Joint Information Systems Committee

Strategies Conference

Focus on Funding

Keynote Address by Nigel Brown

7 December 2000

Key Contexts

• Challenge from the Secretary of State

• Government Expectations

• Divergence of National Funding Systems within the UK

• Inadequacy of the Unit of Teaching Resource

Funding ReviewTerms of Reference

• Stage 1

- to identify the future funding requirements of UK HEIs over the next decade

- draw on all available sources of data to undertake a comprehensive review of public and private funding sources and how these are deployed

- to assess the extent to which these sources meet the future funding requirement

Funding Options ReviewTerms of Reference (cont.)

- cost and model the various funding options including differential fees which might meet the future funding requirements

• Stage 2

- This will develop criteria against which the strengths and weaknesses of the funding options identified in Stage 1 can be assessed

- This assessment will form the basis of policy on the principles for future funding of HE

Publicly Planned Funding for HE2001-2002 to 2003-2004

• £1 bn. additional funds across the three years

• funding for an extra 45,000 places mainly part-time and sub-degree

• most other additional funding for specific initiatives, including C&IT

• little or no increase in the core funding per student - 0 to 0.5% per annum

C&IT Requirements

• Re-tooling Teaching and Learning

• On-line Student Administration

• Improving Academic and Pastoral Support

• Scholarship and Research - Empowering the Individual

• E-University or E-Universities

London Economics Option Types

1. Increased Means-tested Fees (differentiated or undifferentiated)

2. Higher Means-tested Fees for Those from the Wealthiest Backgrounds

3. Increased Fees with Income-contingent Loans

4. Income-contingent graduate contributions

Increased Means-tested Fees

• Increased public contribution

• Increased private contribution from all students who currently pay a contribution -about 50% from 2001-2002

• Differential maximum contribution by subject or possibly by institution

The Wealthy Pay More

• No Necessary Increase in Public Funding

• Those who Currently Pay No Contribution or Pay a Contribution Less Than the Maximum make no increased Contribution

• Those who Currently Pay the Maximum Contribution Pay an Increased Contribution on a Means-tested Basis up to the average full cost across all subjects

Increased Fees Backed By Income-Contingent Loans

• Increased Public Funding Up-Front to Meet the Increased Fee Payment

• Decreased Private Contribution Up-Front

• Contributions from Graduates on an Income-Contingent Basis Until the Total Real Cost is Repaid: Those Who Never Earn Above the Threshold Never Required to Repay

Graduate Contributions

• No Necessary Increase in Public Funding Unless Graduate Contributions Combined with an Increased Up-Front Fee

• Income-Contingent Graduate Contributions Either Open-Ended(Graduate Tax) or to Some Pre-Set Maximum

• Can Be Paid to the Exchequer, to a Separate Higher Education Fund,or to the Graduate’s Institution

The Status Quo

• Means -tested Contribution to Tuition Costs (The Student Fee) up to a Maximum in the Current Year of £1,050 for Full-Time Undergraduates

• 44% currently pay no fee: This will rise to 50% from 2001-2002

• The Vast Majority of Maintenance Support is Through Income-Contingent Loans

Universities UK Options Under Consideration

A. Status Quo with Limited Modification

B. Increased Fees Backed by Income-Contingent Loans

C. Deferred Payment/Graduate Contributions

D. Full Cost Fees and Means-Tested Scholarships

E. Institutional Opt-Out/Endowment

Higher education funding per student in England, 1993 to 2001 (1999 prices)

4200

4400

4600

4800

5000

5200

5400

5600

5800

1993-94 1994-95 1995-96 1996-97 1997-98 1998-99*(plans)

1999-00*(plans)

2000-01*(plans)

2001-02*(plans)

Financial Years

Fu

nd

ing

per

stu

den

t (£

)

including student fees contribution

excluding student fees contribution

Tertiary educational expenditure from public and private sources as a percentage of GDP

(1997)

0

0.5

1

1.5

2

2.5

3

Australia Canada France Germany Japan Netherlands UK USA

Country

% o

f G

DP