The autumn budget left higher education, students and universities, in a state of shock (links to details in footnote). Their deliberate omission from consideration was profoundly disappointing, amounting to a betrayal. This was after multiple representations highlighting the financial crisis spreading like a plague across the sector. By Monday, the government had realised its mistake and backed down with a small rise in fees and maintenance loans in 2025/26. This was communicated by Bridgit Philipson, Secretary of State for Education, in a letter to universities on 4th (reported by Wonkhe). However, it only covers the projected increase in National Insurance costs for universities and a small proportion of inflation costs for students. It is simply a ‘sticking plaster’ stopgap.
Let down badly.
The budget had little for higher education other than support for the research budget that is only likey to affect the most research active institutions such as the Russell Group. The biggest shock for university planners was the increase in National Insurance payments. This will have led to alarm for universities already making deep cuts and redundancies. For students, after a small increase in the maintenance loan, the increase in the minimum wage for 18 to 20 year olds was welcome. However, they will probably be chasing fewer jobs as more feel badly let down. Indeed, it could be viewed as encouraging more hours away from studies. This deliberate tactic from the government to squeeze universities into submission hardly helps, and an upfront statement of intention in the budget would have cleared the air.
The context and earlier hints.
Despite the Labour election campaign revealing almost nothing about addressing the funding crisis in universities and students, there were a few hints of plans to reform the system. Back in January, the then Shadow Education Secretary, Bridget Phillipson revealed most in an interview with Laura Kuenssberg (below).
The clear inference was that a ‘no fees’ plan was not being considered and a more progressive payment system would be introduced; a major u-turn from earlier Labour promises. The expanding problem of students having to spend more time in jobs would be also addressed. The return of maintenance loans was not hinted at, but more maintenance support could be reasonably assumed.
Fast forward to July and, now in government, Phillipson’s very few comments on universities were evident in parliament.
This was accompanied by an interview on the BBC Today programme with the news that there was to be no bailout of universities that are in financial trouble. Despite the promise of a more sustainable future, the signs were ominous.
“Universities are independent institutions that have responsibilities in terms of how they manage their budgets,”
This came after the CEO of Universities UK, Vivenne Stern, had indicated the “majority of the sector is in trouble” on the same programme. She indicated that seventy universities cutting costs were now engaging in cost-saving exercises and expected nearly all to be doing the same by the end of the year. The solution is obvious in that fees must be linked to inflation, however,
“It’s not going to fix the whole problem…I personally also believe the government needs to, over time, put more public funding in.
In the meantime, Universities UK, and the whole sector, have been lobbying hard for improved funding. Regardless of this, the crisis in universities is now acelerating apace with the budget doing nothing to stem the cuts and redundancies. Any reform of university finances seems a long way off.
Five priorities.
In her letter to universities, Phillipson expects a lot in return for very little with her five priorities for reform. These are,
1. Play a stronger role in expanding access and improving outcomes for disadvantaged students.
2. Make a stronger contribution to economic growth.
3. Play a greater civic role in their communities.
4. Raise the bar further on teaching standards, to maintain and improve our world-leading reputation and drive out poor practice.
5. Underpinning all of this needs to sit a sustained efficiency and reform programme.
It is worth noting that she expects “system-level change” and a “changed context of the higher education sector” with a “re-examination of business models and much less wasteful spending”. She automatically presumes that there is considerable inefficiency and waste. Could this be code for excessive senior management pay?
A whiff of reform in the pipeline.
The delay in the Lifelong Learning Entitlement (LLE) to 2027 offers more than a hint of reform in the student loan and repayments system. If this was to be radically changed, as TEFS suggests, then the LLE would have to be delayed. Its costings are predicated on the existing loan system. Thus, this statement says it all,
“This measure will delay the implementation of the reforms to Higher Education student finance under the Lifelong Learning Entitlement (LLE) announced at Autumn Statement 2023”.
Under ‘Implementation to amended timetable’, this quote on costings reveals a measure of fear and uncertainty about how to proceed.
“The main uncertainties in this costing relate to the size of the behavioural response”
Delaying reform to the 2025 spending review.
It seems any reform will take considerable time, but at least there might be some consultation possible. It might have inspired more confidence if a review was announced with a clear purpose and a timeline. Instead we get more vague intentions that do not help much. However, despite the Chancellor omitting to mention this in the budget, Phillipson has stated,
“I want to work in partnership with you, the Department forScience, Innovation and Technology, UK Research and Innovation, and the Office for Students over the coming months to shape the changes to government policy that will be needed to support these changes. The Government will then set out its plan for higher education reform by next summer, to ensure the system delivers against these priorities”.
Putting greater emphasis on early years education in the budget was obviously important. After that, the skills agenda took its place with more funding for technical colleges. However, it appears higher education comes well down the list alongside an assumption that students will pay for it all.
TEFS has long argued that a completely new funding model is needed that removes the unfair non-progressive loan repayments and forces the graduates to pay for all. Instead, the costs shuld be shared by those who benefit, graduates, their employers and wider society. The best way to achieve this would be a graduate levy on National Insurance for graduates and their employers. However, the government may have trapped itself in a corner with the increase in National Insurance increase announced in the budget (see TEFS ‘Funding students and Universities: a graduate National Insurance Levy is gaining traction’).
National Insurance trap.
In short order, Times Higher Education reported that the budget National Insurance hike ‘costs universities £372 million’ and,
“Chancellor goes ahead with 1.2 percentage point increase, hiking staff costs for already cash-strapped institutions”.
Asking employers to stump up more National Insurance will have gone down like a lead balloon amongst those left outside of the relief for the public sector. The impact on inflation and jobs will come first before profits are reduced. With the majority of universities already making major redundancies, there will be a further acceleration of the cuts.
In the end, the deliberate omission of universities and students was not ignoring universities, it was a rehearsed tactic. Universities and students will have to take in further cuts and lower aspirations as they restructure. The government wants to inflict more stress and pain in forcing ‘autonomous’ universites to become more efficient. In the meantime students take more hits.
Currently, in England, all the burden is on students and graduates through loan repayments plus interest extending for 40 years. This is unfair when employers and society in general also benefit. The cost is far too high for students.
The author, Mike Larkin, retired from Queen’s University Belfast after 37 years teaching Microbiology, Biochemistry and Genetics. He remains optimistic and loves mixed metaphors.
Footnote: Budget links and quotes.
Government Autumn Budget 2024 (pdf)
House of commons library Research Briefing Autumn Budget 2024: A summary (pdf).
OBR Fiscal Outlook October 2024 (pdf)
Damning is the OBR Review of the March 2024 budget forecasts
Missing is the impact of BREXIT and the OBR’s assessment and forecasts from last May
On skills:
3.46 The government is committed to addressing skills challenges, which are holding back growth across the country, alongside supporting people into work. The government has already established Skills England to begin addressing these challenges. In the Budget, the government is going further by providing an additional £300 million for further education in England, while increasing the core schools budget by £2.3 billion, which increases per pupil funding in real terms.
3.47 The government will also take steps to transform the Apprenticeship Levy into a more flexible Growth and Skills Levy by investing £40 million, which will help to deliver new foundation and shorter apprenticeships in key sectors. The reformed levy will be developed in partnership with employers, providers, and learners. Skills England will take the time to consult with a wide range of partners to ensure that levy-funded training meets the needs of employers, providers, and learners, and secures good value for money
4.10 The settlement reaffirms and expands the government’s commitment to skills by providing an additional £300 million for further education to ensure young people are developing the skills they need to succeed. In addition, the government is:
• investing £40 million to help deliver new foundation and shorter apprenticeships in key sectors, as part of initial steps towards a reformed Growth and Skills Levy.
• committing to delivering the Lifelong Learning Entitlement (LLE), with a revised launch date of January 2027. The LLE will expand access to high-quality, flexible education and training for adults throughout their working lives.