STUDENT AWARDS AGENCY FOR SCOTLAND Laura Steele FUNDING AVAILABLE IN SESSION 2014-2015 .
The funding of higher education in Scotland: implications ... · PDF fileThe funding of higher...
Transcript of The funding of higher education in Scotland: implications ... · PDF fileThe funding of higher...
The funding of higher education in Scotland: implications of further devolution and/or independence
Professor David Bell
ESRC Research Fellow
University of Stirling
1
INTRODUCTION
2
Constitutional Options for Scotland
• Status Quo
• Devo +
• Devo More
• Full Fiscal Autonomy
• Independence
3
The Status Quo - Scottish Budget 2013-14
4
Scottish Further and Higher Education Funding Council
2012-13 Budget £m
2013-14 Draft
Budget £m
2014-15 Plans £m
Scottish Funding Council FE Programme 506.9 511.7 470.7
Scottish Funding Council HE Programme 1,002.2 1,041.6 1,061.8
Scottish Funding Council FE/HE Capital 60.7 45.9 56.4
Scottish Funding Council Administration 7.9 7.9 7.9
Total Level 2 1,577.7 1,607.1 1,596.8 of which:
DEL Resource 1,517.0 1,561.2 1,540.4
DEL Capital 60.7 45.9 56.4
SG Spending Limits — Cash Terms 2010-11 £m
2011-12 £m
2012-13 £m
2013-14 £m
2014-15 £m
Revenue DEL 27,259 26,270 25,896 25,429 24,961
Capital DEL 3,462 2,837 2,707 2,319 2,320
Total 30,721 29,107 28,603 27,748 27,281 Real-Terms Change – year on year -5.3% -1.7% -3.0% -1.7%
Real-Terms Change – cumulative -5.3% -6.9% -9.7% -11.2%
The Status Quo - Scottish Budget 2013-14
Higher Education Student Support
Level 3
2012-13 Budget £m
2013-14 Draft
Budget £m
2014-15 Plans £m
DEL
Student Support and Tuition Fee Payments 325.9 302.4 307.0
Student Loan Company Administration Costs 5.0 5.0 5.0
Student Loan Interest Subsidy to Bank 4.5 4.5 4.5
Cost of Providing Student Loans (RAB Charge) (Non-Cash)
88.4 134.0 181.6
Student Awards Agency for Scotland Operating Costs 8.4 8.7 8.7
AME
Net Student Loans Advanced 241.3 408.3 468.3
Capitalised Interest (47.0) (50.0) (52.0)
Student Loans Fair Value Adjustment (69.0) (69.0) (69.0)
Student Loan Sale Subsidy Impairment Adjustments 0.5 0.5 0.5
Total Level 2 558.0 744.4 854.6
of which:
DEL Resource 431.8 454.2 506.4
DEL Capital 0.4 0.4 0.4
AME 125.8 289.8 347.8
5
Alternatives to independence • Devo plus and devo more
– No obvious implications for HE sector relative to status quo.
• Fiscal autonomy – research councils part of “shared services”? “A payment from Edinburgh to London would be required to cover common UK public goods and services (i.e. “shared services”). The range of services included in this basket of “shared services”, how they would be paid for, and the authority the Scottish Parliament would have over such policies, would be subject to negotiation at the time of any revised settlement” (Fiscal Autonomy in Scotland, Scottish Government 2009) Would the research councils form part of these shared services?
6
Independence and Higher Education
• Key questions for Scottish Government – Would an independent Scotland want to increase/decrease
level of support for HE
– Could it afford increased support?
• Existing structures and relationships – Student demography – stocks and flows
– University funding
• The tuition fee issue – A proposed solution
7
DESIRABILITY AND AFFORDABILITY OF POST-INDEPENDENCE HE SUPPORT
8
Graduates make up an increasing share of the Scottish workforce
9
0.00
0.50
1.00
1.50
2.00
2.50
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
Nu
mb
er
of
em
plo
yee
s (m
illio
ns)
Graduate
Non-graduate
Graduate premium declining slightly
10
40%
50%
60%
70%
80%
90%
100%G
rad
uat
e P
rem
ium
(%
)
rUK
Scotland
Graduate premium = Graduate wage/non-graduate wage – 1 Source: Labour Force Survey
Spending on HE in UK low, but effective
11
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Iceland UnitedKingdom
Norway Ireland Sweden Denmark Finland Korea UnitedStates
Spe
nd
ing
on
HE
as S
har
e o
f G
DP
29 of the world top 200 universities in the UK
Scottish HE Institutions 2012 – Significant Income Generation
12
£0m
£100m
£200m
£300m
£400m
£500m
£600m
£700m
£800m
£900m
£1,000m
FundingCouncil grants
Tuition fees Researchgrants andcontracts
Other income Endowmentand
investmentincome
Scottish Growth Sectors Have Strong Links to HE • Oil and Gas
• Food and Drink
• Technology and Engineering
• Renewable Energy
• Life Sciences
• Tourism
• Creative Industries
• Financial and Business Services
• Chemical Sciences
• Construction
• Forest and Timber Technologies
• Textiles
13
Unlikely to change immediately post-independence
HE as an export earner in an independent Scotland?
• Issues
– Migration/visa policy
• Implications for border arrangements?
– Co-operative/competitive outcomes among institutions
– Technological challenges
– Product differentiation
• What makes a Scottish HE course better?
– Policies to attract best scholars
• Salaries, working conditions etc
14
STUDENT DEMOGRAPHICS
15
Potential student numbers in Scotland static, growing in England
16
60
70
80
90
100
110
120
181716151413121110 9 8 7 6 5 4 3 2 1 0
Ind
ex 2
01
3 =
10
0
Current Age
Scotland
Wales
NI
England
Scottish Higher Education Initial Participation Rate (HEIPR) static
17
0%
10%
20%
30%
40%
50%
60%
2006-07 2007-08 2008-09 2009-10 2010-11
Cu
mu
lati
ve H
EIP
R
Other HE
HNC/HND
First Degree
Share of Students studying in HEIs in the UK by domicile and country of institution: 2009-10
18
72.4%
84.5%
58.0%
92.1%
12.6%
2.6%
25.5%
2.4% 17.9% 17.3% 18.2%
11.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Scotland England Wales Northern Ireland
Pe
rcen
tage
sh
are
of stu
de
nt p
op
ula
tion
in e
ach
co
un
try
(%)
Country of Institution
InternationalstudentsOther Uk students
Home students
RUK students share varies by institution
19
0% 10% 20% 30% 40% 50% 60%
Bell College
The University of West of Scotland
UHI Millennium Institute
Scottish Agricultural College
The Rober Gordon University
The University of Strathclyde
Glasgow Caledonian
Edinburgh Napier
University of Abertay
The Univerisity of Dundee
The University of Stirling
The University of Glasgow
Queen Margaret University
The University of Aberdeen
Heriot-Watt University
The Royal Scottish Academy of Music
Edinburgh College of Art
Glasgow School of Art
The University of Edinburgh
The University of St Andrews
Proportion of RUK Students in Undergraduate Intake
These data are calculated from HESA microdata and provided by Marta Odendal
Significant post-graduation cross-border flows
20
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Scottish Studentsat ScottishInstitutions
RUK Students atScottish
Institutions
Scottish Studentsat RUK
Institutions
First Career Destination of Students Entering University 2003-2006
First Career Destination World
First Career Destination EU
First Career Destination RUK
First Career DestinationScotland
These data are calculated from HESA microdata and provided by Marta Odendal
FUNDING
22
Spending relative to population on HE is high in Scotland
23
0%
20%
40%
60%
80%
100%
120%
140%
England Wales NorthernIreland
Scotland
Public Spending
Higher Education
Income by Institution 2011-12
24
£m £100m £200m £300m £400m £500m £600m £700m £800m
Royal Conservatoire of Scotland
Glasgow School of Art
University of Abertay Dundee
Queen Margaret University, Edinburgh
SRUC
University of the Highlands and Islands
The Robert Gordon University
The University of the West of Scotland
The University of Stirling
Edinburgh Napier University
Glasgow Caledonian University
Heriot-Watt University
The University of St Andrews
The University of Aberdeen
The University of Dundee
The University of Strathclyde
The University of Glasgow
The University of Edinburgh
The Funding Status Quo
• No tuition fees charged for higher education in Scotland
• Fees of up to £9000 per annum payable in rest of UK. Those charging fees above £6,000 have to allocate some funding to widening access initiatives.
• But according to the NUS, even with tuition fees in England, “Scotland has the worst record on widening access in the whole of the UK”
25
Income from tuition fees and education contracts by country of HE institution 2011/12
26
0% 20% 40% 60% 80% 100%
England
Wales
Scotland
Northern Ireland
Full-time undergraduate
Full-time postgraduate
Part-time undergraduate
Part-time postgraduate
Non-EU domicile students
Non-Scottish domiciled students in higher education in Scottish HEIs and colleges by domicile: 2000-01 to 2009-10
28
25
,84
5
26
,73
0
26
,87
0
26
,23
5
25
,95
5
26
,70
0
27
,27
0
28
,29
0
28,5
20
29
,83
0
7,8
50
7,9
85
8,3
70
9,1
95
9,8
70
10
,87
5
12
,07
0
12
,67
0
13
,85
0
16
,07
5
10
,83
0
12
,75
0
15
,37
0
16
,91
5
18
,23
0
19,4
75
23
,08
5
22
,44
5
25
,15
5
25
,99
5
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
No
n-S
co
ttis
h d
om
icile
d s
tud
en
ts
Academic Year
Rest ofUK
EU
Non-EU
Increased flows from rUK during “noughties” – fee effect?
29
-0.1%
22.1%
22.9%
-19.0%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10%
Change s
ince 2
000
-01
Academic Year
% Change in student numbers in Scottish HEIs and colleges from UK countries since 2000-01
Scotland
England
Wales
NorthernIreland
The zero line
represents no
change since 2000-01.
POST-INDEPENDENCE - SOLVING THE TUITION FEE ISSUE
31
Post-independence – must treat rUK students as EU
• EU citizens are automatically entitled to study in other EU member states: they should not be paying higher tuition fees and they should be able to receive a residence permit (in order to obtain financial sustain as any other national student) – after 5 years
• Hence, substantial increase in inflows post-independence from rUK?
• Studying in Scotland would not be free – living costs incurred
• Recent NUS estimates of living costs = £12,056 per annum (£4,834 for rent, £1,956 for food, £316 for household goods, £42 for insurance, £2,074 for personal items, £1,524 for travel and £1,310 for leisure).
32
Floodgates?
• Are living costs higher/lower in Scotland than elsewhere?
• Depends partly on place of domicile
• Paying no fees would reduce costs from £21,000 to £12,000 per annum – 42 per cent (31 per cent if comparing 4year with 3 year course)
• How responsive is student demand to changes in fees?
• Recent estimates from Germany – the imposition of any fees reduces enrollment by 2.7 per cent (Hubner 2012)
33
Floodgates?
• Suppose 1 per cent of qualified rUK students seeking to enter a full-time undergraduate course respond to lower course costs in Scotland by applying to Scottish institution.
• Increase in rUK applications = 3,900
• Equivalent to 12 per cent of Scottish annual intake.
34
A Welsh Solution?
• Allow universities to charge (conditional) fees
• Use conditionality to support initiatives such as widening access/STEM etc
• Offer Scottish tuition fee grants and loans to all Scottish domiciled students
• Could be universal or means-tested
• Means supporting the approximately £12,000 Scottish domiciled students studying in rUK – approx. cost = £120m
35
It won’t work!!!
• EU students must be offered the same fee support and grants as home students.
• The only cash they can’t access are maintenance grants which can be offered to home students only.
• Spillover effects of large neighbour applying marginal cost pricing to merit goods when borders are porous. No obvious solution for small country wishing to subsidise these goods.
36
References
• Hübner, M. (2012). Do tuition fees affect enrollment behavior? Evidence from a “natural experiment” in Germany. Economics of Education Review.
37 Textbox