Tag: Funding

  • WEEKEND READING: Why Scotland’s student funding system is “unfair, unsustainable, unaffordable” and needs to be replaced with a graduate contribution model

    WEEKEND READING: Why Scotland’s student funding system is “unfair, unsustainable, unaffordable” and needs to be replaced with a graduate contribution model

    • These are the remarks by Alison Payne, Research Director at Reform Scotland, at the HEPI / CDBU event on funding higher education, held at Birkbeck, University of London, on Thursday of this week.
    • We are also making available Johnny Rich’s slides on ‘Making graduate employer contributions work’ from the same event, which are available to download here.

    Thanks to the CDBU and to HEPI for the invitation to attend and take part in today’s discussion. 

    My speech today has been titled ‘A graduate contribution model’. Of course, for UK graduates not from Scotland, I’m sure they would make the point that they very much do contribute through their fees, but the situation is very different in Scotland and I’m really grateful that I have the opportunity to feed the Scottish situation into today’s discussion.

    I thought it may be helpful if I gave a quick overview of the Scottish situation, as it differs somewhat to the overview Nick gave this morning covering the rest of the UK. 

    Although tuition fees were introduced throughout the UK in 1998, the advent of devolution in 1999 and the passing of responsibility for higher education to Holyrood began the period of diverging funding policies.

    The then Labour / Lib Dem Scottish Executive, as it was then known, scrapped tuition fees and replaced them with a graduate endowment from 2001-02, with the first students becoming liable to pay the fee from April 2005. The scheme called for students to pay back £2,000 once they started earning over £10,000. 

    The graduate endowment was then scrapped by the SNP in February 2008. A quirk of EU law meant that students from EU countries could not be charged tuition fees if Scottish students were not paying them but students from England, Wales and Northern Ireland could be charged. This meant that from 2008 to 2021/22 EU students did not need to pay fees to attend Scottish universities, though students from the rest of the UK did. 

    We’re used to politics in Scotland being highly polarised and often toxic with few areas of commonality, but for the most part the policy of ‘free’ higher education has been supported by all of the political parties. Indeed at the last Scottish election in 2021 all parties committed to maintaining the policy in their manifestos. It is only recently that the Scottish Tories have suggested a move away from this following the election of their new leader, Russell Finlay.

    But behind this unusual political consensus, the ‘free’ policy is becoming increasingly unsustainable and unaffordable. Politicians will privately admit this, but politics, and a rock with an ill-advised slogan, have made it harder to have the much needed debate.

    The Cap

    While we don’t have tuition fees, we do have a cap on student numbers. And while more Scots are going to university, places are unable to keep up with demand. Since 2006 there has been a 56% increase in applicants, but an 84% increase in the number refused entry. 

    It is increasingly the case that students from the rest of the UK or overseas are accepted on to courses in Scotland while their Scottish counterparts are denied. For example, when clearing options are posted, often those places at Scotland’s top universities are only available to students from the rest of the UK and not to Scottish students, even if the latter have better grades. As a result, Scots can feel that they are denied access to education on their doorstep that those from elsewhere can obtain. Indeed, there are growing anecdotes about those who can afford it buying or renting property elsewhere in the UK so that they can attend a Scottish university, pay the higher fee and get around the cap.

    Basically, more people want to go to university, but the fiscal arrangements are holding ambition them back. This problem was highlighted by the Scottish Affairs Select Committee’s report on Universities from 2021.

    Some commentators in Scotland have blamed the lack of places on widening access programmes, but I would challenge this. It is undoubtedly a good thing that more people from non-traditional backgrounds are getting into university, it is the cap that is limiting Scottish places, not access programmes. This is a point that has been backed by individuals such as the Principal of St Andrews, Professor Dame Sally Mapstone [who also serves as HEPI’s Chair].

    Financial Woes

    The higher education sector in Scotland, as with elsewhere in the UK, is not in great financial health. Audit Scotland warned back in 2019 that half of our institutions were facing growing deficits. Pressures including pensions contributions, Brexit and estate maintenance have all played a role and in the face of this decline, but nothing has changed and we’re now seeing crisis like those at Dundee emerge. Against this backdrop, income from those students who pay higher fees is an important revenue stream.

    There is obviously a huge variation in what the fees are to attend a Scottish university, considerably more so than in the rest of the UK.

    For example, to study Accounting and Business as an undergraduate at Edinburgh University, the cost for a full-time new student for 2024/25 is £1,820 per year for a Scottish-domiciled student (met by the Scottish Government), £9,250 per year for someone from the rest of the UK and £26,500 for an international student. 

    It is clear why international students and UK students from outside Scotland are therefore so much more attractive than Scottish students.

    However, there is by no means an equal distribution of higher fee paying students among our institutions.

    For example, at St Andrews about one-third of undergraduate full-time students were Scots, with one-third from the rest of the UK and one-third international. The numbers for Edinburgh are similar.  

    At the other end of the scale, at the University of the Highlands and Islands and Glasgow Caledonian, around 90% of students are Scottish, with only around only 1% being international.  

    So it is clear that institutions’ ability to raise money from fee-paying students varies very dramatically, increasing the financial pressures on those with low fee income.

    However, when looking at the issue, it is important to recognise that it is not just our universities who are struggling, Scotland’s colleges are facing huge financial pressures as well. 

    The current proposed Scottish budget would leave colleges struggling with a persistent, real-terms funding cut of 17 per cent since 2021/22. Our college sector is hugely important in terms of the delivery of skills, working with local economies and as a route to university for so many, but for too long colleges have been treated like the Cinderella service in Scotland. The prioritising of ‘free’ university tuition over the college sector is adding to this problem.

    Regardless of who wins the Holyrood election next year, money is, and will remain, tight for some time. It would be lovely to be able to have lots of taxpayer funded ‘free’ services, but that is simply unsustainable and difficult choices need to be made. 

    This is why we believe that the current situation is unfair, unsustainable, unaffordable and needs to change.

    Reform Scotland would offer another alternative solution. We believe that there needs to be a better balance between the individual graduate and Scottish taxpayers in the contribution towards higher education. 

    One way this could be achieved is through a fee after graduation, to be repaid once they earn more than the Scottish average salary. This would not be a fee incurred on starting university and deferred until after graduation, rather the fee would be incurred on graduation.

    In terms of what that fee could be, the Cubie report over 25 years ago suggested a graduate fee of £3,000, which would be about £5,500 today.  This could perhaps be the starting point for consideration.  

    Any figure should take account of different variations in terms of the true cost of the course and potential skill shortages. 

    However, introducing a graduate fee would not necessarily mean an end to ‘free’ tuition. 

    Rather it provides an opportunity to look at the skills gaps that exist in Scotland and the possibility of developing schemes which cut off or scrap repayments for graduates who work in specific geographic areas or sectors of Scotland for set periods of time. 

    Such schemes could also look to incorporate students from elsewhere for Scotland is facing a demographic crisis. Our population is set to become older and smaller, and we are the only part of the UK projected to have a smaller population by 2045. 

    We desperately need to retain and attract more working-age people. Perhaps such graduate repayment waiver schemes could also be offered to students from the rest of the UK who choose to study in Scotland – stay here and work after graduation and we will pay a proportion of your fee. A wide range of different schemes could be considered and linked into the wider policy issues facing Scotland. 

    According to the Higher Education Statistics Authority (HESA) there were 3,370 graduates from the rest of the UK who attended a Scottish institution in 2020/21. Of those, only 990 chose to remain in Scotland for work after graduation. Could we encourage more people to stay after studying?

    Conclusion

    A graduate fee is only one possible solution, but I would argue that it is also one with a short shelf life. As graduates would not incur the fee until they graduated, there would be a four-year delay between the change in policy and revenue beginning to be received. Our institutions are facing very real fiscal problems and there is a danger of a university going to the wall. 

    If we get to the 2026 election and political parties refuse to shift the dial and at least recognise that the current system is unsustainable, then there is a danger that nothing will change for another Parliamentary term. I don’t think we can afford to wait until 2031.

    There is another interesting dynamic now as well. Labour in Scotland currently, publicly at least, oppose tuition fees. However, there are now 37 Scottish Labour MPs at Westminster who are backing the increase of fees on students from outside Scotland, or Scottish students studying down south. Given the unpopularity of the Labour government as well as the tight contest between the SNP and Labour for Holyrood, it seems unlikely that position can be maintained.

    All across the UK there are increasing signs of the stark financial situation we are facing. Against that backdrop, along with the restrictions placed on the number being able to attend, free university tuition is unsustainable and unaffordable. People outside Scottish politics seem to be able to see this reality, privately so do many of our politicians. We need to shift this debate in to the public domain in Scotland and develop a workable solution.

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  • The research system won’t become more agile without a deeper conversation on funding

    The research system won’t become more agile without a deeper conversation on funding

    There is a feeling among some policymakers that the UK research system lacks agility. But the key question is agility for who: for researchers, for research institutions, or for the government which funds the research?

    By definition, research explores the unknown. These unknowns range from the unknown solutions to today’s challenges such as affordable healthcare and reversing climate change, to initiating the yet unknown technologies of tomorrow that will feed future economic growth.

    Whose agility?

    The UK government’s Plan for change: milestones for mission-led government repeatedly mentions the UK’s outstanding research base. It is also clear that government has high expectations of how our research system can demonstrate agility to pivot towards addressing major societal needs. But addressing any of these missions requires time, and hence a disciplined balance of agility and commitment to a long-term research agenda.

    At a more operational level, for our national funders such as UKRI, legitimate concerns over the precarity of research careers, and the recognition that hard problems take time to solve, means that a large fraction of their annual budget is committed for three or more years into the future.

    The extent of these multi-year commitments seemingly restricts the agility of the research system. However, looking more closely, embedded within these commitments are the commitments made to individual researchers to support them and their teams to pursue thematic programmes while empowering their own agility to rapidly pivot their research in response to new ideas of their own or the discoveries of others. It is precisely these longer-term funding commitments typified by support for research fellowships or the quality-related funding driven by REF that allows the UK’s researchers themselves to be agile.

    It is widely accepted the UK’s research system is highly productive in basic curiosity-driven research. This productivity, we would argue, is a direct result of the researcher-led agility that our current funding system allows. However, we also recognise that government can and should identify areas of research in support of our industrial or other national needs – some on shorter time horizons.

    The key is the balance between this academically-led and government directed agility – we can and do need to do both. Reaching this balance requires greater transparency from the funding agencies and an intellectually safe discussion between government and the research sector. We urge UKRI and DSIT to articulate this balance, around which we can all then work.

    Speed and success

    Related to these questions of agility are current problems in the funding system which if left unchecked will undermine our research productivity. The costs of research have far outstripped inflation and available research funding has not kept pace – for example, the fall in the number of doctoral training centres funded by EPSRC from 2014 to 2019 and to 2024.

    These financial pressures have driven hyper competition in the sector. Success rates have plummeted, with many researchers’ experience being of ten per cent success rates or less – particularly in the schemes supporting academically-led, curiosity-driven research.

    Perhaps even worse are the lengthening times taken to receive a funding decision; a decision on a three-year long application often takes more than one year to receive – hardly a route to agility of any kind.

    Irrespective of these budget-constrained success rates, we urge our national funders to reduce significantly the time it takes to reach their decisions on whether to fund or not. Suggestions have been made to move to lottery funding, thereby reducing decision times and eliminating potential biases within an ultra-low success rate environment. But a lottery would not solve the issue of low success rates, and hence fails to provide the continuity of funding for people and the security of careers upon which their agility depends.

    Beyond long decision times, low success rates drive many other unwanted behaviours: for example, conservatism in selection, or a tendency for the applicant to oversell.

    The danger of system failure

    The reality is that the public purse alone is insufficient to fund the research volume the UK requires. Hence a question for the research sector, funders and government alike is how we can maximise the gearing of taxpayers’ investments by securing industrial and philanthropic co-investment to drive economic growth and public benefit.

    It should also be recognised that universities in the UK increasingly cross-subsidise the whole research system via non-publicly funded teaching, and that this aspect of the system is already highly geared. Leaving aside several successful schemes which already do this, such as EPSRC prosperity partnerships, we believe that a co-investment culture would also require system agility and prompt decisions.

    We all feel that the research system lacks agility, but we each see this problem from our own perspectives. The government bemoans the forward commitment of our funders – but also needs to restrict the number of new initiatives to those that it has the resources to fund, perhaps refocussing an agreed fraction of the challenges each year. Funders think that they are empowering the agility of their researchers – but also need to realise that their lengthy decision times are harming productivity. Individual researchers should welcome the agility with which they are empowered – but must accept also the responsibility to never stop thinking as to how their expertise can be applied to benefit the economy and society.

    These are the interconnected problems of agility, of balance between government priorities and curiosity-driven research, of success rates, of decision times. The system we have is in danger of failing us all – we need to talk.

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  • State Funding for Short-Term Credentials Ramps Up

    State Funding for Short-Term Credentials Ramps Up

    Title: A 2024 Update of State Investments in Short-Term Credential Pathways

    Author: Stephanie M. Murphy

    Source: HCM Strategists

    The higher education landscape continues to evolve rapidly as more and more students prioritize short-term credentials, also known as micro-credentials and non-degree credentials. There is increased demand for these valuable credentials, which can improve individuals’ career prospects and meet the changing needs of the modern economy and job market.

    Despite a massive proliferation in funding for short-term credentials, there has been a lack of systematic cataloging or analysis of state investments in short-term credentials. HCM Strategists, through funding from the Lumina Foundation, conducted an in-depth examination of all 50 states to establish the first comprehensive classification system of state funding for short-term credential programs. The October 2024 report is an update of HCM Strategists’ 2023 typology and policy landscape analysis of short-term credentials.

    Key findings are summarized below:

    Total state investments in short-term credentials exceed $5.6 billion across 69 initiatives in 31 states.

    • This represents an increase from 2023, when there were 59 state-led programs with nearly $4 billion in funding.
    • Across programs, a majority of state funding for short-term credentials has gone toward students, for financial aid, and institutions, for capacity building and student supports and aid).

    Since 2023, 10 new short-term credential initiatives have launched in eight states, increasing total investments by roughly $1.8 billion.

    • As an example, Alabama established its Short-Term Credential Scholarship Program during the 2025 fiscal year with a $1 million appropriation. This initiative reimburses Alabama residents for up to $4,500 in for expenses such as tuition, fees, and materials as they seek short-term credentials aligned with workforce demands.
    • In Colorado, HB24-1340, signed into law in May 2024, created a tax credit for low- and middle-income residents enrolled at public colleges and universities. This initiative provides full reimbursement of tuition and fees for eligible recent high school graduates, improving access to short-term credentials.
    • West Virginia’s Credential WV micro-credential initiative was created in October 2024 to help workers and students gain targeted credentials to meet new labor market demands in the state. This program will roll out over three years, with institutions identifying resources to create workforce-aligned micro-credentials and standardizing the process for awarding credit for prior learning.

    Short-term and non-degree credentials are becoming an increasingly central piece of the education landscape in the United States. And while 31 states have invested more than $5.6 billion across 69 initiatives to make workforce training more accessible, research remains limited on the outcomes and long-term labor market value of these credentials. The large financial investments that states and institutions of higher education are making into short-term credential pathways reflect the growing recognition of the value of immediate upskilling in today’s labor market.

    To read the full report from HCM Strategists, click here.

    —Austin Freeman

    If you have any questions or comments about this blog post, please contact us.

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  • Quick Update on Research Funding

    Quick Update on Research Funding

    Remember the spring budget, when the Federal government announced a heavily back-ended $1.8 billion (spread over five years) boost to research grant funding, as well as the creation of a capstone research organization which might have its own funds to co-ordinate challenge-based research? Well, the federal government has recently been fleshing out these announcements through a series of badly coordinated media releases. And so today, we’re going to go on a quick government press release safari to try to work this out.

    The three granting councils have all issued statements about how much new funding they expect to receive over the next five years. SSHRC says that its share of the $1.8 billion will be $316 million. CIHR says it is in line for $540 million over five years. NSERC does not provide a figure over five years, but it does say it what it will receive in years one and five, and since these figures are both pretty close to the numbers CIHR cites, I’m going to go ahead and say that NSERC is set to get something around $540 million as well. Total to the councils is therefore $1.396 Billion over five years.

    In addition to this, the government says it is going to give $182 million over five years for the creation of 224 new Canada Research Chairs. It also says it will be providing $452 million to the Research Support Fund (RSF) for things such as establishing digital tools to support research and cybersecurity and supporting inclusive and indigenous research. A separate press release says it will be providing $354 million to support the indirect costs of research. 

    Now, if you’re counting carefully, you’ll realize that total government announcements total to $2.03 billion. Which, it should be superfluous to add, is not $1.8 billion.

    Confused? Me too.

    And the government is not done with announcements. Recall from the spring budget that one of the key announced changes was the creation of a “capstone” organization which would sit above the tri-councils without actually directing them. Details on what it would do and how were scarce, mainly because ISED and Finance were at loggerheads over the issue and so the feds did what they always do and punted the question for a few months with the magic words “details to come in the Fall Economic Statement.” 

    Now, it’s not entirely clear that there actually will be a Fall Economic Statement (Dec. 21st is fast approaching and there’s still no date set), but one key question it was meant to resolve was whether or not the capstone organization would, as recommended by l’Université de Montréal’s estimable Frederic Bouchard and the rest of his Advisory Panel, have funds of its own (beyond those run by each of the tri-councils) for a) multi- and interdisciplinary research that falls through the cracks between the councils and b) mission-driven research. I think the general assBudumption in the research community is that while the capstone organization might not get a ton of money for these activities, the sum would nevertheless be non-zero. So we’re more than likely not just $200 million dollars over the originally-announced budget but probably $300 million or more.

    It’s not peculiar that this government might go over budget on something. What is peculiar is that the current government, famous for believing (or at least giving every evidence of doing so) that spending money is in and of itself evidence of program effectiveness, wouldn’t take credit for it. If they were actually bumping up their overall spend, past form suggests they’d be shouting it from the rooftops instead of letting some random higher education blogger work it out on his own and then share it with a few thousand of his closest followers. 

    A mystery to be cleared up soon I guess. 

    One other point of note here is a wrinkle in how the additional indirect support grants will work. Overall, indirect support has been equal to about 22% of “direct” funding: that is, for every dollar of tri-council grant that goes out, 22 cents accompanies it to cover overhead (most informed observers think actual overhead is closer to 50 cents, but this is another story). The sum being allocated in these announcements—$354 million to accompany a $1.4 billion increase in council grants—is more or less in line with this figure.

    BUT—and this will be a big but for some people—the money is only going to be given to institutions which receive more than $7M/year in tri-council grants, which basically means the U15 plus a half-dozen others. Why? Well, because that 22% average is just that: an average. The biggest tri-council grant recipients (i.e. the U15) only get indirect funding equal to about 18% of their tri-council grant haul. At some of the smallest institutions, the figure can be as high as 80%. This equalization formula has, as you can imagine, driven the U15 absolutely spare over the two decades it has been in force, and so you can read this part of the announcement as a victory for the Big Rich Universities. 

    More when we get a Fall—or possible a Winter—Economic Statement. See you then.

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  • University autonomy and government control by funding

    University autonomy and government control by funding

    by GR Evans

    A change of government has not changed the government’s power to intrude upon the autonomy of providers of higher education, which is constrained chiefly by its being limited to the financial. Government can also issue guidance to the regulator, the Office for Students, and that guidance may be detailed. Recent exchanges give a flavour of the kind of control which politicians may seek, but this may be at odds with the current statutory framework.

    As Secretary of State for Education, Gillian Keegan sent a Letter of Guidance to the Office for Students on 4 April 2024. She stated her priorities, first that ‘students pursue HE studies that enable them to progress into employment, thereby benefitting them as well as the wider economy’. She also thought it ‘important to provide students with different high-quality pathways in HE, notably through higher technical qualifications (HTQs), and degree apprenticeships’ at Levels 4 and 5. These ‘alternatives to three-year degrees’, she said, ‘provide valuable opportunities to progress up the ladder of opportunity’. As a condition of funding providers were to ‘build capacity’ with ‘eligible learners on Level 4 and 5 qualifications via a formula allocation’.  The new Higher Technical Qualifications were to attract ‘an uplift within this formula for learners on HTQ courses’. ‘World leading specialist providers’ were to be encouraged and funded ‘up to a limit’ of £58.1m for FY24/25.

    The change of Government in July 2024 brought a new Secretary of State in the person of Bridget Phillipson but no fresh Letter of Guidance before she spoke in the Commons in a Higher Education debate on 4 November, 2024. Recognising that many universities were in dire financial straits, she  suggested that there should be ‘reform’ in exchange for a rise in tuition fees for undergraduates which had just been announced. That, she suggested, would be needed to ensure that universities would be ‘there for them to attend’ in future.

    However, commentators quickly pointed out that Phillipson’s announcement that there would be a small rise in undergraduate tuition fees from £9,250 to £9,535 a year would not be anywhere near enough to fill the gap in higher education funding. The resulting risks were recognised. When the Office for Students reviewed the Financial sustainability of higher education  providers in England in 2024 in May 2024 it had looked at the ‘risks relating to student recruitment’ by providers in relation to the income from their tuition fees.

    Phillipson was ‘determined to reform the sector’. She called for ‘tough decisions to restore stability to higher education, to fix the foundations and to deliver change’ with a key role for Government.  Ministers across Government must work together, she said, especially the Secretary for Education and the Secretary of State for Science, Innovation and Technology in order to ‘deliver a reformed and strengthened higher education system’. This would be ‘rooted in partnership’ between the DfE, the Office for Students and UK Research and Innovation’.

    “… greater work around economic growth, around spin-offs and much more besides—I will be working with my right hon. Friend the Secretary of State for Science, Innovation and Technology on precisely those questions.”

    In the debate it was commented that she was ‘light on the details’ of the Government’s role’.  She promised those for the future, ‘To build a higher education system fit for the challenges not just of today but of tomorrow’. She undertook to publish proposals for ‘major reform’.  There were some hints at what those might include. She saw benefits in providers ‘sharing support services with other universities and colleges’. Governing bodies, she said, should be asking ‘difficult strategic questions’, given the population ‘changing patterns of learning’ of their prospective students. The ‘optimistic bias’ she believed, needed to be ‘replaced by hard-headed realism’. ‘Some institutions that may need to shrink or partner, but is a price worth paying as part of a properly funded, coherent tertiary education system.’ She saw a considerable role for Government. ‘The government has started that job – it should now finish it.’

    Like her predecessor she wanted ‘courses’ to provide individual students as well as the nation with ‘an economic return’. She expected providers to ‘ensure that all students get good value for money’. Other MPs speaking in the debate pressed the same link. Vikki Slade too defined economic benefit in terms of the ‘value for money’ the individual student got for the fee paid.  Laura Trott was another who wanted ‘courses’ to provide individual students as well as the nation with ‘an economic return’. Shaun Davies asked for ‘a bit more detail’ on ‘the accountability’ to which ‘these university vice-chancellors’ were to be held in delivering ‘teaching contact time, helping vulnerable students and ensuring that universities play a huge part in the wider communities of the towns and cities in which they are anchor institutions’.

    Government enforcement sits uncomfortably with the autonomy of higher education providers insisted on by the 2017 Higher Education and Research Act. This Act created the Office for Students as ‘a non-departmental public body’, ‘accountable to Parliament’ and receiving ‘guidance on strategic priorities from the Department for Education’. Its ‘operations are independent of government’, but its ‘guidance’ to providers as Regulator is also heavily restricted at s.2 (5) which prevents intrusion on teaching and research. That guidance may not relate to ‘particular parts of courses of study’; ‘the content of such courses’; ’the manner in which they are taught, supervised or assessed’; ‘the criteria for the selection, appointment or dismissal of academic staff, or how they are applied’; or ‘the criteria for the admission of students, or how they are applied’.

    This leaves the Office for Students responsible only for monitoring the financial sustainability of higher education providers ‘to identify those that may be exposed to material financial risks’. Again its powers of enforcement are limited. If it finds such a case it ‘works with’ the provider in a manner respecting its autonomy, namely ‘to understand and assess the extent of the issues’ and seek to help.

    Listed in providers’ annual Financial Statements may be a number of sources of funding to which universities may look. These chiefly aim to fund research rather than teaching and include: grants and contracts for research projects; investment income; donations and endowments. The Government has a funding relationship with Research England within UKRI (UK Research and Innovation). UKRI is another Government-funded non-departmental public body, though it is subject to some Government policy shifts in the scale of the funding it provides through the Department for Science, Innovation and Technology.

    Donations and endowments may come with conditions attached by the funder, limiting them for example to named scholarships or professorships or specific new buildings. However  they may provide a considerable degree of financial security which is not under Government control. The endowments of Oxford and Cambridge Universities are substantial. Those made separately for their Colleges. may be very large, partly as a result of the growth in value of land given to them centuries ago. Oxford University has endowments of £1.3 billion and its colleges taken together have endowments of £5.06 billion. Cambridge University has a published endowment of  £2.47 billion, though Cambridge’s Statement for the Knowledge Exchange Framework puts ‘the university’s endowment ‘at nearly £6 billion’.  Cambridge’s richest College, Trinity, declares endowments of £2.19 billion.

    The big city universities created at the end of the nineteenth century are far less well-endowed.  Birmingham had an endowment of £142.5 million in 2023, Bristol of £86 million. Of the twentieth and twenty-first century foundations, Oxford Brookes University notes donations and endowments of £385,000 and Anglia Ruskin University of £335,300. The private ‘alternative’ providers of higher multiplying in recent decades have tended to have a variety of business and commercial partnerships supporting their funding. Categories of funding provided by such gifting remain independent of Government interference.

    The Review of Post-18 Education and Funding (May 2019) chaired by Philip Augur stated ‘Principles’ including that ‘organisations providing education and training must be accountable for the public subsidy they receive’, and that ‘Government has a responsibility to ensure that its investment in tertiary education is appropriately spent and directed’. ‘Universities must do more to raise their impact beyond their gates’, Phillipson said, so as ‘to drive the growth that this country sorely needs’ including by ‘joining with Skills England, employers and partners in further education to deliver the skills that people and businesses need’.

    In the same Commons debate of 4 November Ian Roome, MP for North Devon, was confident that in his constituency ‘universities work in collaboration with FE sector institutions such as Petroc college’. Petroc College offers qualifications from Level 3 upwards, including HNCs, higher-level apprenticeships, Access to HE diplomas, foundation degrees and honours degrees (validated by the University of Plymouth) and ‘in subjects that meet the demands of industry – both locally and nationally’. Roome saw this (HC 4 November 2024) as meeting a need for ‘a viable and accessible option, particularly in rural areas such as mine, for people to access university courses?’ Phillipson took up his point, to urge such ‘collaboration between further education and higher education providers’. Shaun Davies spoke of the £300 million the Government had put into further education, ‘alongside a £300 million capital allocation’, invested in further education colleges’.  

    However in an article in the Guardian on 4 November 2024,Philip Augur recognised that ‘the systems used by government to finance higher and further education are very different’. ‘Universities are funded largely through fees which follow enrolments’, in the form of student loans of £9,250, now raised to £9,535. ‘Unpaid loans are written off against the Department for Education’s balance sheet’. At first that would not be visible in the full  government accounts until 30 years after the loan was taken out. Government steering had become more visible following the Augur Report, with the cost of student loans being recorded ‘in the period loans are issued to students’, rather than after 30 years.  

    By contrast the funding of individual FE colleges is based on annual contracts from the Education and Skills Funding Agency, an executive agency of the DFE for post-18 education. They may then spend only within the terms of the contract and up to its limit. The full cost of such contracts is recorded immediately in the public accounts. This makes a flexible response to demand by FE colleges far from easy. Colleges may find they cannot afford to run even popular courses such as construction, engineering, digital, health and social care, without waiting lists for places. The HE reform Phillipson considered in return for a rise in tuition fees had no immediate place in FE.

    Government funding control maintains a pragmatic but very limited means of means of giving orders to universities. This depends on regulating access to taxpayer-funded student loans. The Office for Students measures a provider’s teaching in terms of its ‘positive outcomes’. These are set out in the OfS ‘Conditions’ for its Registration, which are required to make a provider’s students eligible for loans from the Student Loans Company. Condition B3 requires that a provider’s ‘outcomes’ meet ‘numerical thresholds’ measured against ‘indicators’: whether students continue in a course after their first year of study; complete their studies and progress into managerial or professional employment.

    An Independent Review of the Office for Students: Fit for the Future: Higher Education Regulation towards 2035 appeared in July 2024. The Review relies on ‘positive outcomes’ as defined by the OfS’s ‘judgement’,  that ‘the outcome data for each of the indicators and split indicators are at or above the relevant numerical thresholds’. When such data are not available the OfS itself ‘otherwise judges’.

    The government’s power to intrude upon the autonomy of providers of higher education continues to be constrained, but chiefly by its being limited to the financial, with many providers potentially at risk from their dependence on government permitting a level of tuition fee high enough to sustain them.

    GR Evans is Emeritus Professor of Medieval Theology and Intellectual History in the University of Cambridge.

    Author: SRHE News Blog

    An international learned society, concerned with supporting research and researchers into Higher Education

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