongside knowledge and skills when making major decisions about the education system.
Educational inequalities cannot be solved by the education system alone. Family background has an extraordinarily strong influence on educational attainment. Educational inequalities are a consequence as well as a cause of wider economic inequality. In an economy where the financial returns to ‘making it’ in education are so high, there will always be pressure on parents to invest in helping their children to succeed. And in a society where the resources parents have to invest are so different, the education system will never be able to fully compensate for the vastly different experiences children have outside the school gates.
Cite this as:
Farquharson, C., McNally, S., Tahir, I., (2022), ‘Education Inequalities’, IFS Deaton Review of Inequalities, https://ifs.org.uk/inequality/chapter/education-inequalities/