Quick Pounds 165m spin causes contortion

September 26, 1997

In its second U-turn on higher education policy since the general election, Britain's Labour government has again softened its line, this time finding Pounds 165 million to help out English universities, colleges and students in 1998/99. Further announcements are expected for Scotland, Wales and Northern Ireland.

Higher education will not, after all, have to live with the Conservative government's spending limits next year, including, as they did, a 2.5 per cent cut for higher education. The sum announced matches quite closely back-of-an-envelope calculations of the amount which means-tested Pounds 1,000 tuition charges will bring in next year and allows the Government to counter the charge that it was planning to tax students without helping higher education.

The motives for Tuesday's announcement are clear. The Government needed to move fast to ward off mounting attacks on their fees plan. Criticism has been building up from three sides: vice chancellors have been threatening not to collect the charge unless universities were going to benefit or toying with top-up fees; the House of Commons select committee on education was expected to give Mr Blunkett a hard time on Wednesday over higher education not seeing the proceeds; and politicians are on the rampage with the Liberal Democrats engaging in "constructive opposition" this week and constituency Labour parties putting down agressive motions for next week's conference (page 9).

The Pounds 165 million was announced with predictable spin to the effect that this extra money would enable universities and colleges "to maintain and improve quality and standards and make a start on the backlog of maintenance and equipment replacement" while at the same time as "enabling more people to benefit from higher education". It is unlikely to do either,let alone both.

First improvements and backlogs: only Pounds 125 million of the package goes to universities and colleges - less than they will be expected to collect in fees (upwards of Pounds 150 million), much less than Dearing said was needed and not enough even to eliminate cuts next year. In practice this means that cash income from the public purse (via local authorities and block grants) will be reduced next year to free up the Pounds 40 million cash needed at the centre for the Government's access part of the package.

The extent of the cut universities and colleges end up facing will depend on their success in collecting the fees. Since students are not going to get the loans they need to cover those fees at the start of the year, collecting will be difficult.

Even if universities and colleges are 100 per cent successful collectors, some of the Pounds 125 million is likely to be eaten up by inflation. While inflation is not expected to run away next year, informed guesses put the likely outturn at around 3 per cent rather than the 2.5 per cent assumed in the previous cash settlement. Using the figures in our Higher Education Trends (pages i - viii), half a percentage point of the English funding council's grant and fee income would be about Pounds 22 million.

A further chunk may be swallowed up maintaining the present unit of resource. The Universities and Colleges Admissions Service claims that universities and colleges are admitting an extra 15,000 students this autumn. The education department does not accept the figure. No one will know who is right until annual returns are made in December - too late to affect next year's spending allocation. At an average of Pounds 4,750 a head, 15,000 more students this year would mean further slippage in the unit of resource this year and an extra Pounds 71 million next to get back to 1996/97's level. It looks then as if little will remain to redress the Pounds 400 million teaching equipment gap identified this week by PREST for the English funding council (page 5).

Claims that the new money will increase access and enable more people to enter higher education are also disingenuous: the only additional numbers announced this week are 1,000 extra places costing Pounds 4 million on subdegree courses in further education. Last week Baroness Blackstone said that rationing of places in higher education should continue for now.

The Pounds 36 million in this week's package for access may indeed therefore help the disabled and the worst off take up places but it will only do so at the expense of others. As David Robertson said (page 8) rationing is the real enemy of wider participation.

Mr Blunkett's promise of higher participation within five years will need to be backed by a much more satisfactory funding machine if it is to cause pleasure. That means getting the cost of loans off the public expenditure accounts which has still not been achieved. This week's contortions are at best a stop gap.

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