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Navigating the UK Budget Crisis: Impact on Higher Education

Explore the effects of the budget on higher education in the UK, from financial challenges to potential changes in funding and quality. Discover the key issues and implications for institutions, students, and the academic landscape.

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Navigating the UK Budget Crisis: Impact on Higher Education

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  1. Balancing the Books What did the budget do for us? SAF-UIS Sally Faith, University of Sussex

  2. Who’s in charge? • The Boss: Rt Hon David Lammy MP Minister of State for Higher Education and Intellectual Property • The Boss’s Boss: Rt Hon Lord Mandelson, First Secretary of State for Business, Innovation and Skills and Lord President of the Council

  3. Where do we stand financially? • Financially, as a nation, things are not that great right now! http://www.hm-treasury.gov.uk/bud_bud09_index.htm • The UK has a ‘borrowing requirement’ of £175bn • 6.3% of national income (or £90bn p.a.) is needed just to cover the cost of the recession • Of this, £140bn will need to be found even if the economy gets better. How…? • £30bn has been earmarked in the recent 2 budgets to help kick-start the economy

  4. How does the future look? • Current spending expected to show less than 1% growth in real terms: the lowest for a long time! • Investment spending expected to fall substantially • Thus total spending to be cut by 0.1% p.a. in real terms

  5. Where do we stand against the others? • In the euro context GDP was at @3.5% on Q1 ’06 – in Q4 ’08 it stood @-6% (source Eurostat) • UK projected to hit -4% in ’09 & -0.4% in ’10 (France -3% & 0.4%. Germany - -5.6% & -1%) (source IMF) • Only UK & Sweden (in Eurozone) have invested more in Government Support - more than £50m (source IMF) • Sovereign Financing Requirement? Better than many! • Lots more information can be found on the World Bank & IMF web sites.

  6. So, all this borrowing…how will we pay it all back? • Government intends to raise £90bn extra per year from next year • 10% from tax increases • 40% from public sector spending • 50% from … to be announced after the next election! • Meanwhile, capital investment programme cut this year

  7. How will this play out for HE? • Extra £5bn vfm saving required in 2011 which increases the CSR savings (identified in 2007) needed to £35bn. • DIUS were asked to find £1.94bn out of £23.2bn savings (not yet clear how this equates to BIS) incl • £118m increased efficiency & decreased admin • £116m saving from Research Councils (to be reinvested!) • £50m improved procurement • £400m improved efficiency in FE & HE • A further £9bn on top pf the £35bn required in 2013/14. HE’s share to be confirmed!

  8. And there’s more… • Caps to remain in place for: • Student Numbers • ELQs • Student grants & loans • However…the commitment to increase the science budget by 6% is being upheld.

  9. Can it get any worse?! • Other factors that could impact on the pressures include: • Pay settlements and related disputes • Cost of pensions • Low returns on investments & reductions in other income areas. • No substantive outcome from the fees review • Quicker economic recovery outside of the UK

  10. What changes can we expect in HE as a result of all this? • Potential concern over the capacity for all institutions to survive in current form • Jam-jar funding • Pressure on levels of quality • Pressure on administrative & central funding that may have long term implications for the academic workload etc.

  11. To conclude • How long will this go on? • What are we going to do about it?

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