Universities continue to defy gravity

It’s a question worth pondering: is there a publicly funded sector in the country that is more effective at lobbying than universities? 

Some observers might suggest the NHS, or indeed schools, both of which enjoy huge budgets and commensurate levels of political support. But pound for pound, in both senses of the word, universities punch far above their weight in the endless battle for public funding and political attention. 

This is, to be fair, a reflection of the extraordinarily strong universities which the UK has, which compete globally for students, staff, and research. There is also a powerful argument, which this Treasury and Chancellor are particularly receptive to: that university investment helps drive productivity, growth, skills, and local development. And George Osborne has proven to be an immensely valuable ally in this argument. 

The 2011 settlement saw a big switch in to fee loans, and therefore took much of the HE budget out of the deficit, and protected universities from the wider public sector cuts taking place at the time. The sector did well from this and the overall cash picture for the sector since has been positive, particularly because applications held up and increased from some quarters. So good was the outcome of the last spending period, universities were extremely nervous that this time they wouldn’t get so lucky, and the coming cuts would finally start to eat in to HE cash.

But so far it hasn’t come to pass. In the Conservatives’ first Budget for 20 years this week, universities were recipients of largesse as part of an overall package that also delivered a tax rise of £47bn by the end of the Parliament. Specifically, those universities who pass a new TEF benchmark from 2017-2018* will be allowed to increase their fees by inflation (as an aside, I look forward to any institutions who wish to make a headstart and reduce their fees next year to £8,991 in line with the latest inflation numbers).

Index-lining fees is something that universities have been noisy in calling for. Yet their case, in truth, looked less than strong – inflation is at very low levels and not predicted to rise significantly, and in any case, a sector asked to find perhaps 2% efficiencies a year to cope with inflation, doesn’t present the biggest challenge in public services at the present time.

When you add in the fact that university income is at record levels, and discretionary reserves (after accounting for pension liabilities) sit at just under 50% of the entire annual income of the sector (albeit not evenly distributed), it would have been difficult for any impartial observer to conclude that the case for an inflationary fee increase had become unanswerable at this stage. 

The government has made a series of further changes to offset the overall growing costs of HE to the public purse; largely by proposing to freeze the repayment threshold for student loans at £21,000 and also through the much predicted switch of maintenance support from grants to loans.

Yet the impact of such moves on numbers, access or completion, if there are any, will fall upon students and graduates, not institutions. The full effects of which we will not understand for some time.

As things stand therefore, universities can look forward with confidence to further increases in student numbers from this September as the number controls lift, and further increases in fee income from September 2017, assuming they can pass the TEF threshold – which has yet to be fully developed.

In a Budget which set out continued cuts across much of the public sector, it seems higher education continues to defy political and economic gravity. 

* As others have noted, this places a real premium on what is defined as ‘pass mark’ for qualifying for the ability to raise fees, and whether it will be restricted to real excellence. In other words, will it be a ‘TEF’ bar? Ahem.  

post list Latest articles

Leave a Reply