UK Universities, Sustainable funding needed to realise ambition for more graduates

Sustainable funding needed to realise ambition for more graduates 

Type: 

• Press Releases

Subject/s:

• Funding and the economy - general

Date:
7 Nov 2013

Universities UK has today published a report looking at the funding challenges facing universities.

Focusing on England in particular, the report examines the challenges for universities and government in funding any expansion of student numbers, given the backdrop of current funding restraints. Drawing on research by the Institute for Fiscal Studies [IFS], the report calls for consideration of funding options that are sustainable and ensure that higher education remains accessible to all applicants.

Key findings and themes in today’s report include:

Tuition fees alone cannot provide for future expansion.

• The increase in the fee cap in England to £9,000 was largely a replacement for cuts in direct government funding. Not all universities have experienced an increase in income or generated greater surpluses from the increase in fees.

Additional capital expenditure is critical to the student experience.

• Universities need capital investment to maintain a quality student experience, and to remain internationally competitive. The universities that have experienced an increase in their income, or generated larger surpluses, have invested back into capital expenditure, compensating for significant cuts in grants from government.
• Even if student number controls were lifted to support growth, it is far from certain that universities could fund additional capital infrastructure to maintain a quality student experience.
  

Expansion would have a significant impact on public finances.

• The IFS modelled a number of public finance scenarios and examined the potential implications for the budget of the Department for Business, Innovation and Skills (BIS). Their analysis showed that BIS may have to make cuts of between 15% and 30% to non-investment spending between 2014-15 and 2017-18.
• If these cuts to the BIS budget were shared equally across all areas of BIS spending, the implied change in the number of students enrolled in higher education in England would range between a fall of 4% per year or a rise of 5% per year, assuming that teaching grants and student maintenance grants remain unchanged in cash terms.

Increased student numbers would have implications for the long-term sustainability of the student loans system.

• Changes could be made to reduce the Resource Accounting and Budgeting [RAB] charge but this would not make any extra cash available in the present to fund an increase in student numbers.

The report also looks at funding challenges faced by other countries with tuition fee systems and how private finance could fund expansion. The report examines the funding systems of the United States, South Korea and Hungary, which each include elements of private finance.  It finds that these private sources are not without their problems and in particular have the potential to expose students to higher levels of debt and instability.

Professor Sir Christopher Snowden, President of Universities UK, said:
“We hear a lot about there being too many students and graduates in the UK. The reality is that the UK needs more graduates in the future, not fewer. We know, for instance, that employers are demanding increasing numbers of highly-skilled individuals to fill their vacancies. And we also know that higher education is life-changing, giving individuals the opportunity to enhance their own education and career prospects.

“However, higher education is an expensive undertaking. The rise in tuition fees in England did not give all universities extra money – it replaced substantial cuts in direct government funding.  We need to think very carefully about how this demand for more graduates is paid for. But however any expansion is funded, we must be able to maintain the standards that make the UK’s higher education system world-class and any changes must be true to the Robbins principle. That is, regardless of your background, if you have the qualifications and the desire, you can go to university. 

“There will be no easy answers to how expansion is funded. This report aims to set out the challenges and get the debate underway.”

Notes

1. The funding challenge for universities is available on Universities UK’s website.
2.  This report lays the groundwork for a follow-up report from Universities UK which will look at changes that could be made to the system and how they may address the challenges outlined here.
3. The report considers the need for graduates throughout the UK. But in terms of future funding, the main focus is on English higher education institutions, due to the divergence in funding policies across the devolved administrations. Universities UK’s report The funding environment for universities: an assessment (May 2013) outlined the differing policies and arrangements operating across England, Scotland, Wales and Northern Ireland.
4. The report draws on research by the Institute for Fiscal Studies, PricewaterhouseCoopers and Demos.
5. The Institute of Fiscal Studies is publishing its report, funded by Universities UK, The Outlook for Higher Education Spending by the Department for Business, Innovation and Skills on its website on Thursday 7 November 2013.
6. Professor Sir Christopher Snowden, President of Universities UK, gave an interview last week (31 October 2013) to the Times Higher Education discussing the themes covered in this report.
7. David Willetts MP, Minister for Universities and Science, published a pamphlet, Robbins Revisited, with the Social Market Foundation (21 October 2013), which explored the need to expand student numbers and raise the quality of teaching.
8. The Robbins Committee was appointed in 1961 to evaluate the need for expansion and develop a coherent plan for universities. The Robbins Committee's report advanced the principle that higher education courses should be available to all those who are qualified and wished to study.
9. The UK Commission for Employment and Skills report Working Futures 2010-2020 (August 2012) forecast  a continued trend of employment growth in higher skilled, white collar occupations, including managers, professionals and associate professional roles.  The study estimates 2 million additional jobs in these occupations by 2020.  This report follows on from an earlier study from UKCES Towards Ambition 2020: skills, jobs, growth