And little cheer for the rest of the sector

June 19, 1998

THE prospect of no more money for teaching in Gordon Brown's public expenditure reforms has cast a shadow over hopes for more science funding.

Economists and university finance chiefs warned that the Chancellor's spending package is unlikely to end the financial "nuclear winter" in higher education. Tony Travers, Greater London research centre director at the London School of Economics, predicted a "continuing freeze or erosion on the unit of resource".

He said: "I do not think there will be any let up in university funding per student or pay. Now is as good as it will ever get for university funding."

The main points in the Chancellor's announcement last week were:

* two years of public spending freezes to be followed by average real increases of 2.75 per cent a year

* departmental spending plans and budgets to be fixed for three years at a time

* more capital spending, including greater investment in the science and technology base

* student loans switched to resource-based accounting, releasing Pounds 500 million from next year

* separation of current and capital spending, with more capital spending balanced by a tighter rein on current spending

* promotion of new public/private partnerships.

On the student loans accounting change, Diana Warwick, chief executive of the Committee of Vice Chancellors and Principals, warned: "The additional funds generated from the government's new student funding scheme should be reinvested in maintaining the quality of, and improving access to, higher education."

Tony Bruce, CVCP policy director, said the government could do more to lift constraints on student loans. The move to resource-based accounting would not make it any easier for loans to be extended, he said. Andrew Pakes, president of the National Union of Students, was concerned that it appeared there might be no more money for maintaining standards.

Higher education funding experts warned that some of Mr Brown's proposals might be a backward step. Steve Chicken, the Open University's finance chief and chairman of the Finance Directors Group, said: "The crucial issue is the actual size of public expenditure and how much filters through to higher education.

The Chancellor's plans to separate current from capital expenditure could cause problems if applied directly to higher education funding, even though it might bring more cash for buildings and equipment, he said.

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