For decades, the social contract imposed on Britain’s youth was hardwired into the curriculum, declaring that educational attainment was the only true guarantor of economic prosperity. Degree certificates were deemed a Wonka-esque golden ticket to a life of financial security. A student loan was framed not as a burden, but as a modest price of admission into a post-university employment hubbub. The reality, though, has been quite different. Over 700,000 university graduates are currently jobless and claiming state benefits, according to the latest report from the Centre for Social Justice. This is not a short-term labour market anomaly. It is a structural misalignment between the British education system and the economy.

Academic institutions have embarked on a relentless drive to fill seats. Cloaked in the language of social mobility and pitched as widening access to coveted graduate opportunities, the sector has abandoned academic selectivity, leading to an erosion of standards. Students are forced to sit pointless exams with inflated grades, for the express purpose of accessing equally useless university courses. Grade inflation has run rampant, to the point that a student who would have received a failing grade in 1988 is now estimated to be awarded between a B and a C in a modern exam. This malleability of results has made it increasingly difficult to identify those students who should actually pursue further educational opportunities.

Yet, at the same time, businesses are increasingly selective. Rapidly capitalising on a market saturated with “overqualified” labour, they can offer reduced graduate salary premiums. In many sectors, the demand for graduate-level tasks has not kept pace with this influx and has actually contracted. Large corporate employers, facing uncertainty and squeezed margins, have cut back on their university recruitment, favouring experienced technical specialists who can add value immediately, leaving the entry-level generalist market in a state of atrophy.

This dynamic has been supercharged by the voluntary sacrifice of graduate prospects on the altar of globalisation. British white-collar workers are increasingly treated as interchangeable cogs in an international machine, no longer protected from the forces of outsourcing and offshoring. Large employers are aggressively cutting entry-level roles in the UK while simultaneously expanding their capabilities in lower-cost jurisdictions. A UK graduate is now in direct price competition with a graduate in South Asia, who often possesses functionally identical qualifications but commands a fraction of the salary. This has also driven a near-endless requirement for upskilling. An undergraduate degree has ceased to be an effective differentiator, creating a treadmill of credentialism where the goalposts are forever shifting away from this baseline qualification.

Thus, the welfare state has had to compensate for the job market’s inability to handle this annual influx of graduate talent, driving ever-increasing numbers of students down a path from classroom to job centre. Britain has inadvertently created a tacit, youth-focused Universal Basic Income scheme that supports an ever-growing cohort of overqualified and underutilised graduates. In doing so, it legitimises the provision of a subsistence wage to a generation trapped in a purgatory between the classroom and a job market that has rejected them.

To fix this, Labour needs to address a foolish education policy that has allowed universities to sell courses based on what 18-year-olds think is interesting, rather than what employers actually need. Until the UK abandons the fetishisation of degrees and realigns its education system with the cold realities of the labour market, graduate unemployment will undoubtedly rise. And, in turn, the welfare state will remain the primary destination for much of the nation’s youth.