No new age for higher education funding in Budget 2021

Did Rishi Sunak's second budget of 2021 leave you wanting more detail? Us too. David Kernohan takes a look at what is there for higher education and what is expected in "the next few weeks"

David Kernohan is an Associate Editor of Wonkhe

Just like 2010, 2021 has been a year of two budgets.

On both occasions the unusual multiple fiscal event has been linked to a global crisis, and each time an eagerly awaited response to a report dealing with funding for higher education did not emerge (though, to be strictly fair, there were 20,000 extra funded university places in the first 2010 budget).

There was a lot of noise about a “skills revolution”, but everything under that banner had been previously announced. The total funding increase over this parliament of 26 per cent in real terms covers an expansion of Skills Bootcamp places and free level 3 qualifications, and an adult numeracy programme trailed over the weekend.

Another delay

We’re assured that a response to Augar will emerge in the coming weeks – we’d tentatively hope that the Lifelong Loan Entitlement consultation would emerge around a similar time. The importance here is that the long term policy direction is an expansion of the current student fee loan scheme to other parts of the post-compulsory sector and allowing for flexibility – a cut to the higher education fee level, counterintuitively, affects the future of FE and skills funding too.

Likewise, changes to the repayment threshold makes earnings-linked repayments less attractive to those contemplating vocationally-orientated qualifications, and changes to eligibility based on previous academic attainment excludes precisely the kind of mid-career upskilling that the LLE is designed to achieve.

With that in mind, the long delayed conclusion of the DfE’s post-18 review of education and funding (which included the long delayed Augar report as a single, interim, component) is rather boxed in by stated government policy. There’s very little that can be done to save money on higher education spending that does not have an impact on the levelling up agenda, and as we approach another election the impact on aspiration is also a consideration.

Pushing the envelope

The Office for Budgetary Responsibility projection for spending on student loans is a straight line – baking in a gradual increase linked only to the number of 18 year olds likely to be entering university. There appears to have been no modelling of expected or new policy changes, and no modelling of shifts in the costs of borrowing. So whatever changes come with future announcements will be in spite of, not because of the detail of the spending review released today.

That means we are looking at trade-offs. With the funding envelope set (for DfE as a whole as well as on student loans), we face inflationary and demographic pressures – including the way in which higher education seems to become more popular every year – meaning that measures to limit higher education may be politically unwise but financially necessary. The three Augar measures are already on the table – numbers caps (that rumour of a limit on creative arts places for one) could also be in the mix.

Innovation

In comparison, the research leg of sector spending is looking healthier than expected. The demise of the £22bn on research and development spending by 2024-25 had been widely predicted – but the £20bn promised by that year (including a massive 3.3bn rise in 2023-24) still represents a healthy increase, with the remainder to appear by 2026-27 – all sums here exclusive of R&D tax reliefs offered to industry, and includes the promised costs of Horizon Europe affiliation should we ever managed to get involved.

What the chancellor calls “core research” does well, but the big winner is Innovate UK (up £0.4bn by 2024-25). This is clearly an attempt (along with changes to R&D tax credits to include data and cloud computing) to unlock commercial spending on innovation – an area where the UK still lags behind competitors.

And, as expected, the Turing scheme continues for another year at the actually-quite-a-lot-less-than-Erasmus cost of £110m.

I don’t think any of us would have predicted a budget which saw Rishi Sunak talk more about prosecco than about higher education policy. But the whole thing was heavy on sparkle and light on substance.

One response to “No new age for higher education funding in Budget 2021

  1. Not sure about your comments on 2010. There were three big fiscal events in that year, including two Budgets (as you note). There was a Labour Budget in March, a Coalition Budget in June and a Spending Review in October. You say in relation to the two Budgets that ‘an eagerly awaited response to a report dealing with funding for higher education did not emerge’. But the reason neither of the two Budgets included a response to Browne was that Browne had not concluded his work, which was not published until the autumn. The October 2010 Spending Review did, on the other hand, respond to Browne.

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