News blog: BIS must still find £450m cut

Department confirms work to find savings is ongoing, but offers no details on George Osborne’s Budget pledge to bring in ‘new entrants’, says John Morgan

July 9, 2015

The Department for Business, Innovation and Skills has confirmed that it still has to find cuts of £450 million for this year, on top of the future savings from scrapping student maintenance grants announced in yesterday’s Budget.

The £450 million cut for 2015-16 was announced by George Osborne in June.

The remaining £1.4 billion of higher education teaching grant, which includes student opportunity funding accompanying the poorest students and funding for high-cost subjects, is likely to be a target for a portion of the cuts.

A BIS spokeswoman said: “We are continuing to work on how to implement the £450 million savings, across BIS budgets, announced by the chancellor on 4 June; on higher education we will ask Hefce [the Higher Education Funding Council for England] to implement funding reductions in a way that does not undermine the viability of institutions.”

That sounds a bit alarming, as there has never been a suggestion that the cuts would undermine the viability of institutions, although cuts to teaching grant would mean taking money back that has already been allocated to universities for 2015-16.

I also asked BIS if any further details were available on Osborne’s statement in his Budget speech that “we’ll open the whole sector to new entrants who can deliver the highest standards”.

The answer was: no, there are no further details available.

Earlier this year, I reported that BIS had quietly suspended the process for applying for university title and degree awarding powers – the means by which private providers and further education colleges can fully enter higher education.

The department previously said this was because it was reviewing “the criteria and guidance for DAPs, university title and designation for Hefce grant funding to ensure they continue to protect the reputation and integrity of the UK higher education sector”.

Designation for Hefce grant funding is not yet open to private providers, and would be a significant step to giving them equal footing with traditional universities on teaching and research funding.

The Conservatives have long had the goal of creating a market where “alternative providers” drive down fees at (some) universities. Those efforts failed in the last Parliament, but Osborne’s statement indicates the Tories are gearing up for another go.

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