Spending sword with two edges

May 29, 1998

Alan Thomson explains what the government's comprehensive spending review could offer further and higher education

A YEAR after higher education spent a long spring and summer in anticipation of the Dearing report the sector is again holding its breath, this time for the comprehensive spending review.

Dearing held great promise but disappointment followed its publication. It took the government seven months to produce a full response. Then, when published in February, it kicked funding decisions on some of the main Dearing recommendations into touch for another six months.

The reason for the delay is simple. The CSR is the key to government spending and policy priorities for the remainder of the parliament and beyond. No major new initiatives will begin until given the green light by the spending review. Higher and further education will receive money and be told what to spend it on.

Chief Treasury secretary Alistair Darling hailed the CSR as a root-and-branch reappraisal of government spending when he announced it a year ago. The Treasury has been at pains ever since to point out that it is not just another spending round. Chancellor Gordon Brown has made it clear that the public purse-strings are as tight as ever.

Treasury spokesmen say it is not so much about the quantity of spending but the quality. One said: "It is rejigging spending across the board to make sure that money can be freed for key areas such as health and education. It is important to maintain spending discipline and only then through the elimination of waste will it be possible to ensure investment in key areas."

But it has emerged that many government departments have fallen into the trap of treating the CSR as an old-fashioned public expenditure round and the begging bowls have been out. It is understood that education, health and transport have all bid for bigger budgets.

Originally a manifesto commitment, the CSR is double-edged. On the one hand, it seeks to identify and eliminate departmental waste and bears chancellor Gordon Brown's fingerprints. On the other hand it enforces policy priorities, making sure departmental spending is properly focused. Tony Blair and his policy unit will ensure there is no blunting of the message.

Departments have now told the public expenditure committee where they can make savings, where their priorities lie and how much they will cost.

But key decisions will be the responsibility of Mr Brown and Mr Blair. The prime minister will refer to his policy unit, which has taken soundings from organisations operating within departmental areas, including the Committee of Vice-Chancellors and Principals.

Money will be allocated to priority areas and could be linked to specific initiatives. The government has already said that it supports Dearing's recommendation that money should be targeted to those institutions that demonstrate a commitment to widening participation. The intention is that students will have Individual Learning Accounts with which they will pay towards their courses.

The results of the CSR are scheduled for publication in July. Treasury spokesmen say that it will contain far more detail than old public spending announcements, which more or less focused on headline spending figures. However, they say that details of how departments will divide the money between their areas of responsibility may take longer to emerge.

POTENTIAL FURTHER AND HIGHER ECUCATION CASH

Sale of existing student loan debt - estimated Pounds 2.5 billion-worth remaining

Tuition fees - Pounds 800 million in total by 2000-01

Savings following abolition of student grants - Pounds 250 million net by 2000-01

Resource accounting and budgeting - possibly Pounds 1 billion a year after 2001

New Deal for the unemployed - possibly Pounds 875 million for education and training

University for Industry - Pounds 15 million kickstart, agreed "substantial" funding available from the European Social Fund

Individual Learning Accounts - Pounds 150 million by April 1999 seed corn from Training and Enterprise Councils. Further state support and planned support from businesses

University Challenge Fund - Pounds 50 million from the Department for Trade and Industry. Will become a permanent fund to encourage universities to market research.

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