Sustainable University Provision in Scotland1. Scale of Funding Challenge

Position of Scottish Universities prior to Current Financial Crisis

Green Paper – December 2010

`It is clear that at around 1%, Scotland provides less funding as a proportion of its GDP than our sector’s main competitors’

England 1.3%; Sweden 1.4%; Canada 1.5%; India and China 2%; US 2.9%; Australia 5.8%

SFC Recurrent Funding for HE - Budget 2010 projections

£1,086,664,880

£989,300,000

£964,216,294

£945,349,941

£900,000,000

£920,000,000

£940,000,000

£960,000,000

£980,000,000

£1,000,000,000

£1,020,000,000

£1,040,000,000

£1,060,000,000

£1,080,000,000

£1,100,000,000

FY 2010/11 FY 2011/12 FY 2012/13 FY 2013/14 FY 2014/15

Inflation

Flat cash

Scottish Block

Actual 11/12 & maintain share

SFC Capital Funding for HE

£91,388,374

£83,200,000

£81,090,464

£83,200,000

£36,966,837

£30,000,000

£40,000,000

£50,000,000

£60,000,000

£70,000,000

£80,000,000

£90,000,000

£100,000,000

£110,000,000

£120,000,000

FY 2010/11 FY 2011/12 FY 2012/13 FY 2013/14 FY 2014/15

Inflation

Flat cash

Scottish Block

Actual 11/12 & maintain share

Impact on UWSScottish Government Funding2009/10 to 2011/12

2009/10 2010/112011/12

Recurrent 72,185,985 72,862,58868,021,398

Capital 5,000,000 2,600,000 1,600,000

Total £77,185,985 £75,462,588 £69,621,398

Impact on UWS

Assuming 4% inflation adjustment to 2009/10 figures

2010/11 2011/12Recurrent 75,073,424 78,076,361Capital 5,200,000 5,408,000Total £80,273,424 £83,484,361

Reduced Funding in real termsRecurrent £10,054,963 - (13.9%)

Capital £ 3,808,000 - (76%)Total £13,862,963 - (18%)

Structural Options? Scottish Solutions Work

• Make the learner journey more efficient: reduce duplication of levels of study between school/ college/ university;• Drive forward efficiency, collaboration, shared services;• Keep public funding at the core: supplement with fair and moderate graduate contribution;• NB international and rest-of-UK challenges.

Scottish Government Response

• Green Paper December 2010:– Affirms commitment to restoring competitive

funding;– Open on learner journey;– Open on financial models;– But loads in almost every other possible issue

about function, structure and governance of universities.

Scottish Government Response

• Agreed (finally) to joint work with Universities Scotland to scale the comparative funding gap with England and the possible means of filling it.

Technical Group Report

Table 1: Potential Funding Differences by 2014/15

Average English Fee

Annual funding gap by 2014/15

Comments

£7,000 (not indexed)

£96m Assumes that the average English fee is set at the lower end of the

£6,000 to £9,000 range and is not indexed in line with inflation.

£7,500 (not indexed)

£155m Assumes that the average English fee is set at the level adopted by

the Treasury and is not indexed in line with inflation.

£7,500 (indexed)

£200m

Assumes that the average English fee is set at the level adopted by the Treasury in 2012/13 and is

increased with inflation.

£8,000 (indexed)

£263m

Assumes that the average English fee is marginally above the

Treasury’s assumptions and is increased with inflation.

Technical Group Report

Table 2: Fixed Graduate Contribution to raise £100 million per annum Discount rate 2.2% 3.5% 6.5% Fixed Contribution

£5,400

£5,700

£6,500

Contribution from Scottish and EU graduates, payable on graduation

Technical Group Report

Table 3: Income from students from the rest of the UK Average

Scottish fee for RUK students

Contribution to the funding gap

by 2014/15

Comments

Low assumption

£5,625

£41m

Assumes 20% decrease in demand over the period.

Middle assumption

£5,625

£52m

Assumes static demand.

High assumption

£6,375

£74m

Assumes 20% increase in demand over the period.

Technical Group Report

• Other options (business, philanthropy, efficiency) won’t make a difference to the comparative funding gap

Political Responses

• SNP – cherry-pick figures to reduce funding gap to £93m and agree to fill it for 2012-13 from reprioritised public funding and RUK fees. ‘Democratic intellect’ governance proposals.

• Labour – similar cherry-picking. Conditional intention to fill funding gap from same sources but only after ‘root and branch review’ of FE and HE.

Political Responses

• Lib Dems: committed to filling funding gap from same sources, want to look at learner journey issues, student support.

• Conservatives: support graduate contribution, increased funding for universities for social and economic reasons.