1. The Political Context – a Funding Council Perspective
Mark Allanson
The Leadership Foundation for Higher Education
6th October 2011

2. Issues Why invest in HE? Economic context Political Context
The White Paper
Financial Overview
HEFCE strategic response
System Uncertainties - Risks

3. Why invest in HE? £59 billion economic impact and……
…development of our professions…
…cultural and social impact
…contribution
to sustainable development 3

4. October 2010
‘ The UK’s Conservative led coalition has announced the most dramatic cuts in living memory…’ 4

5. 2010
National debt £830bn (60% GDP)
Public sector borrowing 5

6. 6

7. Coalition budget October 2010
- £89bn over 4 years (PSBR)
- 490,000 public sector jobs
Departmental Budgets: 30% cut in local government 16% cut in police service % cut & 42,000 jobs in defence £7bn welfare
Economic growth forecasts: 2.3% in 2011 (current 2.8% in % in 2013 7

8. The White Paper Sustainable sector funding
Improving student experience
Increasing social mobility
A diverse and responsive sector
A new regulatory framework

9. Current financial health
10 year average
Operating surplus as % of Total Income (TI)
1.3
3.2
1.4
Historical cost surplus as % of TI
2.5
3.6
2.7
Operating cash flow as % of TI
6.8
8.3
5.9
Liquidity days 83 98 73
External borrowing as % of TI
20.9
21.1
19.9
Discretionary reserves exc. FRS17 as % of TI
43.7
46.0
41.6
Staff costs as % of TI
55.4
54.3
56.5

10. HEFCE’s strategic statement
“Higher education changes lives. It is enriching and inspiring for students and it is vital to social mobility, future economic growth and our international standing.” 10

11. Tackling higher education reform

12. HEFCE approach Smooth transition Partnership working
Respecting Autonomy
Monitoring Impact

13. Risks to not achieving forecasts
Examples include:
Student recruitment/participation (Demand)
Student number control (Supply)
Public funding changes/economic factors
Pay & Pension costs
Management decisions

14. In summary…..
The overriding context is the economy and the public purse
The Politics and policies of coalition are not easy
Student interest, choice and market belief are core
Significant funding change (higher income?)
Regulation
Opportunity, choice and excellence
Higher education matters 14

15. Thank you for listening