Ahead of the Browne Review, and the associated storm of nonsense in the national press, I’ve been getting very interested in the nature of the university, and how this has changed over time. With the fees issue, the influx of private institutions into the UK and cuts to research funding, we are going to be living through some great upheavals. I think it is important to show that the virtual stasis within the system between 1992 and 2004, and from 2004 onwards, has been an anomaly, and that change is embedded into the DNA of the institutions we work for. This is part 2 of a short series of blog posts: this post focuses on present day funding pressures, the first focused on the history of state funding for the university system and the next will focus on the future.
These are my views and not those of my employer, or of projects and programmes I am responsible for. Full disclosure: I previously have worked for HEFCE, but have prepared this post using only information that is publicly available. This post is available under a creative commons CC-BY license.
So where are we today?
The total income of the UK Higher Education Sector is £23,440m. Direct funding council funding for UK institutions (taking into account teaching [64%], research [20%] and special funding allocations [16%]) currently constitutes 36% (£8,508m) of this income. 19% of UK Higher Education Funding comes from other government sources (mainly the research councils), 8% from standardised student “top-up” fees. The remaining 37% comes primarily from other income associated with students (including international student fees, profits on university halls of residence). Non-government funded research (on behalf of charities and the private sector), comes to only 7%, only a little over the 6% gained from residential and catering profits (source, HEFCE 2010
, from 2008-9 HESA figures).
Two things are notable about these figures.
The first is that research is not especially profitable if you take a short term view of it. The vast majority of research is paid for by the government using funding that would probably otherwise make its way into the core allocation, and factoring in that some universities do an awful lot of non-government research, the average institution is probably more profitable as a hotel than a commercial research centre. Given the rumoured oncoming research funding cuts, even more so.
The second is that charging a student £3,000-odd pounds a year per student is not yielding much in the way of additional income. Fees are payable starting at the point of completion of each year with the Student Loan Company
paying the fees and then reclaiming from graduates over their working lives. All this does is move (a small amount) of the long-term cost of higher education from public taxation to private debt. And in the short-term, the fees are paid by the SLC and guaranteed by the Government, so for at least the first three years it makes pretty much no difference at all to the taxpayer whether fees are £0, £3000, £7000 or whatever else. Incidentally, why are we trusting an ex-BP person to apply a cap correctly?
This is an important point and is worth bearing when ever you hear a politician talking about cutting costs and universal education being unaffordable. The government will start getting a tiny trickle of these fat fees back in round about 2014-15, by which time that nice Mr Osborne will have cleared the deficit and the sun will always be shining. Fee increases have NOTHING to do with clearing government deficit and anyone who tells you otherwise is a liar.
But – oh yeah – the cuts. One rumour
I’ve heard is of all funding for bands C and D cut, with bands A and B cut by an equivalent amount. This (apparently
) will be a 40%-ish cut. For many readers, the previous sentence will be nonsense, so allow me to explain.
For the rest of you who don’t actually care, here’s a link to a picture of Thora Birch in Ghostworld with a CC-BY-ND license.
Or if you’re super keen, here’s HEFCE explaining the whole system in more detail.
See you in 5.
HEFCE allocates funds on a weighed model, based on a complicated set of observations called TRAC-T
which tells them pretty much what it costs to do any kind of teaching in a UK university. They then simplify this into four bands and apply a weighting to each band, something like this:
Band A (Clinical Sciences) = standard unit of resource x4
Band B (Other lab-based sciences, engineering and technology) = standard unit of resource x1.7
Band C (Other lab, studio or fieldwork subjects) = standard unit of resource x1.3
Band D (everything else) = standard unit of resource x1
Then they add on some further weightings for being in or near London and some non-traditional modes of study, and note that some subjects are in multiple bands (eg Psychology) which causes no end of trouble. But the question you are probably wondering is what is the “standard unit of resource”. Well, to figure that out you take the number of students in the system (weighted as above) and then divide the total available teaching funding by that. This year, the standard unit of resource happens to be is £3947. (and the £3225 of fees “tops up” this figure to something approaching a nominal total cost of tuition per year, which must be about £7172… hmmm…)
, everyone back together at this point, please. Let me start by apologising for not doing this next bit in as cool a way as Tony Hirst
So, if we take the cuts rumours as fact, and lose HEFCE funding for band C and D entirely, and cut bands A and B by the standard unit of resource, we look like this.
Band A (Clinical Sciences) = standard unit of resource x3
Band B (Other lab-based sciences, engineering and technology) = standard unit of resource = x0.7
Band C (Other lab, studio or fieldwork subjects) = standard unit of resource x0
Band D (everything else) = standard unit of resource x0
Assuming that the nominal standard unit of resource is kept the same (£3947), we get:
A: current system = £15896, would be £11841
B: current system = £6710, would be £2763
C: current system = £5131, would be £0
D: current system = £3947, would be £0.
Looking at the system as a whole in 2008-9 combined (which are figures that have handily and rather arbitrarily have been published
by HEFCE) we can get a rough understanding of the effects this would have on the system as a whole. (note that this is really dodgy and I’m ignoring all the complicated stuff that is in more than one band, London weighting, other weighing… so this is indicative rather than exact).
So a 40% teaching funding cut by cutting Band C and D and reducing A and B by a similar amount would actually come to at least a 78% cut to core teaching funding! Clearly someone else out there has data standards as low as mine, I just hope that it isn’t someone advising David Willetts and Lord Browne.
Now from above, we know that any higher fees coming in will make no difference to state spending on HE for at least 4 years, we can make one of two assumptions depending on our current state of optimism given the assumed truth of the rumours..
1. These cuts will be one great big short sharp shock, and we’ll lose any number of institutions, with the government hoping that any extraneous costs in legal fees, redundancy etc will be more than offset by the increased savings. Carnage, basically.
2. These cuts will be tapered, to mesh with the rising fee take. Given that we’ve calculated the total unit of resource is about £7000 anyway, we wouldn’t see any overall loss in resource assuming that we see the same number of students overall. As that last clause is clearly not going to happen we will still see a certain amount of carnage, but not as much as in option 1.
And if we had the kind of government who hadn’t recently rushed in to quango cuts
and child benefit cuts
without weighing up all the implications, I’d be confidently if painfully predicting option 2.
But I’m going to end on an upbeat note. Option 3. These rumours are clearly fag-packet policy from within the Browne Review. The figures don’t add up, the fee cap raise doesn’t have the effect that is expected, and above all, the country gains £3 from every £1
it invests in Higher Education. Browne releases the report and plays the big bad capitalist, the Tories harrumph and nod, then make a big show of being beaten down to a lower cut and a lower rise in fees by the Lib Dems, those plucky defenders of student finance.
Please do comment to correct any errors of fact or calculation, I will be happy to amend the post and will attribute if you wish.