Money's tight, but we still have the scope to improve and innovate

£1 billion of cuts in the past year have hit the academy hard, but David Willetts explains how the Tories will upgrade the academy without it costing the earth

February 11, 2010

Universities are unavoidably facing a tough financial situation. But it's been made worse by the confusion over exactly what the Government is proposing. Ministers have - perhaps intentionally - spread confusion about how much public money institutions will get in the future. So here's my guide to what I think has been happening.

Close analysis shows five waves of cuts in less than a year. The first wave was announced in May 2009, when ministers said £180 million would be clawed back from the Higher Education Funding Council for England to pay for the student-support reforms announced by Prime Minister Gordon Brown in his first few days in office, the cost of which had been grossly miscalculated. The second wave came in the same month, when a further £83 million was cut along with the number of additional student places.

The third wave came late last year, when the pre-Budget report said £600 million would be taken from the higher education, science and research budgets. Two months later, we still don't know exactly where this pain will hit. The fourth wave came almost immediately afterwards, when a further £135 million of cuts was announced in the annual grant letter to Hefce - effectively, this was a cut in the per-student unit of resource.

Now, in February 2010, Hefce's latest announcement includes a fifth cut of £51 million. So, in total, more than £1 billion has been taken from universities in the past year. But it has been done episodically and slyly so that the total cuts and the precise pressure points are not easy to identify.

We know there is a furious internal debate going on within the Labour Party over its election strategy. On the one hand, we have Education Secretary Ed Balls promising that spending will rise "this year, next year and the year after". On the other, First Secretary Lord Mandelson wants expenditure to be reduced. So it could be that universities are suffering disproportionately because they are the chief victims of this internecine struggle.

Of course, higher education is not, and indeed should not be, immune to the funding pressures being felt right across Government. We are running unprecedented levels of public debt, and reducing the deficit must be the core priority of every minister in the next government, whatever its colour.

Nonetheless, public spending pressures need not stop all improvements to higher education. Looking to the future, there is a real danger of a university entrance crisis this summer that will dwarf last year's. That is why the Conservative Party is committed to offering 10,000 additional student places for 2010-11. These are fully funded for teaching and maintenance and paid for through a new incentive for the early repayment of student loans. There is a clear dividing line between us and Labour on this issue. Under Labour, the number of students is likely to fall in 2010-11, despite unprecedented demand. Under us, there will be 10,000 additional fully funded places.

We also want to ease other pressures on universities. For example, I recently announced that we will delay the introduction of the research excellence framework by two years. We believe the shift from the research assessment exercise to the REF needs time to allow proper consultation, including consideration of the controversial proposal to include an assessment of impact.

Another area where we believe improvements can be made is in the quality of the student experience. A key problem is the shortage of information available to potential students about different courses at different institutions. We are committed to tackling this by setting up a new all-age careers service, by ensuring universities publish more information about the destination of their graduates, and via our support for a new website showing the financial returns of different higher education courses.

Our other policies include fully funded Skills Scholarships so that apprentices can study in higher education, and we are committed to improving the rules on funding for part-time study.

Notwithstanding the conclusions of Lord Browne's Independent Review of Higher Education Funding and Student Finance, I am keen to see our university sector become even more diverse, both in the range of income sources and in terms of mission. For example, I think there is still scope for the further development of universities' links with alumni, philanthropic groups and employers.

I am also struck by how, compared with some other countries, ours is a fairly uniform higher education sector. There are single institutions, such as The Open University and Birkbeck, University of London, that have unique missions, but - as a sector - I would be happy to see more new providers, more diversity of mission and more innovative forms of delivery.

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