Why is living costs inflation for Chevening scholars much higher than it is for home domiciled students?

When the Westminster government annually uprates the amounts in maintenance support that students from England can borrow, it uses a measure of inflation.

Jim is an Associate Editor at Wonkhe

That’s because – in its own words – sustained increases in prices and the cost of living reduce the real value of money, in terms of the quantity of goods and services that a given amount of money will buy:

…increasing the maximum level of student support available across these different streams of funding in line with forecast inflation aims to ensure that students do not suffer a real reduction in their income.

The problem in recent years is that the measure chosen – an OBR projection of inflation (RPIX, which is the discredited RPI plus housing costs) for the third quarter of the academic year in which the increase will apply – has been convemniently and consistently wrong, and consistently lower that the reality.

That means, for example, that unless something major changes, we are heading towards a 0.9 per cent uplift on the max maintenance loan in England next year – given that’s the current OBR RPIX projection for Q1 2025.

(The other problem is that the threshold over which the government starts to assume a parental contribution to that maximum hasn’t changed since 2007, but that’s several other blogs for other days.)

Of course the headline measures of inflation often don’t capture the basket of goods that students actually buy, there are different measures that can be used, there are different snapshots or projections to use, and there are plenty of other arms of the state that apply inflationary increases for those on low-incomes that vary from the DfE undergraduate calculation.

But on the basis that, for example, UKRI is independent of government over stipends or the DWP isn’t really focussed on students at all, the question is whether any other bit of government itself uses a different measure of inflation for students. And I’ve found one.

The Chevening Scholarship Programme is a UK government (Foreign, Commonwealth and Development Office) initiative aimed at cultivating leaders, decision-makers, and future influencers from around the world. It’s basically a ticket for high-achieving professionals to pursue postgraduate studies, usually a one-year master’s degree, at UK universities.

Scholarships – often funded in partnership – cover tuition fees, travel costs and a stipend living allowance. Getting hold of the actual figures for that stipend has been exceptionally difficult – they’re not published routinely anywhere, but now thanks to the magic of FOI, I’ve been able to work out how they compare to home domiciled living costs support and how inflation applies.

If we exclude, for a moment, bits in the rates for partners, arrival, children and the allowance for “warm clothes” (!), the headline (non-London) rate is £1,180 a month – and students get at least 12 months, so £14,160 as compared to the (max) £9,978 an undergraduate from England can pull down, and even less for home domiciled PG students once they’ve paid tuition fees.

We can quibble about whether the baseline amounts are comparable – these are a very distinct set of students with different working rules, academic expectations and so on, along with different backgrounds. You can make the case that a scholarship of this sort shouldn’t expect a parental contribution, too.

What’s more interesting is how inflation has been applied. It turns out that it has an agreed formula, reviewed regularly, for increasing the annual stipend rate for the three government-funded scholarship schemes for international students: Commonwealth Scholarships, Chevening and Marshall.

Not only is it using CPI rather than RPIX, and a “current” rather than “projected” measure at that – it even varies from that rate a bit based on the basket of goods it thinks that these students buy.

This year, the application of the formula to Consumer Price Inflation (CPI) figures resulted in a 9 per cent uplift in the stipend rate for the three programmes against an 8.7 per cent increase in CPI in April.

The formula uses a set basket of indices from the Consumer Price Index which were specifically chosen to reflect the main areas of spending for scholars. So for example, their main cost is on rental for housing, which carries a weighting of 45 per cent in the calculation that determines the stipend.

This formula is applied annually in May on the release of the April Consumer Price Index, for increases applicable from October, and the percentage inflation for stipends is a weighted average of the percentage increase April to April of the value of each of those indices, calculated using the weightings listed in this table.

You might, for undergraduates, weight slightly differently, based on an analysis of what they tend to spend (which we’ve not seen from government for the best part of a decade). And that 45 per cent weighting for housing looks optimistic.

But in principle, this is exactly the sort of approach that we ought to expect from governments when using “inflation” to determine increases.

The question is why one arm of government does this for its students, while another doesn’t.

Leave a Reply