1. CVU annual conference, 19 September 2014
Public spending on higher education
and the implications for partnership activity
Julian Gravatt, Assistant Chief Executive, AoC

2. English College HE Characteristics
100,000 students in 280 colleges (range 100 to 3,500)
Local, employer-led, technical, some niche
c50% apply for one course/one institution (UCAS)
70% live within 25 miles of campus
Student cohort more disadvantaged than HE average
Partnerships with Universities long-standing & important

3. English College HE trends
2008-9
2011-2
2012-3
Full Time
Direct 31 37 44
Indirect 28 30 24
Sub-total 59 66 68
Part Time 21 20 33 27 18 56 48 38
117
116
106
% Direct
47%
50%
60%

4. The English HE system – not a normal market
Supply
Inertia (heritage, three-year degrees etc)
Longish lead-times to respond to demand but shortening
Full-time UG fees close to the £9,000 cap
Universities compete to be higher up league tables
Demand
Applicants need to be qualified to make a choice
Degrees are positional goods
Higher fees are paid after completion (no fees upfront)
Living costs loom larger than fees to many students

5. “Breaking the mould” Analysis
English post-secondary higher-level skills system weak and small
Policy & history biased towards full-time
residential three-year degree model
Proposals
Re-balance the system
Different approaches to validation
Colleges/universities to work on progression

6. The bigger spending picture
Government plans Deficit reduction Spending cuts Spending review in 2015 Unprotected departments 9.1% of GDP ( ) 7.8% of GDP ( ) 5.4% of GDP ( ) Loans may be a safe haven

7. The HE budget 2011-12 Teaching Student Support Research RAB charge
Grants
Loans
Teaching
Student Support
Research
RAB charge
Grants
Loans

8. Revenue spending in HE after 2015
BIS revenue budget £13.2 billion in (£8 billion HE) Spending plans imply 31% cuts to unprotected depts ( ) IFS scenarios for UUK (back in October 2013) 1. Breach the science/research ringfence (£4.6 bil budget) 2. Allow fees for Medicine & STEM to exceed £9, Switch from HE maintenance grants to HE loans 4. Reduce number of FT HE students 5. Cut 19+ FE/Skills budget further (on top of 35% cuts )

9. HE student loans after 2015 Issues Options 2013-14 2014-15 2015-16
Outlays
10.3
12.7
14.4
15.6
16.7
17.4
Repayments
1.8
2.1
2.3
2.5
2.6
Issues Options

10. Now – the 2014-15 HE round The spending decisions
HE teaching grant £2 bil; HE fee loans £7 bil
Decisions on HEFCE grants and SNCs notified in March
Fee regulation
No significant change despite new fair access director at OFFA
Allocation of HE loan budget
30,000 additional FT entries in 2014 (8% extra)
No core/margin bidding process
Redistribution of SNCs within a new flexibility range (6%)
Off quota Colleges and private HEIs will get SNCs
Some justifiable concern about practices in some private HEIs

11. The future – 2016 and beyond Could general election change things?
“Young people feel they have no control because they are going to get into mountains of debt if they go to university…We do want a radical offer on tuition fees because the future of our young people… is a massive issue that our country faces,”
Ed Miliband, ITV interview, March 2014
..but Ministers would need to act quickly
“There are some decisions, however, that can’t wait. We do need to set out in the next few weeks the way forward for graduate contributions and student support if we are going to have any chance of implementing changes for the Autumn of 2012 …..It is rather like A. J. P. Taylor’s thesis that train timetables determined the outbreak of the First World War”
David Willetts, October 2010

12. HE full-time entries 2012-13 312,000 £7,700 2013-14 345,000 £7,800
Entry numbers
Average SLC fee loan
312,000
£7,700
345,000
£7,800
375,000
£7,900
390,000
£8,100
Source: Derived from PQ answered by David Willetts, 24 Feb 2014

13. Suggestions Rethink adult learning
Changes to public spending permanent
These are long-term trends which take time to implement
Loans are a way to make fees more palatable
Fees were a bigger part of the mix in the 1980s
There’s still considerable demand for education and training
People are working longer/need to retrain
Employers still think about workforce development
Opportunities exist