Budget cuts are not gains

April 5, 1996

While universities have to accept that continual demands for efficiency gains are inevitable, last year's budget cuts go far beyond anything which can be described as promoting efficiency, Brian Fender, chief executive of the Higher Education Funding Council for England, said this week.

Professor Fender, speaking to the annual conference of the Royal Economic Society in Swansea, said: "I don't think you can say that further efficiency gains were impossible. I would expect something around 1 to 1.5 per cent was possible. Anything beyond that - this year about 3 to 4 per cent - is a cut and should be described as such. That needs to be said, and we should not collude in the use of the words 'efficiency gain' in this context."

He added that the cut had been inexcusable "both in magnitude and in the way in which it deviated from the planning forecast".

But, in a discursive address to the economists, he warned that cost-cutting was likely to be an inherent part of higher education's future - one dominated by the forces of competition, complexity and sophisticated communications.

He said that the future was likely to see a diversification in the providers of higher education: "I think it is very unlikely that the universities will be able to maintain their monopoly. Until recently we were the only people who could provide higher education, as nobody else had the knowledge. That's a challenge we have to face."

He also expects to see distance learning playing a far more significant role in a world where demand for part-time and lifelong provision far outpaces that for full-time courses. The Open University, he noted, was now well down the list of the world's largest distance learning providers, its 146,000 students far outstripped by a Chinese institution with around 500,000 registered.

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