Growth likely to wipe out cash gains

July 17, 1998

The Comprehensive Spending Review means a 1 per cent per capita cut in real terms for higher and further education.

HIGHER EDUCATION

Vice-chancellors have declared that the government's spending package for higher education is "so far so good".

But many of the crucial details are still unclear, and even more uncertain is what will happen to higher education funding after next year.

The extra Pounds 280 million not only includes Pounds 50 million for research, but also an unknown amount for access funds.

Universities and colleges have yet to learn how an extra 35,000 funded student numbers for next year breaks down between full and part-time.

And the Department for Education and Employment is still to put a cash figure on the 1 per cent efficiency savings the sector will be expected to make next year.

Although there will be a 5.7 per cent cash increase, inflation running at perhaps 3 per cent will eat up much of this. In addition there will be the extra students who add around 3.5 per cent to the 1998-99 total numbers.

Adding these factors together brings a total increased cost to the sector of at least 6.5 per cent and a minimum efficiency gain of 0.8 per cent.

Although the government's Comprehensive Spending Review statement said "extra resources will be earmarked for infrastructure, equipment and an expansion of student numbers", institutions have yet to learn how the cash split between these spending priorities works out.

Nevertheless, the Committee of Vice-Chancellors and Principals was breathing a sigh of relief that the previous government's project ed efficiency savings for next year of 4.5 per cent had at least been laid to rest.

Diana Warwick, CVCP chief executive, said: "We always accepted that there would have to be a 1 per cent efficiency gain. It is clear that the government has listened to the case for restricting cuts to that level. But in the end the important questions to be answered all relate to what happens in the longer term."

FURTHER EDUCATION

"THE government has given us the ball gown and the golden coach is pulling up outside," said John Brennan, policy director of the Association of Colleges. The Cinderella sector, further education, shall at last go to the ball, it seems.

Education secretary David Blunkett has announced an additional Pounds 255 million for further education and sixth-form colleges next year. A cash increase of 8.2 per cent, it falls just Pounds 4 million short of what the AoC demanded. "You can't get much closer than that," said Mr Brennan.

The AoC demanded an increase in student numbers of 140,000 in the next academic year. The government has come up with 150,000, as the first tranche of 420,000 new FE students by 2002.

The AoC also asked for a 1 per cent efficiency gain for 1999-2000, rather than the 2.75 per cent it faces for the year 1998-99. "And we have got that as well," said Mr Brennan.

Plans to pilot from September 1999, new Education Maintenance Allowances, a lump-sum grant aimed to encourage 16-18-year-olds to stay on in education, taken from the child benefit budget for over-16s, have also been welcomed. As has the announcement that the New Deal, with its full-time education option, will be expanded further.

"We are extremely pleased," said Mr Brennan. So pleased, indeed, that the AoC is keen to downplay the unanswered questions, and disappointments. The 1 per cent efficiency gain will still mean a Pounds 30 million cut from the budget and the government expects that Pounds 35 million of the Pounds 255 million will come from employers. But the AoC's experience of convincing employers to pay for training, it has warned, is not encouraging.

It also remains to be seen if the government's longer term plans meet colleges' demands for Pounds 715 million by 2002, said Mr Brennan.

David Melville, chief executive of the Further Education Funding Council, said: "With this much- needed new money, the sector will be able to take major steps to deliver the government's agenda for lifelong learning, and the Kennedy agenda."

SCIENCE

An extra Pounds 1.4 billion will be spent on university research over the next three years.

John Mulvey, of Save British Science, said: "British science can celebrate the millennium with confidence that the government understands the importance of the science and engineering base as an investment for the nation's future."

The extra money comes from the government and the Wellcome Trust, the world's largest medical charity. The government's contribution of Pounds 707 million to science represents a 14.8 per cent increase in real terms to 2001. On top of this, the Wellcome Trust is providing Pounds 400 million and a further Pounds 300 million is coming from the education budget.

Most of the money will be spent on refurbishing decaying laboratories and replacing obsolete equipment. From the Pounds 1.4 billion windfall, Pounds 300 million will be channelled through the Office of Science and Technology as extra funds for this refurbishment along with Pounds 300 million from the Wellcome Trust and Pounds 300 million from the higher education funding councils. The total figure of Pounds 900 million is more than twice that recommended by the House of Commons science and technology committee, which called for Pounds 410 to Pounds 430 million over three years in its response to Dearing.

The government also announced a review of the dual support system, under which the funding councils award block grants and the research councils fund individual projects. The government wants to encourage better accountability and better transparency of this research funding. The director general of the research councils, Sir John Cadogan, has been asked to conduct the review.

The research councils, which will receive an extra Pounds 407 million of the Pounds 1.4 billion total, may be required to meet the overheads associated with their research projects. An independent study has suggested that it would cost the research councils an extra Pounds 185 million a year to pay the full indirect costs of the university research that they fund. This would absorb the extra funding.

A consultation document on the research assessment exercise, which determines the research cash allocation that universities receive from the funding councils, is also expected from the Higher Education Funding Council for England.

Some researchers have expressed concern that the involvement of the Wellcome Trust will skew funds towards the biomedical sciences. But the science minister, John Battle, denied that there are strings attached to the money. Applications for new equipment will be peer-reviewed and a final decision will be taken by Sir John and the director of the Wellcome Trust, Michael Dexter.

The life sciences have been identified as a priority area for the research councils. Other priority areas are due to be identified in the next few weeks.

Finally, a quarter of the Wellcome Trust's Pounds 400 million contribution has been earmarked as going towards a new high intensity X-ray synchrotron that will be used by structural biologists and materials scientists. It is due to be built at the Daresbury Laboratory near Warrington and should be running by 2004.

Wellcome Trust, page 25

SCOTLAND

SCOTTISH education minister Brian Wilson has claimed "spectacular and massive" support for further education, Pounds 214 million over three years, alongside Pounds 230 million for higher education institutions.

Scottish further education has won Pounds 102 million to support 40,000 extra students, Pounds 56 million for "financial stability" with cuts restricted to 1 per cent, Pounds 29 million for information technology and Pounds million for capital investment. Next year's Pounds 40 million tranche is a real-terms increase of more than 10 per cent, Mr Wilson said.

The Association of Scottish Colleges enthusiastically welcomed the "huge boost" for the sector, which it said put colleges on a new and more secure footing to support lifelong learning. But the Educational Institute of Scotland said a number of colleges were close to collapse and it remained to be seen if the extra funds would rectify the problem.

There has been a mixed reception for the news that higher education will next year have a cash increase of Pounds 53 million, a real terms cut of about 1 per cent.

Richard Shaw, convener of the Committee of Scottish Higher Education Principals said that while next year would not be easy, the two subsequent years would provide a sound platform for the future.

But David Bleiman, assistant general secretary of the Association of University Teachers, said it was "disappointing" that the sector faced level funding at best.

Higher education institutions will have an extra 2,000 full time students by 2001-02, and will also gain from a Pounds 100 million scheme to boost Scottish science and technology. There will be Pounds 23 million to underpin research excellence which meets the needs of the economy, with Pounds 11 million to improve the commercialisation of research.

Scottish secretary Donald Dewar said an extra Pounds 19 million would go to agricultural and biological research, while Scotland could win some Pounds 55 million from the research councils as well as expecting substantial support from the Wellcome public-private partnership.

NEW MONEY

EDUCATION TOTALS

* Pounds 19 billion extra in total

* Pounds 3 billion in 1999

* Pounds 6 billion in 2000

* Pounds 10 billion in 2001.

Higher education

* Pounds 445 million extra over two years 1998- 2000

* Pounds 165 million in 1998-99 announced prior to the CSR. Efficiency gain 1 per cent.

* Pounds 280 million in 1999-2000 announced in the CSR.

Efficiency gain 1 per cent.

* figures for later years an- nounced over the winter

Research

* Pounds 900 million extra for refurbishing labs and replacing obsolete equipment from 1999 to 2002 (This breaks down as Pounds 300 million from the DTI, Pounds 300 million from the Wellcome Trust and Pounds 300 million from the higher education funding councils)

* Pounds 407 million extra for specific research projects, particularly in the life sciences

* Pounds 100 million (from the Wellcome Trust) towards a new high intensity X-ray synchrotron

Further education

* Pounds 338 million extra over two years 1998- 2000

* Pounds 83 million for 1998-99 announced prior to CSR. Efficiency gain 2.75 per cent

* Pounds 255 million announced in CSR. Efficiency gain 1 per cent.

* figures for later years to be announced.

THE UNANSWERED QUESTIONS

How much extra will higher education receive in 2000-01 and 2001-02?

Will the student contribution to higher education funding continue to increase?

Will the government admit that students are funding the expansion of education?

Will universities be required to continue making efficiency gains, thereby cutting the unit of resource year on year?

Can universities look forward to a real terms increase in future?

If the economy goes into recession in the next three years will the government stick to its promises of increased spending on higher education?

How much of the estimated Pounds 1.8 billion "on-paper" savings generated by resource-based accounting and budgeting between 1999 and 2002 will go to higher education?

What is the projected per capita investment in higher education over the next three years?

How much will further education receive in 2000-01 and 2001-02?

Will further education continue to face efficiency gains in these years?

Will further education continue to receive a share of the tuition fees and grants savings from higher education?

Will the Treasury check the DFEE's progress against targets for efficiency and reform every quarter? If so does this mean that where once there were annual, now despite talk of three-year allocations in fact the department will only get a quarter's money at a time?

Who is going to do the monitoring and what will it cost?

REACTIONS

Diana Warwick, CVCP chief executive: "We have to take the Prime Minister and the Secretary of State at face value. They are determined to halt the decline and the 1 per cent efficiency gain has been obtained. In that sense we are in a positive upcurve."

David Triesman, general secretary of the Association of University Teachers, said: "With the extra money for research and if they are right about what is going to come in in student fees, we will be edging towards the figures Dearing recommended. We will be in a position to have a far more realistic discussion among higher education players and employers about pay than we have had for some time. "

Paul Mackney, general secretary of the National Association of Teachers in Further and Higher Education, said: "This is a start on the road to recovery for cash-strapped colleges and universities. The education secretary's announcement offers the prospect of a better deal for students."

A spokesman for the National Union of Students said: "We are very impressed, particularly by the extra money for further education."

Brian Fender, chief executive of the Higher Education Funding Council for England said the outcome of the comprehensive spending review would allow it to build on this year's improved funding base and ensure higher education remained competitive.

Kate Barker, chief economic adviser at the Confederation of British Industry, said: "We should target resources to get maximum return, an improvement in standards and skills."

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