Recommendations: 71, 72, 73, 74

Recommendation 71: We recommend to the Government that, over the long term, public spending on higher education should increase with the growth in Gross Domestic Product.

10.1 The Government intends that, over the course of this Parliament, public spending on education should increase as a proportion of national income, as the cost of social and economic failure is reduced. Detailed plans for the longer term, including for higher education, will be announced in the summer as part of the Comprehensive Spending Review. The Government has already shown its commitment to maintaining and improving quality in higher education, as well as expanding access, through the measures announced in the autumn which made available extra funds for higher education in England, Scotland, Wales and Northern Ireland for 1998-99.

Recommendation 72: We recommend to the Government that it shifts the balance of funding, in a planned way, away from block grant towards a system in which funding follows the student, assessing the impact of each successive shift on institutional behaviour and the control of public expenditure, with a target of distributing at least 60 per cent of total public funding to institutions according to student choice by 2003.

10.2 The Government accepts that a greater proportion of funding for higher education should follow the student. In ending the present system of differential tuition fees, paid through mandatory awards, the Government has asked the Funding Councils to allocate the additional funds which have been transferred in consequence to Funding Council grant in a way which reflects the effect of the differentiated fee regime of 1997/98 and earlier years. This will mean that more funding follows the student, even though it is paid through Funding Council grant. The main funding formula which is being adopted by the Funding Council for England is also based directly on the number of students enrolled. The Scottish Higher Education Funding Council’s funding methodology will automatically take account of the change in the fee regime.

Recommendation 73: We recommend to the Government that the public funding for higher education institutions should be determined on a rolling three year basis.

10.3 Public funding for higher education has necessarily been announced for just one year (1998-99) pending the outcome of the Comprehensive Spending Review. It is, however, the Education Departments’ intention that funding should in future be announced on a rolling three year basis in the same way in which grant to the Funding Council has hitherto been announced for three years, with the second and third years funding necessarily being on an indicative rather than a firm basis.

Recommendation 74: We recommend to the Government that variations in the level of public funding for teaching, outside modest margins, should occur only where: there is an approved difference in the provision; society, through the Secretary of State or his or her agent, concludes, after examining an exceptionally high level of funding, that in relation to other funding needs in higher education, it represents a good use of resources.

10.4 So far as variations in the level of public funding for teaching go, after allowing for differences in subject, the spread of funding by institution in the higher education sector is relatively limited, with a small number of institutions in England at the extremes but most clustered around the median. The Government accepts that, where there are cases of exceptionally high levels of funding, these need to be examined to see whether they represent a good use of resources. It is for that very reason that the HEFCE were asked to advise on the mechanisms for setting future funding for universities and colleges at Oxford and Cambridge, having regard to the points raised by the Dearing Committee and to the Funding Council’s new funding method for teaching, which will be based on the principle of a standard price for each of the four broad subject groups. Advice was sought, too, on any implications for the three independent colleges of Durham University, which also receive funding through reimbursement of college fees. The Government’s decision in the light of the Funding Council’s advice will be announced shortly.

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