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Budget 2018 – key points for universities

Mark Condren

Political Affairs Officer
Universities UK

Austerity is over – or at least that is what the Chancellor Philip Hammond was keen to demonstrate in his Budget yesterday. While this claim was met with scepticism by opposition MPs, there was certainly a different mood on the government benches than has characterised previous fiscal events.

With few headline policies on higher education this year, it took some digging into the documents underpinning the Budget to find announcements of interest to universities.

Somewhat ironically given the Budget's overall message, while universities have in recent years been protected from the worst of austerity, the Budget modelled a continued freeze to tuition fees – resulting in £200 million less funding for universities by 2023-24. This will add pressures to the sector finances, as we head into a period of significant uncertainty. As expected, the Budget was otherwise silent on funding and student finance, with both the post-18 review and the review of the Office for National Statistics (ONS) on student loan accounting still ongoing.

On the post-18 review itself, the Budget Red Book simply echoed the long-standing terms of reference, stating that it will aim to ensure "all students are given a genuine choice between high-quality technical, vocational and academic routes in a system accessible to all; students and taxpayers are getting value for money; and employers can access the skilled workforce they need". Universities will have to wait until around the spending review next year for further indication of the government's future approach in this area.

The Budget also gave no immediate comfort to universities concerned about public service pensions, an issue which will particularly affect post-1992 institutions with large numbers of staff in the Teacher Pension Scheme. Confirming reductions to the discount rate for public sector schemes, the Red Book commits to making sure that additional costs do not "put undue pressure on public employers." Only NHS employers and state schools are, however, singled out as institutions which will receive government support.

The Budget had a lot more to offer for universities on research, with announcements allocating £1.6 billion of increased R&D funding pledged at previous fiscal events. This included £1.1 billion for the Industrial Strategy Challenge Fund, £120 million for the Strength in Places fund, £150 million for research fellowship schemes, and funding for university enterprise zones and catapult centres. This investment in the UK's research base is positive and will support universities in continuing to drive economic and productivity growth in all regions and nations of the UK.

The government's continued ambition to promote apprenticeships was also apparent in the Budget, with a package of investment to halve the levy contribution of smaller firms to 5% and allow employers to transfer training funds to their supply chains. These measures align with previous recommendations by Universities UK to support the delivery of higher and degree apprenticeships, offering more diversity for learners beyond traditional undergraduate degrees.

The Chancellor's additional funding for mental health services, one of the headline announcements yesterday, should be strongly welcomed. It is vital that all universities make mental health a priority and ensure effective coordination of care with local health services, though this society-wide issue cannot be addressed without effective resourcing of mental health within the NHS. Yesterday's investment in areas like crisis services and schools-based support signals the government's commitment to addressing the historic disparity in funding for mental health.

Of course, all these announcements come with one major caveat: Brexit. The Treasury has been keen to emphasise that yesterday's fiscal programme is predicated on a deal with the EU, with the Chancellor promising to 'take whatever action appropriate' if the economic outlook changes. The coming weeks will therefore determine whether yesterday's announcements will stand the test of time.


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