Millions of reasons to cheer

July 31, 1998

Education secretary David Blunkett says higher education's extra funding is substantial and meets Lord Dearing's key priorities

ONE of the first things I was determined to do when I became secretary of state for education and employment was to grasp the nettle of higher education funding. The sector was in financial crisis and student support needed to be reformed and modernised.

Within two months, building on the recommendations of the Dearing report and our own election manifesto, we announced our new student support and fee arrangements. These have ensured that students from low-income families will not have to pay fees and that there is a much fairer income-based loan repayment scheme, with collection made through the Inland Revenue, as advocated by Dearing, in place of the hotch-potch of grants and loans which we inherited. We promised that the savings from the new funding arrangements would be used to improve quality, standards and opportunities for all in further and higher education. We have kept that promise.

In September 1997, I announced an extra Pounds 165 million of investment in higher education for 1998-99. Two weeks later, the prime minister set out the government's target of an additional 500,000 students in further and higher education by 2002. And now the comprehensive spending review settlement will enable us to meet the key priorities of the Dearing report. It is all good news for higher education.

The extra Pounds 280 million for higher education for 1999-2000 is on top of this year's Pounds 165 million of funding. In 1999-2000, compared with 1997-98, higher education will receive an increase of Pounds 445 million in total. This will allow us to meet a key recommendation in the Dearing report; ie the reduction in the unit of funding per student over the next two years will be contained at no more than 1 per cent. And in line with another of Dearing's priorities, the previous government's cap on student numbers will be lifted. There will be an additional 1,000 students in 1998-99 and a further 35,000 students in 1999-2000.

In 1998-99, universities and colleges will be able to keep the contributions to fees they receive from students - some Pounds 130 million. This was taken into account in the Pounds 165 million package. Similarly in 1999-2000 they will keep all the income from students - some Pounds 235 million. The additional fee income institutions will receive in 1999-2000 is estimated at some Pounds 105 million.

The balance of the Pounds 280 million, after taking account of fee income from new entrants of Pounds 105 million, is all new money and not the result of any savings on the abolition of maintenance grants. There is no saving in 1999-2000 from the abolition of maintenance grants on the present cash accounting basis. In fact, in that year, the additional loans expenditure will cost significantly more than the saving on the abolition of maintenance grants.

We have also announced very substantial additional sums for research over the three years 1999-2000 to 2001-02. The Pounds 280 million for higher education for 1999-2000 includes Pounds 50 million for research, and over the three years the total figure for research will be Pounds 300 million. On top of this, the Department of Trade and Industry and the Wellcome Trust are providing jointly for a Pounds 600 million fund for research infrastructure and equipment, with the DTI providing a further Pounds 400 million for current and capital costs for the research councils. This will be an enormous boost to research budgets and will address Dearing's other key recommendation on funding for infrastructure and equipment.

By 1999-2000, higher education will be benefiting from an increase in funding for both research and teaching of over Pounds 580 million. Compared with 1997-98, this is made up of the Pounds 445 million funding, plus Pounds 136 million from the science budget (excluding the contribution from the Wellcome Trust). This is more than Dearing recommended. This substantial improvement in funding will enable universities to enter the 21st century in a strong position, financially and academically.

David Blunkett is secretary of state for education and employment.

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