Expansion gives rich pickings to colleges

Further education colleges have added to last week's Pounds 725 million windfall by becoming beneficiaries of a Pounds 776 million cash boost for higher education.

Education secretary David Blunkett announced on Tuesday an extra Pounds 776 million over the next two years for higher education. But much of it comes from students' fees. And Mr Blunkett expects higher education to recruit an extra 61,000 students, of whom more than half are to be students on sub-degree courses in further education colleges. By contrast the increase in the number of full-time first-degree students will be limited to just 6,000 by 2000-01.

No reliable costings are available yet of the higher education cash that will flow to colleges for these courses but vice-chancellors fear the sub-degree drive could hit universities' financial flexibility.

Tony Bruce, policy director for the Committee of Vice-Chancellors and Principals, said: "We do not know whether there will be sufficient demand for sub-degree courses. If it materialises there will clearly be less financial flexibility for universities than otherwise."

The higher education settlement breaks down to an extra Pounds 280 million next year and Pounds 496 million the year after. The amounts are the total extra available in each year over and above a Pounds 4,851 million higher education budget this current year. Details of the 2001-02 funding settlement will be announced next year.

The CVCP has calculated that, allowing for expansion, the money is sufficient to limit the efficiency gain required over the two years to an average 0.7 per cent, 0.3 per cent next year and 1.1 per cent the year after. The committee is disappointed at the amount for capital expansion, including teaching infrastructure and information technology. This is Pounds 185 million over the next three years but medical school expansion could swallow as much as Pounds 50 million up to 2002.

Overall funding

The Pounds 4,851 million for higher education this year is 3.49 per cent above the 1997-98 baseline figure of Pounds 4,687 million. The Pounds 5,131 million for 1999-2000 is 9.47 per cent higher than the baseline. And the Pounds 5,347 million for 2000-01 is 14.08 per cent higher. Adding inflation, but excluding the additional costs of extra students, the real-term rises are 1 per cent, 4.4 per cent and 6.6 per cent respectively.

This current year public funding accounts for 97.3 per cent of total higher education funding, while student contributions through tuition fees come to 2.7 per cent. In 1999-2000 public funding is 95.4 per cent and student contributions 4.6 per cent. In 2000-01 the state contribution will be 93.8 per cent and students fee contributions 6.2 per cent. Public funding per student in real terms will in fact fall from Pounds 4,702 in 1998-99 to Pounds 4,687 in 1999-2000 and Pounds 4,633 in 2000-01.

Student numbers

An extra 36,000 students should be recruited in 1999-2000, rising to 61,000 extra the year after and 100,000 extra in 2001-02. Of next year's, 16,000 will be on sub-degree courses such as higher national diplomas and certificates.

Most should be in further education colleges, according to Mr Blunkett, with half full-time and half part-time. In 2000-01 35,000 more students should be studying for sub-degree qualifications, 15,000 full-time and 20,000 part-time, again mostly in colleges. Mr Blunkett wants the funding councils to enforce separate caps on the number of full-time students on first degree and on sub-degree courses to ensure targets are met but not exceeded. Universities should limit the rise in full-time students on first degrees to just 6,000 in 1999-2000 with a negligible increase, if any, the following year.

Tuition fees

Student fees between this year and 2001 will be Pounds 698 million. They will contribute Pounds 130 million in 1998-99, Pounds 235 million in 1999-2000 and Pounds 333 million in 2000-01. Had fees not been introduced, the sector would have faced efficiency gains of 2.4 per cent in 1999-00 and 3 per cent in 2000-01.

This means that they will contribute nearly 79 per cent of the Pounds 165 million extra for higher education this year over the Pounds 4.7 billion funding baseline in 1997-98. In 1999-2000 student tuition fees will account for nearly 53 per cent of the Pounds 445 million extra available over the baseline, and in 2000-01 fees will account for fractionally over half of the Pounds 661 million available over 1997-98 total funding.

Mr Blunkett has again warned universities against charging top-up fees.

Capital funding

In 1999-2000 Pounds 35 million extra will be available for capital funding to enhance teaching, including better information technology. It will rise to Pounds 50 million the following year to total Pounds 100 million in 2001-02. Government investment over the three years is Pounds 185 million.

"First call" on the money will be to meet the capital implications of the 1,000 trainee doctor expansion.

Research infrastructure

The extra funding includes Pounds 300 million for research announced earlier. There will be Pounds 50 million for infrastructure and equipment in 1999-2000, rising to Pounds 100 million in 2000-01 and to Pounds 150 million in 2001-02. Investment over the three years is Pounds 300 million.

This is on top of the Pounds 1.1 billion for university science and engineering over the three years from the Office of Science and Technology and the Wellcome Trust.

Oxbridge fee

Oxford and Cambridge are to lose about Pounds 6.5 million each over the next ten years following changes to the college fee. The fee, which amounts to about Pounds 35 million a year between the two universities, will from next year be incorporated into the HEFCE block grant.

It will be phased out over ten years. The universities are expected to make up two-thirds of the cash through new funding council money for college research staff, smaller institutions and old and historic buildings. The announcement rubber stamps HEFCE advice to Mr Blunkett last month.

Researchers employed by colleges are not now counted when university departments' research grants are calculated. In future, they will be included, giving about Pounds 2.6 million extra to Oxford and Pounds 2.9 million to Cambridge.

Initiatives to help smaller, older institutions will benefit Oxbridge. Universities are responsible for allocating the HEFCE block grant. HEFCE has discussed subsidising poorer colleges. Both universities said students at poorer colleges will not suffer.