There’s no such thing as a free lunch, or a cost-neutral HE reform

When James Withers was asked to review Scotland’s skills landscape, this was under the proviso that recommendations would not require a big new injection of funding. He came up with changes to skills oversight and the operation of funding bodies that would promote better cohesion and strategic oversight.

Skills Development Scotland (SDS), which under the Scottish government’s planned reforms would see funding powers transferred to the Scottish Funding Council (SFC), does not see this as a cost-neutral approach. Its evidence to the education committee (pages 43 to 57) says that the government’s estimations – contained in the financial memorandum to the Tertiary Education and Training Bill that has followed from the Withers review – “significantly underrepresents the cost of this transfer of functions.”

Speaking at the committee today, Skills Development Scotland chief executive Damien Yeates said the skills quango is estimating the costs involved in moving all the relevant parts into SFC would be more like £30m – more than a dozen times he said the government was “spending £30m to move £100m” of apprenticeship funding.

The two other attendees at committee – SFC COO Martin Boyle and SAAS chief executive Catherine Topley – did not want to get too involved in this particular argument. Boyle noted that it was also a question of how funding is directed, not just the total amount, and wouldn’t be drawn on how much SFC thought the transfer of responsibilities and personnel would actually cost.

SDS’ evidence tried to link current higher education funding woes to a need to rethink the bill:

We are concerned that current plans for reform appear limited to narrow structural change. A focus on moving just 3% of the skills budget risks tying up the funding system for years in a costly, complex administrative process, while not addressing the longer-term future of our high-value institutions.

SDS had also previously proposed an “alternative approach to reform” (which the government has already opted against) which would have seen SFC become a “dedicated higher education funding agency, empowered with the capability and capacity to address the systemic challenges and opportunities facing the sector.”

It’s odd to see an arm’s length body fighting a rearguard action against a policy which has already been decided, but it will be interesting to see how much buy-in the arguments get from the committee, as scrutiny continues over the next few months.

As it stands, the committee didn’t seem too convinced by SDS’ line of thinking – the Scottish Lib Dems’ Willie Rennie said he had been told that SDS was “difficult” to work with, and the committee was – rightly – gobsmacked by Yeates’ claim that the Withers review was just an “opinion piece”.

MSPs did seem concerned that moving total responsibility for apprenticeships over to SFC might see them deprioritised. And the overall question of the cost – and the opportunity cost – of the funding body reforms looks set to remain a concern.