A year of chatter, but little money

May 1, 1998

THES reporters assess the impact of Labour's first year of government on higher and further education and unravel how they have sold their policies to the country

TONY Blair famously placed education first, second and third in his list of pre-election priorities. But the emphasis has always been on schools.

The agenda for higher education had been set before the election. The National Committee of Inquiry into Higher Education, chaired by Sir Ron Dearing, had been set up by the Conservatives in summer 1996. It received all-party backing and removed the need for parties to include potentially unpopular higher education reforms in their manifestos.

There was also the report pending from the Further Education Funding Council's widening participation committee, chaired by Helena (now Baroness) Kennedy QC. The committee was formed in 1994 and its report was published a month before the Dearing report in June last year.

Together the two reports paved the way for a radical overhaul of the post-16 sector. Wide parameters had been set, presenting the fledgling government with ready justification for radical action.

But to the surprise of many, including Lord Dearing, Labour rejected Dearing's central tenet: the preferred option of retaining maintenance grants for students and charging them a flat-rate Pounds 1,000 tuition fee that would be ring-fenced for universities.

Instead education secretary David Blunkett scrapped maintenance grants and said that fees would be means-tested. The government extended Dearing's proposed income-contingent loans system to account for fees.

Universities would retain fees as income to be taken into account in overall funding. Beyond this higher education would have to share any savings from fees and loans with further education.

The prompt response meant that ministers had no detailed policy on which to draw. The funding option had been manufactured quickly when ministers learned that, against expectations, the Dearing committee would recommend retaining maintenance grants. The government's decision to remain within the previous administration's public spending levels allowed no scope for paying grants to ever-growing numbers of students.

Weaknesses were highlighted in the government's confusion over those students who had been accepted on to courses in 1997-98 but who chose to defer entry until 1998-99 when tuition fees would be charged to all new entrants. Gap-year students had to wait until the day before their A-level results were published to learn that they would be treated as 1997-98 entrants and so escape fees.

Limited government respite was provided by the Dearing consultation. In the event, ministers gained a long breathing space since the response was not published until February 25 this year.

Anticipation turned quickly to disappointment when the response emerged backing Dearing's vision while avoiding funding commitments. Funding was, it said, subject to the outcome of the comprehensive spending review due this summer. Chancellor Gordon Brown has said education is top of the list for CSR cash but universities are a low priority compared with schools and colleges.

February 25 also saw the publication of the response to the Kennedy report on widening participation and The Learning Age green paper. The government disagreed with little in the Kennedy report but again there were few financial commitments. Continual-cross references to the green paper also weakened the impact of the Kennedy response because this document had been downgraded from white paper status at the 11th hour. The policy vacuum affected the launch of the Teaching and Higher Education Bill in the House of Lords in November. The bill, which has just completed its Commons committee stage, is the legislative cornerstone of the government's proposals, preventing top-up fees and preparing the ground for income-contingent student loans.

The bill conferred far-reaching enabling powers, dubbed "Henry VIII" powers by Conservatives, on the education secretary with very little detail on obligations and limitations.

Alarm bells rang in universities when they realised these powers could undermine their historic autonomy. Lords' amendments temporarily neutered the bill but the government has since overturned these in the Commons. The policy gaps will be filled in only when the government publishes detailed regulations in the summer, almost certainly after the bill has gained royal assent.

Money worries remain paramount for both higher and further education. The additional Pounds 165 million in next year's budget for higher education, which includes almost Pounds 140 million in tuition fee income, has reduced the efficiency gain required from 1.5 per cent to just under 1 per cent. By 2015 the government estimates that fees and the loans system will generate Pounds 1.7 billion for further and higher education.

The sector is worried that the new income will come on stream too slowly to avert the Pounds 565 million shortfall, highlighted by Sir Ron Dearing, faced in 1999-2000. Many vice-chancellors feel that universities would have been better off if the government had stuck to the Dearing option of ring-fencing the tuition fees for universities.

Further education colleges are also still hungry for funds. In November last year Mr Blunkett announced an extra Pounds 83 million for further education in 1998-99 and the budget earmarked Pounds 100 million to tackle the skills gap. But when the chancellor produced detailed plans for the much-hyped University for Industry in early March it transpired that only Pounds 15 million of public money was to be put into the project.

The New Deal for the longer-term, young unemployed, launched nationally last month, presented the opportunity for colleges to bid for a slice of Pounds 700 million new money. But colleges fear that its full-time education option will force them to provide "education on the cheap", as New Deal students bring less funding with them than FEFC-funded students.

The sound and fury of Labour's first year has shaken the post-16 education sector to its foundations. Yet much of the brave new world of learning remains on the drawing board. Money is required to put the plan into action. The $64,000 question for higher education is whether it is invited to share in a potential CSR bonanza for education or whether it gets the crumbs.

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