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Proposals to cut HE budgets are a recipe for disaster

Responding to the Policy Exchange report published today, Karmjit Kaur of UUK argues that the proposals to cut HE in favour of technical education would damage the economy and row back much of the progress made by universities in recent years.
This article is more than 6 years old

Karmjit Kaur is Head of Political Affairs at Universities UK.

Making cuts of up to half a billion pounds to higher education would not only be a false economy, it would endanger the world leading system we have today.

The report released today by Policy Exchange builds on a false and unhelpful dichotomy between higher and further education, encouraging us to battle it out for precious resources. The suggestion that universities are sitting on large cash reserves also misunderstands how universities are funded – and how they spend and invest for the future.

There is little doubt that the UK economy will need more technical and professional skills, but, as the report itself acknowledges, the higher education sector has a role to play in delivering these skills.

The relationship between further and higher education and academic and vocational simply isn’t that clear cut. Around 200 further education colleges are delivering higher education, often in partnership with their local university, whilst over 50 universities are sponsoring the successful university technical colleges, supporting the development of technical skills and encouraging the progression into higher education.

Many universities already offer a wide range of vocationally focused programmes in partnership with local business. For example the University of Sheffield’s AMRC Training Centre provides training in the practical and academic skills that manufacturing companies need to compete globally. The AMRC offers apprenticeships alongside opportunities for fully-funded progression to degree level education and beyond, including doctorates and MBA level.

Add to this the leading role that universities are playing in delivering the new degree apprenticeships as well as universities collaborating with further education on other higher level apprenticeships. This demonstrates that universities not only have a major role in meeting the skills requirements of today’s economy, but that they are doing this in partnership with further education.

Businesses have been very positive about graduates meeting the technical skills that they require. In the most recent CBI/Pearson survey of education and skills, employers expressed an 88% satisfaction rate with the technical skills of graduates compared to 69% for school and college leavers. The demand for graduates overall is the highest it has been since 2007 and the sort of jobs that require graduates are likely to increase in the future.

When it comes to funding of the higher education sector, it is misleading to suggest that universities are sat on large cash reserves. Universities are indeed required to maintain minimum surpluses. But without these, universities would be unable to deliver the scale of investment required to meet student demands, build capacity and ensure that the sector can remain internationally competitive. Universities also need capital investment to invest in world-class facilities and to leverage additional funding from external sources. Further, if you exclude this year’s one-off contribution to capital for STEM subjects, capital funding for universities has in fact dropped by 82.5% since 2009-10. Universities are planning to spend £15 billion over the next four years on buildings and facilities; this makes their current reserves of £12.3 billion already look inadequate.

Despite overall levels of funding at a sector level being maintained, institutions are facing some significant funding challenges. The increase in the fee cap in England to £9,000 was largely a replacement for cuts in direct government funding, and does not fully cover the cost of high-cost subjects such as science and engineering. The teaching grant from HEFCE has declined by 66% since 2009-10 and £700mn of student fee income is already targeted on access and widening opportunities. Universities also spend a proportion of the fees in supporting widening participation and providing financial support to students, something that they are also required to do by government. Further, ten per cent of the current student opportunity funding, which supports widening access, improving retention, supporting students with disabilities and providing bursaries and hardship funds goes directly to further education institutions. 

The UK has one of the best higher education systems in the world. This system complements a mixed economy of provision with universities delivering substantial vocational education, further education delivering substantial higher education and significant collaboration between the two. Artificial dividing lines don’t help deliver the skills and education that the UK needs. The challenge of improving the skills of the UK workforce requires universities, colleges and business to work together.

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