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Mind the university funding gap

Douglas Fraser | 21:13 UK time, Thursday, 7 April 2011

Education is anything but free. It's very expensive. But as it's long been said, just try costing the alternative.

The Scottish government is putting around £926m into universities this year, down by more than 6%.

There's a one-year promise from the universities to keep student numbers steady for less money, but after that, principals say they need to be sure there's a secure stream of funding.

This has emerged as perhaps the most significant dispute of the election campaign so far, yet it's mainly between university principals and the political consensus, with three parties are in agreement.

Labour, Lib Dem and the SNP are all promising tuition will be kept free for students, without any graduate contribution either.

Conservatives say that's not realistic, and that a graduate contribution of some sort will be required.

Inferior university

So here's how the numbers stack up.

The gap identified in Scottish university and other higher education funding has been calculated, by an expert group of government and academics, which says it's at least £97m, and perhaps far more. It depends how much English universities charge their students.

At present, English universities can charge £3,290. They are being allowed, very controversially, to increase those charges to between £6,000 and £9,000.

In Whitehall, the government hoped to keep to the lower end of that spectrum.

But no university wants to be seen as an inferior option. So with 30 universities now declaring their intention, most want to go for the maximum, at least for some courses, and not just the most prestigious institutions.

If English fees were set at £7,000, without inflation, the knock-on impact of a 'gap' in Scottish funding would be £97m.

But set them at £7,500 on average, and allow for inflation, and the expert group see the Scottish funding gap soar to £202m.

That now looks like it could be a modest figure, if English fee ambitions are to be realised.

Yet Labour, Lib Dem and SNP are all assuming no more of a gap than £155m - the reckoning if English fees averaged £7,500, without allowing for inflation.

Antagonised neighbours

Labour and SNP set out uncannily similar figures. It assumes that students from the rest of the UK could have their fees put up by £62m.

This isn't just as a cash cow, almost designed to antagonise the southern neighbours: it's also to discourage a mass flight north of the border to save money.

It then assumes they would be allowed to charge students from the other 26 nations in the EU a "service charge" totalling £20m.

That's not a "fee", as a fee would not be allowed under European law, if local students are not charged it.

But it assumes Scotland would be allowed to do the same as Ireland, and that's far from guaranteed.

Such charges tend to be allowed only if they are already established, and are much tougher to introduce.

Then add in £26m in efficiency savings, with parties saying which universities have already signed up, and expect the vice-chancellors to make £7m out of better commercialising their assets and research, and by tapping alumni for philanthropic donations.

There's also talk across the party divide about efficiencies to be had from better 'articulation' between schools, colleges and universities.

That means pressure to cut honours degree courses from four to three years, challenging a long-defended feature of Scottish education.

Labour says those figures leave only £38m to be found if it's to fill the £155m gap.

The SNP has yet to publish its manifesto, but it's likely to be saying the same thing, in line with the statement made to the Scottish Parliament by Education Secretary Mike Russell.

Gradual exodus

The Lib Dems? There's little detail to their figures. What there is fails to identify any money that's clearly earmarked for the cost of student tuition, but I'm told their thinking is very similar to Labour and SNP.

That's along with a large share for universities of £250m in science funding, coming from the Lib Dems' manifesto proposal to sell off debt in Scottish Water, handing it a £1.5bn windfall. Access to such a funding stream is, at least, questionable.

The Conservative plans are to levy fees, payable after graduation and dependent on an income threshold. They would average £3,600 per year, and there would be a £4,000 cap.

Funnelling some of the proceeds into a £55m bursary fund as a means of limiting the damage to recruitment of students from lower income students, that is intended to fill the £202m gap.

The Tory claim is that if that gap is not fully filled, there will be 13,000 fewer places. Or it could be that class sizes increase and the student experience declines.

An alternative to that is a much slower impact if the gap isn't closed, and if there's underfunding of universities: the gradual exodus of the best quality teachers and lecturers for campuses which offer them the best facilities, the best research teams and the best pay deals.

Fair access

But there's a complication in all this.

The UK government has noted the rush by universities to charge the maximum possible.

They might have seen it coming if they'd watched the same pattern when the £3,000 fee was first introduced under the Labour government.

Business Secretary Vince Cable has warned that there could be unwelcome consequences for those charging the full whack; fewer places if they fail to fill their quotas, and a refusal by the new Office of Fair Access to allow high fees if there's a high drop-out rate.

He was stressing that there's a limited amount of money in government coffers.

So the cost of providing loans to students to pay an annual £9,000 up-front is more than ministers had reckoned on, and so it will have to come from other areas of government higher education funding.

If that rule is applied strictly, it may change the shape of the Scottish university funding gap, and quite significantly.

Graduate pay

Two other figures that might help illuminate the issue.

The latest Office of National Statistics figures, issued this week, show that graduates can expect to earn, on average, £12,000 more than non-graduates for full-time work - that's a £30,000 salary compared with £18,000.

And another is how popular these policies might be.

The most recent survey of Scottish social attitudes is strongly supportive of some of the distinctive policies pursued at Holyrood, such as free personal care of the elderly.

But on tuition fees, it's far from clear that Scots take a different line from the English.

When asked, in the most recent social attitudes survey if graduates should pay something towards the cost of tuition, 63% of Scots agreed. In England, 66% did so.

Turn that on its head, and ask how many think tuition should be free - in England, 25% think so, and 30% of Scots. That makes free tuition look like a political consensus that's not shared with public opinion.


  • Comment number 1.

    Please, please, please can some political party just do everyone a favour and just cut the student numbers!

    With 18% graduate unemployment Scotland DOES NOT NEED more graduates.

  • Comment number 2.

    The_Ex_Engineer - very true. The last governments target of getting 50% of young people to university just devalues a degree whilst costing the taxpayer a fortune. Not to mention the high drop out rates and the large number of indebted graduates who can't find a job in their chosen field.

  • Comment number 3.

    There is a major misunderstanding here of the Irish student registration charge - this is payable by Irish students as much as by EU ones. Any attempt to levy it on non-UK EU students only, no matter what it is supposed to cover, would definitely violate EU law.


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