English funding review on timing tightrope as loans reassessed

Key questions surround the government review of higher education funding in England and whether it should be delayed to take account of major potential changes to the accounting treatment of student loans, which could impact on any recommendation for tuition fee reductions.

Some in the sector say that the review panel, led by Philip Augar, plans to follow its original timetable and publish in November, with the government’s response coming in the spring.

Options that have been considered by the panel are said to include lowering the tuition fee cap to £7,000 or £7,500 from its present level of £9,250. The key question would be whether the government replaced some or all of the lost funding with direct public subsidies for universities.

Others believe that the publication date of the review – set up by Theresa May amid Conservative concern over the electoral impact of Labour’s pledge to abolish tuition fees – is likely to slip into the new year.

One major factor is the Office for National Statistics’ review of the treatment of student debt in government accounts. The ONS work, expected to conclude by the end of the year, could potentially result in the funding status quo appearing more costly in terms of impact on the deficit than it does at present.

Another senior figure in the sector suggested that at one point in early summer, the Augar review had been considering whether to issue two draft documents for internal consumption by the government: one before the ONS review and one after.

There will also be pressure to get the review done and dusted before the next government spending review, expected in spring or summer 2019.

Andy Westwood, professor of government practice at the University of Manchester and a former special adviser to John Denham in his time as Labour secretary of state with responsibility for universities, said that “clearly the ONS review and the spending review both complicate things for Augar” as well as the Department for Education.

“It’s certainly very difficult to make any concrete recommendations without knowing a) how the system, or any changes to it, will be treated in the national accounts, or b) whether the Treasury is likely to be sympathetic to new accounting treatments or to any requests for new resources,” he said.

Professor Westwood suggested that “some delay might be inevitable – at least until such time as the parameters are clearer”.

He added: “I do think they are likely to be looking at least at some fee reductions. All the political pressures are on the headline parts of the system – fee levels, interest rates and overall debt – so it would be odd if they didn’t.”

But Chris Husbands, vice-chancellor of Sheffield Hallam University, warned that without replacement funding, the “consequence of a headline reduction in fees, whatever the impact on universities – and I imagine all of us are working through what lots of scenarios might look like – would be to take a lot of spend out of large urban economies”.

Bill Rammell, the University of Bedfordshire vice-chancellor and a former Labour higher education minister, said that the review panel “publicly…still appear to be saying they will commit to an interim report in the autumn”.

But he said there were “real concerns around that” timing because “any indication of a change in fee levels – and I don’t think that can come in until probably 2021-22 – will majorly impact on recruitment in 2019-20 and 2020-21”.

“If there is going to be a delay [to the review], in some senses I think that’s welcome,” he added.

Speaking at the Universities UK conference on 5 September, Mr Augar said that the ONS review made the publication timetable of the work he is leading “more complicated, because there is a risk we will be writing across the review. So we are having to look at a number of options.

“But it’s still our intention to produce an interim stage review – hopefully before the end of this year. It’s possible that could slip; depends entirely on the timing of the ONS review and in fact it’s a decision for the government.”

john.morgan@timeshighereducation.com