The historic announcement at the end of last year that the Government is going to fund the removal of limits to the number of students going to university raises some interesting questions for higher education as we enter 2014.
Do the existing cuts to BIS budget remain? Yes. In every other area of higher education, the belt tightening will continue. No-one in the sector should expect smooth sailing in 2014. The HEFCE grant letter is already overdue, with Government still debating how it will ask HEFCE to make savings - sparking much debate about whether this should be through cuts to science funding or other parts of the HE budget. Our position is that pitching the debate between science and student opportunity funding creates a false dichotomy that is not helpful. We have been emphasising that both the £4.6bn science budget and the £224m Student Opportunity Funding should be protected, that there are other areas of the budget that should be cut ahead of these, and that HEFCE is ultimately best placed to weigh up these decisions.
There are also questions over whether the numbers add up. Will the sale of historic loan books really cover the expansion costs to 2020? No-one can really answer these questions until the first tranche of the loan book is sold and the market starts to identify a price for future sales. What we do know is that the Exchequer is covering any additional costs in 2014 and that is a far more important principle to have established. The commitment to the science budget remains just as strong and there was not even the smallest hint of the cost of expansion being met by other areas of the HE budget.
And what about funding this beyond 2020? This is a question that I think we should be answering for ourselves. At University Alliance we have been exploring sustainable long-term funding options for a bigger, more diverse HE system. More on this another time but let's just say that it is possible to significantly reduce the Government's cost of loans (the RAB charge), perhaps even to zero, and that opens up all sorts of sustainable funding options for a growing HE system. We will be saying a lot more about this in 2014 through our Uni Funding project.
And what about those courses or universities that believe they need to charge more than £9,000 to cover costs? Well, again, once you fix the loan system and find legitimate ways to bring down the RAB charge, there are more options available.
And how do we ensure quality in an expanding system? Again, this is a question we should be answering and I don't think this is rocket science. We should avoid the Browne approach of a minimum threshold on entry for all sorts of reasons lest we get stuck in a quagmire of complexity and fair access issues. Rather, we should stick to managing quality through funding on the basis of completion - an approach that HEFCE have been using for many years and has resulted in the UK having a high quality HE system with some of the lowest drop-out rates in the world. One of the many excellent features of the UK HE system that did not entirely disappear with the new £9K fee regime was funding based on completion, with universities receiving three blocks of funding throughout the year from SLC for students that are still studying. If they drop out at any point, the university stops receiving any funding for this student.
Alongside QAA, this is an efficient and effective way of managing quality in the system and driving efficiencies. In a growing system, the mechanism could be made tougher - e.g. clawing back funding for any non-completion over a benchmarked retention rate (these already exist through HEFCE PIs of course) and tough benchmarks in place for new providers. Either way, we should not think that we are destined to have an experience identical to that of Australia in the past 2 years where uncapped expansion has led to big questions around quality and drop-out rates. Our systems are not the same and we have more options for controlling this through funding than they do. We have a tried and tested approach that should allay most peoples' fears - indeed, this is not the first time we've lifted the SNC controls.
And then comes the results of the much anticipated Research Excellence Framework (REF). The new, or not so new, re-branded and improved RAE (another victory for common sense), with all its speculation and predictions. I don't wish to down play the importance of the REF for the individual researchers or for the league table positions of our universities but let's ensure that we all get on the same page and keep the bigger picture in mind. We have a world-leading research base that the REF will no doubt demonstrate has improved further. We also have a research base that benefits from an open, competitive and diverse research eco-system. If we want the next big Government announcement to be a commitment to fully funding an even better and larger research base, we must work together to make the case that the future prosperity of this country depends on it. If 2013 has taught us nothing else it has taught us that, even during an era of austerity, Governments are willing to make principled commitments to areas of investment that will drive economic growth. The big question for research funding in 2014 is not who gets what, but how much more investment is required to firm up the research, innovation and high skills base needed in our economy.