Transcript Public spending on higher education and the implications for

CVU annual conference, 19 September 2014
Public spending on higher education
and the implications for partnership activity
Julian Gravatt, Assistant Chief Executive, AoC
[email protected]
What I’ll talk about
Higher vocational education
Public spending on higher education
Some suggestions
English College HE
Characteristics
100,000 students in 280 colleges (range 100 to 3,500)
Local, employer-led, technical, some niche
c50% apply for one course/one institution (UCAS)
70% live within 25 miles of campus
Student cohort more disadvantaged than HE average
Partnerships with Universities long-standing & important
English College HE trends
2008-9
2011-2
2012-3
Direct
31
37
44
Indirect
28
30
24
Full Time
Sub-total
59
66
68
Part Time
Direct
24
21
20
Indirect
33
27
18
Sub-total
56
48
38
117
116
106
47%
50%
60%
Full Time
Part Time
% Direct
Source: AoC summary of HEFCE’s combined HESA/ILR statistics
The English HE system – not a normal market
Supply
Inertia (heritage, three-year degrees etc)
Longish lead-times to respond to demand but shortening
Full-time UG fees close to the £9,000 cap
Universities compete to be higher up league tables
Demand
Applicants need to be qualified to make a choice
Degrees are positional goods
Higher fees are paid after completion (no fees upfront)
Living costs loom larger than fees to many students
“Breaking the mould”
Analysis
English post-secondary higher-level skills
system weak and small
Policy & history biased towards full-time
residential three-year degree model
Proposals
Re-balance the system
Different approaches to validation
Colleges/universities to work on progression
The bigger spending picture
800
Government plans
Deficit reduction
700
Spending cuts 2009-18
600
Spending review in 2015
500
Taxes
400
RAME
Unprotected departments
300
9.1% of GDP (2013-14)
7.8% of GDP (2015-16)
5.4% of GDP (2018-19)
Loans may be a safe haven
PSCE
RDEL
Deficit
200
100
0
-100
The HE budget – up 26% in 4 years
2011-12
Teaching
Student
Support
Research
Total
RAB
charge
Grants
4.6
1.3
4.6
10.5
2.1
Loans
2.6
4.4
-
7.0
Total
7.2
5.7
4.6
17.7
Teaching
Student
Support
Research
Total
RAB
charge
Grants
1.7
1.6
4.6
7.9
6.4
Loans
8.2
6.2
-
14.4
Total
9.9
7.8
4.6
22.3
2013-14
Source: AoC summary of HEFCE grant letters for 2010 & 2014, BIS annual accounts
Revenue spending in HE after 2015
BIS revenue budget £13.2 billion in 2015-16 (£8 billion HE)
Spending plans imply 31% cuts to unprotected depts (2015-18)
IFS scenarios for UUK to cut RDEL (back in October 2013)
1. Breach the science/research ringfence (£4.6 bil budget)
2. Cut Medicine & STEM funding (involves raising fee cap)
3. Switch from HE maintenance grants to HE loans
4. Reduce number of FT HE students
5. Cut 19+ FE/Skills budget further (on top of 35% cuts 2009-15)
HE student loans after 2015
2013-14
Outlays
2014-15
2015-16
2016-17
2017-18
2018-19
10.3
12.7
14.4
15.6
16.7
17.4
Repayments
1.8
2.1
2.3
2.5
2.5
2.6
RAB charge@ 45%
4.6
5.7
6.5
7.0
7.5
7.8
Some options to reduce net loan outlays or RAB charge
Tuition fee loans to cover less than 100% of tuition fees
Graduates to repay loans faster, earlier or for longer (ie a tax)
Tighter conditions for maintenance loans than fee loans
Limit loan access to prime borrowers (eg via entry qualifications)
Wait and see (what happens with the recovery & repayments)
The timetable
The spending decisions
HEFE grant letter (by January 2015)
HEFCE policy on quality thresholds in uncapped market
General election (May 2015)
Spending review after the election
Quick BIS decisions needed to change things for 2016-17
Recruitment for September 2015 is uncapped
Any reform won’t really bite until 2017-18
Result
You have time to think and plan
Suggestions
Where we are and may be
Changes to public spending permanent
These are long-term trends which take time to implement
Loans have been a financial safety net for HE
Demand exists for HE but it is evolving
Technology and working lives are changing faster
Current HE system may not be financially sustainable
University roots into local communities and economies matter