What’s in the 2023 spring budget for higher education?

Everything you need to know from Jeremy Hunt's big day

News, analysis and explanation of higher education issues from our leading team of wonks

That’s the 2023 Budget over, bar the ostentatious welcoming of policy proposals.

From a higher education perspective, most of the attention – and most of the positivity – has been on the long-trailed establishment of 12 “investment zones”.

There are targeted local investments designed to foster “innovation clusters” in one of five thematic areas: digital technologies, life sciences, creative industries, green industries, advanced manufacturing. Tweaked and reconfigured, these represent one of the few announcements from Kwasi Kwarteng’s budget proposals to survive. These are, however, only five year deals.

With confirmation that universities and research centres will be required partners for local authorities, the sector will benefit from:

  • A share of £35m of flexible spend, split 40:60 between recurrent and capital spending
  • The opportunity to benefit from tax incentives, which can cover up to 600 hectares across up to 3 sites, lasting for 5 years (though for smaller sites these can be exchange for a greater amount of spend)
  • The possibility of a share in 100 per cent of the business rates growth in designated sites above an agreed baseline for 25 years
  • Plus support guidance from central government on core policies such as export support, planning and infrastructure

There will be a total of 12 investment zones – based in current or planned mayoral combined local authorities in the west midlands, greater Manchester, the north east, south Yorkshire, west Yorkshire, the east midlands, Teesside, Liverpool, and at least one in each of Scotland, Wales, and Northern Ireland. If you are thinking that many of these places already have freeports and that it is maybe a bit odd to pile other initiatives on top of them, so are we.

This policy was a big ask from universities and mission groups – and in implementation it gives universities a direct role in local innovation and skills delivery. But it is arguably dwarfed by bigger news for local authorities, who will take on economic development roles from the local enterprise partnerships set up by this government in 2010.

In other areas of the budget university spin outs will likely be among those to benefit from an enhanced research and development tax credit. This applies to small and medium-sized businesses that devote more than 40 per cent of their expenditure to research and development. For medically focused spin-outs, focused deregulation around innovative medicines and medical technology should make it easier to bring products to market – supported by an additional £10m to MHRA. There’s also incentives and other support for research into artificial intelligence and quantum technology.

The skills section of the budget focused primarily on older adults returning to work – the “returnership” (basically a later-life apprenticeship) joins the “bootcamps” and the LLE as a means to coax the over 50s back to work, but there was precious little detail to be had.

The one direct investment in the higher education sector was £40m for widening participation in Northern Ireland – as yet there are no details about how this will work.

The Office for Budgetary Responsibility has slightly scaled back some of the terrifying assumptions from November – interest rates are projected to fall sharply this year, as are energy prices (though only from the summer, so the price cap is extended for three months). This is qualified good news for the higher education sector – lower interest rates and energy costs would ease the squeeze on resources caused by the decision to freeze fees – but as with all projections it is a hostage to fortune.

For students, there was (naturally) no direct help. That said the widely trailed retention of the energy price cap will help those in student houses where the bills are passed through, and the announcement on the pricing of energy through pre-payment meters (bringing it into line with prices paid by those on Direct Debit) will help too.

Charities are to get a £100m support fund and it’s not beyond the realm of possibility that SUs or even universities might be able to apply to pass on some help, although detail isn’t known yet.

The duty on draught products in pubs/bars is to be reduced, which will help out the few SU bars that are left – although behind those bars the rumoured announcement on international students and the lifting of work limits didn’t, in the end, make it into Hunt’s review on filling the 1m vacancies in the economy – so those that need the money will remain in the grey economy.

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