Creative ideas on how to budget

May 17, 1996

Working under increasingly severe pressure, staff and students ensured at least until this session that the great majority of universities remained in financial surplus.

Now, however, relative strength has given way to financial forecasts which are harbingers of severe dislocation and down-sizing over the next three years. Few universities can escape serious reductions in either the range or depth of their teaching and research.

Yet more imaginative financial solutions could at least mitigate the potential damage. First, why not eliminate the student tuition fee and compensate by increasing the block grant to universities? This would improve universities' cash flow - for instance, the University of Hertfordshire sends out about 40,000 local education authority invoices which all require collecting with greater or lesser difficulty.

The rationale for local awarding is diminishing; much of the assessment is Inland Revenue-based and the fee is getting relatively smaller. Maintenance awards could be handled centrally as postgraduate awards already are. The administration of awards must consume a significant proportion of local authority budgets and these savings could be passed on to the universities.

Second, the block grant to universities could be paid upfront. Naive, in that this would be totally unacceptable to the Treasury? But in relation to total government expenditure the higher education element is so small that the Treasury should be asked consider this.

In certain sectors, funding for public contracts is already being paid upfront provided price discounts are achieved. Universities can rightly argue that the discount has been delivered.

If, in the event, complete front-end loading of this nature provides unpalatable, surely phasing along the lines of two-thirds payment of block grant by August 1 and the further one-third by April 1 could be acceptable? For this university alone, almost Pounds 1 million would be realised.

Third, we should seek to expedite the merger of the higher and further education funding councils. This would make every sense in an educational context where preservation of funding councils' interests is getting in the way of appropriate alliances, partnerships and mergers at regional level.

A single funding agency would resolve at a stroke obstacles at course level concerned with who funds what and for the benefit of whom? Solutions to issues relating to funding disparities, student progression and quality assurance and enhancement would be facilitated. The Higher Education Funding Council for England's recent consultation document on higher education in further education colleges is a push in this direction: push needs to become all-out shove.

Equally, merger of the two funding agencies makes considerable financial sense. There would be a non-trivial saving of overhead costs; economies effected through academic rationalisation of the type outlined above would accumulate over the medium to longer term; while major savings could again result from payment of tuition fees through the block grant, channelled via a single funding agency.

The quid pro quo would be, of course, that such savings are hypothecated for further and higher education. In each of the areas above where recommendations for change have been made, political and administrative expediency presently seems to drive what takes place at the academic chalk-face. It is time for some redressing of the balance.

Neil Buxton is vice chancellor and Terry Neville is finance director at the University of Hertfordshire.

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