David Kernohan is an Associate Editor of Wonkhe

The Scottish Funding Council’s review of Coherent Provision and Stability hangs over the future shape, funding, and regulation of Scotland’s higher education sector.

Otherwise, higher education feels like it has gone straight on from 2014 – with few, if any rocks melting in the sun despite radical changes in England and Wales. The latest SFC allocation of funding sees an eight per cent uplift against last year, including £14m to support an expansion in places to cover the impact of a likely inflation in Higher grades alongside a general uplift in teaching grants.

Here’s how it looks by provider:

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Walk 500 miles

The comparatively impressive support (£75m to support research, £10m for estates maintenance, £5m for student support, £11m on hardship…) offered to providers in Scotland by their regulator is detailed in a report from the House of Commons Scottish Affairs Committee. This group of MPs set out on 5 August 2020 to examine the future funding of Scotland’s universities (with a particular emphasis on fees charged to non-EU overseas students, and the impact of Whitehall policymaking on the Scottish sector.

The Scottish Government was clear that it would “make every effort to make sure that no university goes insolvent as a result of the pandemic”, and it was this (through the generosity and level of additional funding surely helped) that set it apart from Westminster and Whitehall. As things turned out, the decline in international student admissions was not as deep as had initially been feared, the fact that Scotland had a backstop whereas England had a poorly-considered “restructuring regime” (the latter never used primarily because of how unattractive an option it was) injected a much-needed breathing space into the challenges of the pandemic.

Dignity?

This generosity and good feeling does not disguise the steady decline in the value of fee payments to providers with respect to home students. The fee amount paid by the Scottish Government currently sits at about £1,800 per undergraduate student per academic year, significantly below the fee income enjoyed by providers in other parts of the UK – and although grant levels (variable by provider, subject, and other factors) are correspondingly higher, income per student is much lower than in England or Wales. For this reason, higher education in Scotland has seen much greater levels of cross-subsidy from international student fees, and experiences what has been described as an unofficial soft cap on home student numbers.

The bulk of teaching costs are covered by a block SFC grant, covering 18.3 per cent of sector income – though the proportion of income by provider is variable. But it is reckoned that this only supports 90 per cent of the true costs of teaching, again variable by provider and eaten away over time by a series of below-inflation increases. As James Conroy at the University of Glasgow put it:

It is unsustainable to have fee levels where they are at the moment. To put it in perspective, in a previous incarnation I was dean of the faculty of education, where we got at the time £8,400 roughly per capita. It is £2,000 less today, and that is something like 12 years later. The present levels of funding are unsustainable to maintain a world-class university system

Six of Scotland’s universities have reported deficits every year since 2014-15, according to published data and confirmed by Audit Scotland, with most modern and chartered universities seeing a financial detriment during that period. Pension scheme costs play a significant role too, as did major estates maintenance requirements. Incredibly:

In July 2018, universities estimated that the total value of outstanding estate maintenance requirements was equivalent to 25 per cent of annual income across the sector.

That £10m will surely have helped a little, but maintenance costs do not disappear over time. This is an issue that will one day need to be addressed at some significant cost.

April skies

Scottish universities also bested their English counterparts in seeing direct government support for refunding fees for “university-owned accommodation” during the long period that students were not able to use it. Providers did not generally take up the UK government CBILS and CLBILS offers – not least because eligibility rules were so unclear. There was a lot more interest in furlough, though again confusion reigned and providers took divergent approaches.

The Holyrood allocations and assurances were of more direct help, and the report notes that:

It is quite possible that without that support, some institutions may not have survived.

Another factor was the better than expected income from international students – paying on average £20,000 each academic year and forming a quarter of all students in the Scottish system that provides 57 per cent of all tuition fee income. Ministers and MPs were clear that this was not a sustainable model, and that “the balance needs to be right” to ensure that capacity that could be used for the benefit of home students did not have to be “sold to the highest bidder” to sustain the system.

An external stress on a system is always going to expose problems within that system – and arguably the potential loss of this income stream should not have been as existential a risk as it was in 2020. Though numbers seem to be holding up, the SFC was examining this issue even before the start of the pandemic.

In a big country

Immigration rules, of course, are not devolved – both a perceived and actual hardening of rules around international students from the Home Office have potentially harmed recruitment and international perception. Scotland remains an attractive destination for international students, and takes pains to present a genuinely open and welcoming offer.

Scottish interests are not at the forefront of home office thinking, though then Higher Education Minister in Holyrood Richard Lochhead claimed some successes in working with the UK government on issues relating to student visas. The committee noted a failure to respond to its predecessor’s 2018 report on “Immigration and Scotland” as indicative of a lack of interest in this area.

Erasmus+ eligibility would be another example of this perceived English insularity as a detriment to Scotland’s ambitions – the Scottish government were particularly disappointed that the UK would not be participating given earlier assurances to the contrary, and it emerged during the hearings that Scotland would not be eligible to participate in its own right. The Royal Society of Edinburgh told the committee that:

The UK leaving the Erasmus+ programme is regrettable and will adversely affect both students and staff through the loss of two-way mobility.

And Lochhead suspected that financial considerations were not the only ones in play:

I am suspicious that the UK Government felt the Erasmus scheme was symbolic of close ties with Europe. Therefore, Brexit is Brexit, and they unfortunately committed this vandalism by removing us from Erasmus to go for the alternative global scheme because it was too European.

The committee recommended visa simplification and a cut in fees charged to applicants to aid both student and staff recruitment. On Erasmus, it was felt that the new Turing scheme should be expanded to allow for a full two-way exchange programme. Moreover, it looked to the UK government to provide a positive narrative in support of EU staff working in Scottish Universities, addressing an already apparent trend for such staff to seek to return home or work elsewhere.

Que sera sera?

Scotland has ridden a regulatory and funding system more common in the early years of the century for perhaps as long as it can. The cracks are beginning to show, and there is growing concern over the key role of international student fees in sustaining the sector. Though Scottish universities remain attractive and globally competitive far and above their comparative wealth and catchment, there’s much work to be done.

The review of Coherent Provision and Stability will be a key component in what comes next. SFC, the government, and indeed Scotland as a nation is immensely proud of its higher education sector, as vouchsafed by the level and nature of support offered during the Covid-19 pandemic – but the future of it will clearly depend on collaboration within Scotland, between sectors and within regions. There are radical ideas on the table that are not for the squeamish (student number reductions, course consolidation) – but all eyes now are on the SFC.

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