Access in a New Era Funding Update Julian Gravatt, Assistant Chief Executive Association of Colleges 23 March 2012
Access funding update The wider context Higher education funding and finance Further education funding and finance Some concluding thoughts
Events trump plans 2007: The credit crunch (Northern Rock) 2008: The banking collapse (Lehmans, RBS, Lloyds) 2009: Bank rate 0.5%, Quantitative easing, Fiscal Stimulus 2010: Eurozone Crisis starts, Coalition government 2011: The Arab Spring, the summer riots in UK 2012: What’s the most important thing this year?
Funding of higher/further ed Coalition agreement (May 2010) had two priorities - Economic recovery - Reduction in government deficit Higher education funding left to the Browne review (Oct 2010) Decisions (autumn 2010) to: - protect spending on research - remove teaching funding/replace with fees & loans - measures to protect access (fee cap, loan changes etc) - reduce spending on FE skills by 25%
The higher education budget The imperative “The issue is how the higher education sector makes its contribution to deficit reduction” Vince Cable, Parliament, 12 Oct 2010 Total spending rises... Teaching grants cut from £5 bil to < £2 bil) Student loans rise from £3 bil to £7 bil ...but every £1 in loans costs 30 pence in interest subsidies and write-off
Quotas in 2012-13 360,000 full-time entrants a year est. 65,000 AAB+ places 2012-13 quota = 2011-12 less 9% 20,000 places up for grabs if fees < £7,500 11,000 places to Colleges, 9,000 to Unis Withdrawal of University places in Colleges
Universities & HE teaching Universities have diverse income – UK teaching, research, overseas HE teaching income rising in some Universities Growing competition between Universities for AAB+ students; Divergence in University fortunes Universities control 93% of the student loan quotas in 2012-13 Uncertainty about student demand and the pace of reform
Colleges & HE teaching Long tradition of College higher education but evolution depends on local factors (egcompare Outer vs Inner London, Essex, Suffolk etc) 266 Colleges offer government-funded HE courses 25 Colleges >1,000 FTE students 30 Colleges have 500-100 FTE students 210 Colleges have less than 500 (a long tail) Colleges account for 7% of HE full-time entrants
19+FE and skills funding Budget cut £4 bil (2011) to £3 bil (2015) Single Adult Skills Budget Initial plan to reduce 100% entitlements - inactive benefits, ESOL - second level 2s - level 3s for over 25s Partial reversal of rule changes in 2011
SFA stops and starts 2010 12% cut in adult learning (before election) Single adult skills budget 2011 Smaller (2%) cut than expected for 2011-12 Many Colleges missed 2010-11 targets SFA distributed extra funds in autumn 2011 2012 Large (12%) cash cuts in provisional allocations Final allocations for 2012-13 due shortly
Skills funding & policy Colleges have some freedom with diminishing budgets BUT Expectation that apprenticeships and unemployed come first Course funding rates have been cut Some courses have been declared ineligible System and rules still pretty complicated Meanwhile SFA downsizing and managing multiple initiatives New growth initiatives every month .
FE loans from 2013 A revenue/capital switch (like HE) Level 3 & 4 courses, over 24s Similar to 2012 HE fee loans Big differences betweenHE & FE admin Big implementation risks Briefing paper on www.aoc.co.uk .
Access course viability Understand HE /19-24 FE/25+ FE funding & fees Forecast income (SFA rates * student numbers) What will happen to student demand as things change? How can things be done differently to sustain your area? - Changes in course hours - Changes to teaching input - Other sources of income - Other cost reductions
Some challenges & opportunities Some big uncertainties where competition will come from political direction student & employer response to higher fees which courses are worth doing Income reduction/staffing changes are a permanent fact of life Would you rather be somewhere other than London? Has it ever been particularly easy?