CVU annual conference, 19 September 2014 Public spending on higher education and the implications for partnership activity Julian Gravatt, Assistant Chief Executive, AoC Julian_Gravatt@aoc.co.uk

English College HE Characteristics 100,000 students in 280 colleges (range 100 to 3,500) Local, employer-led, technical, some niche c50% apply for one course/one institution (UCAS) 70% live within 25 miles of campus Student cohort more disadvantaged than HE average Partnerships with Universities long-standing & important

English College HE trends 2008-9 2011-2 2012-3 Full Time Direct 31 37 44 Indirect 28 30 24 Sub-total 59 66 68 Part Time 21 20 33 27 18 56 48 38 117 116 106 % Direct 47% 50% 60%

The English HE system – not a normal market Supply Inertia (heritage, three-year degrees etc) Longish lead-times to respond to demand but shortening Full-time UG fees close to the £9,000 cap Universities compete to be higher up league tables Demand Applicants need to be qualified to make a choice Degrees are positional goods Higher fees are paid after completion (no fees upfront) Living costs loom larger than fees to many students

“Breaking the mould” Analysis English post-secondary higher-level skills system weak and small Policy & history biased towards full-time residential three-year degree model Proposals Re-balance the system Different approaches to validation Colleges/universities to work on progression

The bigger spending picture Government plans Deficit reduction Spending cuts 2009-18 Spending review in 2015 Unprotected departments 9.1% of GDP (2013-14) 7.8% of GDP (2015-16) 5.4% of GDP (2018-19) Loans may be a safe haven

The HE budget 2011-12 Teaching Student Support Research RAB charge Grants Loans 2013-14 Teaching Student Support Research RAB charge Grants Loans

Revenue spending in HE after 2015 BIS revenue budget £13.2 billion in 2015-16 (£8 billion HE) Spending plans imply 31% cuts to unprotected depts (2015-18) IFS scenarios for UUK (back in October 2013) 1. Breach the science/research ringfence (£4.6 bil budget) 2. Allow fees for Medicine & STEM to exceed £9,000 3. Switch from HE maintenance grants to HE loans 4. Reduce number of FT HE students 5. Cut 19+ FE/Skills budget further (on top of 35% cuts 2009-15)

HE student loans after 2015 Issues Options 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Outlays 10.3 12.7 14.4 15.6 16.7 17.4 Repayments 1.8 2.1 2.3 2.5 2.6 Issues Options

Now – the 2014-15 HE round The spending decisions HE teaching grant £2 bil; HE fee loans £7 bil Decisions on HEFCE grants and SNCs notified in March Fee regulation No significant change despite new fair access director at OFFA Allocation of HE loan budget 30,000 additional FT entries in 2014 (8% extra) No core/margin bidding process Redistribution of SNCs within a new flexibility range (6%) Off quota Colleges and private HEIs will get SNCs Some justifiable concern about practices in some private HEIs

The future – 2016 and beyond Could general election change things? “Young people feel they have no control because they are going to get into mountains of debt if they go to university…We do want a radical offer on tuition fees because the future of our young people… is a massive issue that our country faces,” Ed Miliband, ITV interview, March 2014 ..but Ministers would need to act quickly “There are some decisions, however, that can’t wait. We do need to set out in the next few weeks the way forward for graduate contributions and student support if we are going to have any chance of implementing changes for the Autumn of 2012 …..It is rather like A. J. P. Taylor’s thesis that train timetables determined the outbreak of the First World War” David Willetts, October 2010

HE full-time entries 2012-13 312,000 £7,700 2013-14 345,000 £7,800 Entry numbers Average SLC fee loan 2012-13 312,000 £7,700 2013-14 345,000 £7,800 2014-15 375,000 £7,900 2015-16 390,000 £8,100 Source: Derived from PQ answered by David Willetts, 24 Feb 2014

Suggestions Rethink adult learning Changes to public spending permanent These are long-term trends which take time to implement Loans are a way to make fees more palatable Fees were a bigger part of the mix in the 1980s There’s still considerable demand for education and training People are working longer/need to retrain Employers still think about workforce development Opportunities exist