English top-up fees may boost the budget north of the border

November 21, 2003

Scottish ministers believe England's proposals for top-up fees will lead to extra funds north of the border.

It had been thought that top-up fees would have no bearing on Scottish funding since it would in effect be a private income stream for English universities.

But the Scottish Executive sent a memorandum to the Scottish Parliament's enterprise and culture committee, currently investigating the impact of the English white paper on Scotland, saying it expects there will be a direct impact on the Scottish budget.

The memorandum says it is clear from the white paper that private payments will not be recouped from individual students until after they graduate.

These will not start coming through until 2009, and the government has pledged to make up-front payments to institutions from 2006 to cover the anticipated income.

The Scottish Executive says that since this involves resources from the public purse, it expects these "to be taken into account in the calculation of the Scottish budget in the usual way, subject to Treasury approval".

Holyrood's block grant is determined by the Barnett formula, with increases and decreases in English public spending programmes translated into the Scottish budget on the basis of population levels. Under this, Scotland is due 10.3 per cent of any rise in English spending.

Earlier this month, Paul Boateng, chief secretary to the Treasury, was quoted as reaffirming the government's insistence that there were no plans to change Barnett.

The memorandum says that, given that the proposals have still to be approved by Parliament, it is not going to speculate on how much money the new fee regime might produce. It also stresses that it would be up to ministers to decide how to allocate the Scottish budget. But there would undoubtedly be strong lobbying from the higher education sector for any funds emerging through the white paper.

The enterprise and culture committee has broken new ground in its white paper investigation by bringing together experts from business and industry. The brainstorming session, held under Chatham House rules, aimed to find solutions to a feared exodus of staff and an influx of students from south of the border.

Alasdair Morgan, the committee's convener, said: "Everyone who has been following the evidence would note that although there were some very clear expositions as to the nature of the problem, there weren't necessarily too many indications of the way it might be resolved."

Mr Morgan said the seminar, hosted by the Scottish Council Foundation, had been very valuable in helping the committee focus on particular issues.

The committee expects to produce its report around Christmas.

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