London Conference - Juliet Chester - Higher Education Policy

Higher education policy and the implications of the funding reforms

Juliet Chester

Head of policy and data analysis, Universities UK

AUA London Jubilee Conference, 6 December 2011

Contents

1. Policy context

2. Implications of teaching funding reforms in England

3. Changes in the regulatory landscape

4. Other policy developments

5. UUK’s role in policy impact monitoring

6. Conclusion

7. Questions for discussion

2

1. Policy context





6. Conclusion


3

Central and devolved decisions

4

Fee policy

Combination of partially devolved decision-making and cross-UK impact

Student numbers

Funding council (T and R)

Immigration/Visa policy

Quality assurance

Research Councils

Student finance

Westminster govt Devolved administrations

= policy decisions relate directly to all UK HEIs

= policy decisions relate directly to HEIs in home nation

Reforms to teaching funding and fees (1/2) – key policy interventions in England

5

2010 2011

Summer Autumn Winter Winter Spring Summer Autumn

Fiscal mandate Emergency budget

Spending Review

Budget

Chancellor’s Autumn statement

Reform agenda Response to Browne Review

HE White Paper: Students at the heart of the system

Regulatory framework consultation

ImplementationFees legislation

OFFA guidance

HEFCE T funding consultation

Outcomes of HEFCE T funding consultation

Reforms to teaching funding and fees (2/2) – summary of developments in the devolved nations

6

– Scotland, • Additional £135.5million per year • Average fee of £6,841 for students from the rest of

the UK

– Wales • Fee grants for Welsh students in Wales and rest of

UK, likely to cost over £1bn over next 5 years• Other students in Wales to be charged up to £9,000

– Northern Ireland• Tuition fee levels maintained for home students• Other students in NI to be charged up to £9,000• Loans for NI students in rest of UK up to £9,000

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Tuition fees: the emerging UK pictureIllustrative maximum WHOLE COURSE charges for full-time undergraduates

1998 2001 2006 2008 2010 2012

England

Wales

Northern Ireland

Scotland

Upfront fee with means-tested discounts for all UK students

Graduate endowment for home country students + upfront fee with means-tested discounts for rest of UK (RUK) students

Regulated variable fees supported by income-contingent loan with same maximum for all UK students

Flat-rate fee with income-contingent loan

Figure in WHITE is maximum tuition charge for a three–year course in England, Wales and Northern Ireland or a four-year non-medical course in Scotland (real terms for illustrative entry year). Amount in round brackets is the maximum charge for students from the home country and non-UK EU students; amount in square brackets is reduced amount for some RUK students

Figure in BLACK is estimated payment through a compulsory graduate endowment

Regulated variable fees + fee grants for home country and non-UK EU students

Flat-rate fee with loan for RUK students only

Regulated variable fees + fee grants for some RUK students

Regulated variable fees + reduced fees for home country and non-UK EU students

Voluntarily capped fees for RUK students only + fee grants for some RUK students

KEY

£3,000

£3,000

£3,000 (£4,000)

£3,000

£3,225

£3,225

£3,225£2,000

£3,225

£6,800£2,289

£9,000

£9,000

£6,800

£9,435 (£3,765)

£9,435

£9,435

£9,870

£9,870

£9,870

£7,280

£27,000 [£10,395]

£27,000 (£10,395)

£36,000 [10,395]

£3,600

£27,000 (£10,395)

1. Policy context





6. Conclusion


8

Summary of reforms to funding and student number controls

• Changes to basic and higher fee amounts– 149 institutions with access agreements (December 2011)– Average net fee of £8,161 in July 2011, £8,071 in December 2011

• Reduction in HEFCE funding– c. £2.9 billion by FY2014/15 – c. £1.1 billion in AY2012/13

• HEFCE funding reforms– 2012/13 a transitional year

• New student number controls to promote dynamism– AAB+– Price-related margin

9

Changing sources of funding (1/3): balance of teaching funding

Notes

(1) Uses figures provided in the HEFCE grant letter of 20 December 2010 (Annex and paragraph 12)

(2) Only broad indicative figures are given for 2014/15 (Teaching grant of £2 billion and loans of £7 billion 10

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010/11 2011/12 2012/13 2014/15

Indicative breakdown of funding between loans for the graduate contribution and HEFCE teaching grant between 2010/11 and 2014/15

Loans outlay to HEIs

Teaching grant (adjusted baseline)

Changing sources of funding (2/3): Impact on the public finances

The cost of higher education to the public purse is now more significantly influenced by:

• The take-up of tuition fee loans• Interest and write-off policies• Repayment behaviour• Graduate earnings growth and earnings profiles

• Cash flow implications in shift from block grant (financial year) to loan funding (academic year)

• These considerations have all influenced government policy to date, including student number control policies

• Future decisions may yet be affected (e.g. final HEFCE grant)11

Changing sources of public funding (3/3): Impact on institutions

• Already managing impact of Spending Review decisions– HEFCE recurrent: c.£190 million for AY2010/11; c.£750 million for AY2011/12 – HEFCE capital: 58 per cent cash terms reduction in HEFCE capital funding

• Reduction in core student numbers

• Funding more closely linked to actual undergraduate numbers

• Increased funding at stake through successful negotiation of access agreements

• Cash-flow and administrative implications in shift from HEFCE grant payments to student loan instalments

• Impact on taught postgraduates

• Further income diversification?– Alternative forms of student finance– Alternative sources of capital 12

HEFCE capital funding for institutions

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Notes[1] HEFCE capital grant to institutions is TCIF and RCIF in 2008 to 2011 and TCIF2 and RCIF2 in 2011 to 2013[2] £250 million of allocated capital was brought forward from 2010/11 to 2008/09 and 2009/10

-

200

400

600

800

1,000

1,200

1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13

£m

Financial year [2]

HEFCE capital funding for institutions - real terms (2011/12 = 100) [1]

Impact on institutions - diversity of provision

140%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Distribution of UK/EU UG, UK/EU PG and non-EU students by institution, 2009/10

Non-EU students

UK/EU postgraduates

UK/EU undergraduates

Impact on unit funding for institutions: HEFCE funding for new system students: high-cost subjects

For 2012/13 (£113 million available)• Premium for Price groups A and B retained

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From 2013/14 (subject to further consultation)• New funding supplements informed by TRACT(T) data• Possible linking of funding rates to the fee charged

0%10%20%30%40%50%60%70%80%90%

100%

UG

-A

UG

-B

UG

-C

(F

T)

UG

-D

PG

T -

A

PG

T -

B

PG

T -

C (

non-

reg

ulat

ed)

PG

T -

D

Reduction (%) by level of study and price group

Comparisons are made here between March 2011/12 notional grant rates and the illustrative sector average rates for 2011/12, but note that the whole system is changing – shift from tolerance band to funding based on actual student profile

£0

£500

£1,000

£1,500

£2,000

£2,500

£3,000

£3,500

UG

-A

UG

-B

UG

-C

(F

T)

UG

-D

PG

T -

A

PG

T -

B

PG

T -

C (

non-

regu

late

d)

PG

T -

D

Reduction (£) by level of study and price group

Impact on student recruitment: the AAB+ student population

• Under-representation of disadvantaged groups in the AAB+ population:

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• Risks to opportunities for some groups of students – counter to Government’s social mobility policy aims?

• Outcomes depend on institution and student behaviour, and any further policy interventions

0 10 20 30

NS-SEC 4-7

Low participation neighbourhoods

Per cent of young entrants with AAB+

Per cent of all young entrants

1. Policy context





6. Conclusion


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Summary of proposals

• HEFCE to have redefined role as lead regulator and ‘student champion’

• Single funding framework for student support and grant funding across higher education providers

• Move towards risk-based financial and quality assurance (subject to separate consultations)

• Simplification of the degree awarding powers process

• Removal of barriers to non-teaching bodies being able to award taught degrees

• Introduction of a sanction to suspend or remove degree awarding powers, however granted

• Review of the use of university title so that there are fewer barriers for smaller institutions

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UUK’s response

• Core elements of UK system’s success need to be protected:– High quality and standards– Institutional autonomy– Co-regulation

• Welcome risk-based approach alongside a single regulatory framework

• Some proposals need further work to determine how they will be implemented, for example:

– HEFCE’s role as ‘student champion’– relationships between regulatory bodies

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1. Policy context





6. Conclusion


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Research and innovation

• Science and research ring fence – £4.6 billion

• Research capital (HEFCE and research councils) cut by over 50% in December 2010

• Recent announcements: additional £250m for specific projects and £360m for life sciences

• Trend towards further concentration of research and innovation funding

• Impact and public engagement

• Research and innovation strategy to be launched Thursday 8 December

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Immigration

22

1. Policy context





6. Conclusion


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Short-term timetable of data availability and policy interventions

Westminster Government

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2011 2012

Autumn Winter Winter Spring

Public finances Autumn statement

Office for Budget Responsibility Fiscal Forecast

Early indications of student finance commitments

Budget

Funding for institutions

HEFCE consultation outcomes

Grant letter to HEFCE

Student number allocations

Student numbersEarly indications of demand

Bidding process for 20,000 places

Firmer indications of demand

What do we need to monitor?

Student opportunities• Level and patterns of demand among different student groups

– Including intra-UK flows

• Changes in offers and acceptances• Changes in course provision

Funding implications• Government progress against deficit reduction plans• Take-up of loans

– Government has modelled an average £6,800 per student but forecast to be £7,000

• Eligibility for maintenance grants– Note that funding for grants and HEFCE grant form part of the HE budget , which

has to be reduced by c.£3 billion as part of Spending Review commitments– Any overspend on grants has direct implications for HEFCE funding

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1. Policy context





6. Conclusion


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Conclusion

• A period of transition– Long-term trend and aspiration is towards a more deregulated sector– Short-term reality is increased intervention, complexity, and adjustment, with

potential risks to student opportunities and strength of UK brand that will need to be carefully managed

• Successful navigation of this transitional period could bring opportunities for effective change

– streamlining data and information flows– more innovative ways of engaging with students– strong institutions through further diversification of income

• Promoting understanding of the impact of change will be central to UUK’s activity

– continuing to draw on sector expertise to make sure the implications are understood

– monitoring and influencing change and future policy development27

1. Policy context





6. Conclusion


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Questions for discussion

1. What can we do to better communicate changes in the policy environment to administrative staff in higher education institutions?

2. Which changes to policy are likely to be the most difficult for your institution to manage, and why?

3. What policy changes would you most like to see in the short term?

4. Are there other themes you think we could use for publications similar to ‘Driving economic growth’?

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Contact details

• Dr Juliet Chester– Head of policy and data analysis, Universities UK

• [email protected]

Universities UK

Woburn House, 20 Tavistock Square, London

www.UniversitiesUK.ac.uk

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mailto:[email protected]

http://www.universitiesuk.ac.uk/