Official: loan cash switched to FE

November 21, 1997

DAVID Blunkett's special adviser has admitted that money for undergraduate loans has been switched from higher education to help shore up further education.

Adviser Conor Ryan confirmed this week that Pounds 16 million saved by paying undergraduate loans in three tranches from 1998/99 had been rerouted to form part of the Pounds 83 million package for further education announced last week by education secretary Mr Blunkett.

Mr Ryan said: "Effectively it is the same money from the same accountancy changes. The accountancy changes enabled us to provide Pounds 165 million for higher education but as a result of making these changes a small amount was also available to put into a larger package for further education."

News of the switch of vital funds to cash-strapped colleges came as the Further Education Funding Council proposed to cut the number of courses it funds. The proposal, which is out to consultation, has raised fears of fewer educational opportunities for disadvantaged people. Some principals have warned that it could damage Helena Kennedy's crusade for widening participation.

Mr Blunkett announced the Pounds 83 million at the Association of Colleges annual conference in Harrogate. He said that some of the money had been found by changes in departmental accounting.

While neither Mr Blunkett nor his department would admit it at the time, these were the same accounting changes which allowed the government to "find" an extra Pounds 165 million for universities. The government said that from 1998/99 loans would be paid in three termly instalments rather than a single payment. This would allow the third instalment to be shunted into the 1999-2000 financial year.

The Department for Education and Employment is expected to make an announcement on the higher education budget by the end of the month.

An internal Department for Education and Employment memo, leaked to The THES three weeks ago, said that the total amount raised from undergraduate tuition fees and the "rephasing" of fee and loan payments was Pounds 23 million more than the Pounds 165 million given to universities. The beneficiaries of this extra Pounds 23 million were to be Wales, receiving Pounds 7 million, and further education which was to get Pounds 16 million.

The Pounds 83 million will reduce the efficiency gain required of colleges in 1998-99 from an estimated 5.3 per cent to 4 per cent, meaning they are still faced with the need for significant savings.

David Melville, FEFC chief executive, said that the proposal to increase the minimum total number of hours required in a course before it attracts funding from nine to 21 would release money to be redistributed within colleges for longer programmes. He stressed that the proposal would exclude courses in adult basic education, ESOL qualifications and adult pathway programmes. Employers would be expected to pick up more of the costs of the short courses.

Professor Melville said: "We have specifically excluded the Kennedy agenda. Quite a lot of programmes ruled out through this process could be related to things where employers are involved. We would hope that employers would start to pay for them."

But Keith Wymer, principal of Bilston Community College, believes it will reduce educational opportunities. He said: "It is well known that people who have not been in education for some years, the people Kennedy is after, do not want to enrol in a long course. I would say that this proposal runs counter to the Kennedy report and is an anti-access move."

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