Budget reprieve for universities

Extra places may stave off one crisis but already there are pointers to a darker future on campus

By John O'Leary

Universities were among the last-minute beneficiaries in last week’s Budget of better-than-expected Government borrowing figures. Only seven days before the Chancellor came up with 20,000 extra places for the autumn, the Higher Education Funding Council for England (Hefce) was telling the sector that its intake would have to be 6,000 lower than last year. Indeed, Lord Mandelson had specifically ruled out even matching the extra places that universities were allowed to fund themselves in 2009.

A cynical interpretation of the announcement would be that universities also have David Willetts, the Shadow Universities Secretary, to thank at least for the scale of the extra places – and the £250 million that came with them. Without his promise of 10,000 more (funded) places under a Tory government, who knows whether the unexpected windfall would have been as large?

Not ones to look a gift horse in the mouth, vice-chancellors were duly grateful – and keen to take the credit for forcing the Government’s hand. Their outspoken opposition to the cuts announced by Lord Mandelson before Christmas certainly ruffled ministers, even if the electoral consequences of more than 200,000 young voters facing rejection by universities and colleges may have been more significant.

Of course, the Chancellor’s ‘modernisation’ package (which includes £35 million for business links and £20 million to facilitate efficiency savings) will not keep the Treasury wolf from the universities’ door for long. The 20,000 places are fully funded for 2010-11 only, with universities expected to produce savings to cover the costs thereafter. And no one expects special treatment for higher education when the inevitable post-election cuts come.

Despite the good news in the Budget and for all the talk of its value to economic recovery, higher education remains the only ‘front-line’ service to have been cut in 2010-11. In other areas, cuts may have been disguised as back office efficiency savings, but there has been nothing in schools, health or local government, for example, to match the £400 million taken out of universities’ teaching and capital budgets.

This month’s Hefce grant allocation may have seemed benign in the context of the Russell Group’s warning that universities would be “on their knees” when all Lord Mandelson’s cuts had been applied. But that was because moderation was applied so that no university lost more than 0.8 per cent of its grant in cash terms as a result of this year’s changes.

The announcement still showed the shape of things to come. The London School of Economics, for example, suffered a 6.3 per cent cut because it was already receiving one-off protection from the effects of the priority given to science, technology, engineering and maths. The LSE will survive because the scale of its overseas recruitment means that it is less reliant on Hefce grant than most universities, but others may not fare so well when their moderation runs out.

As is often the case, it is the post-1992 universities that look in most trouble. Several will suffer from the phasing out of funding to promote foundation degrees, as well as from the change in research funding that is designed to give more of the money to the top scorers in the 2008 Research Assessment Exercise. Only ten of the 42 institutions receiving an increase of more than 1 per cent are post-1992 universities, and some of them are being rewarded for growth in student numbers that will soon have to slow down or stop.

Nor does it seem that the new measure to concentrate research funding will be the end of that story. The notes accompanying the allocation described the increased funding for 4* research grades as “an initial step towards increased concentration” and Sir Alan Langlands, Hefce’s chief executive, refused to rule out a change in the formula if the higher education budget is cut again.

At least the post-1992 universities should be at the front of the queue for the extra places. All the big increases in applications are at new universities – over 50 per cent at Anglia Ruskin, Bedfordshire, Buckinghamshire New University, De Montfort, Middlesex and Thames Valley – whereas some of those at the top of the league tables actually have fewer applications than 12 months ago.

Once again, priority will be given to science, technology, engineering and maths, although other subjects will not be totally excluded, as they were in the share-out of last year’s 10,000 places. And the stipulation that 5,000 places should be on part-time courses and 5,000 on foundation degrees will also tilt the allocation towards the new universities.

In the longer term, however, all parts of the sector will be hit – especially by the cuts in capital budgets. Universities have transformed the run-down estates that were a legacy of the last Conservative government and many have big capital projects in the pipeline. Some of those projects were brought forward as part of the stimulus package introduced at the height of the recession, but others will be casualties of the current and future cuts.

Even at the advantageous rates negotiated by universities, some will find it hard to afford their current plans. We may soon be back to an era of down-at-heel campuses with peeling paint and deteriorating facilities.

To find out more about this article, visit: http://www.hefce.ac.uk/pubs/hefce/2010/10_08/

28 March 2010

John O'Leary. Editor, Policy Review Magazine