Financial crisis looms despite fees and loans

March 13, 1998

The introduction of fees and the privatisation of student loans will not solve a multi-billion pound financial crisis in higher education, vice-chancellors have warned the government.

Quality will suffer unless there is a substantial increase in the state's contribution to the costs of teaching and research over the next three to five years, the Committee of Vice-Chancellors and Principals says in its submission to the government's comprehensive spending review.

Pledges from the secretary of state for education and employment and the prime minister to resume expansion in student numbers will alone cost an extra Pounds 265 million a year by the fifth year of growth, according to the CVCP's calculations. That would be the amount needed to fund an increase in higher education by 70,000 and raise participation levels to 35 per cent in England.

Over the next three years, Pounds 900 million more is needed to replace research equipment and buy new information technology and teaching equipment.

Furthermore, it will cost Pounds 320 million a year to halt the decline in funding per student, and Pounds 110 million a year to allow the research councils to cover the indirect costs of their projects.

The CVCP draws heavily on the conclusions of Lord Dearing's higher education inquiry report for its evidence of a yawning funding gap, which, it says, will not be bridged by fees or a new student loans scheme until well into the next century.

The submission paper warns: "Unless the necessary public funding is forthcoming, projected shortfalls will have a quantifiable effect on universities over the next three to four years, even allowing for the income generated by the new funding measures.

"Students and their families will become increasingly disillusioned if their private fee contributions to higher education are not matched by appropriate levels of funding to provide up-to-date equipment and other teaching resources and well-motivated, appropriately rewarded staff."

The predicted funding shortfall would jeopardise expansion, damage the international competitiveness of universities, leave institutions with less than one computer terminal for every five students, hamper the ability of institutions to deliver important areas of teaching and encourage multinational companies to move their British-based research and development investment to other countries, the paper argues.

Martin Harris, CVCP chairman, said there was strong support among vice-chancellors for Dearing's notion of a compact between the sector, students, business and industry and the government in support of higher education.

"The students are playing their part and so are the universities, although the private sector has not done all we had hoped. Now we are looking to the government to play its part in the compact," he said.

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