The Chancellor finally delivered his Spending Review today, ending months of frenzied speculation about the scale of cuts needed for the UK to be a ‘country that lives within its means’.
So what are the implications for higher education?
The Department for Business, Innovation and Skills (BIS), home to funding of higher education, research and innovation, fared relatively well, with a 17% cut in real terms by 2019–20, less than the 25% or even 40% cuts feared.
A significant share of BIS’s cuts were accounted for with the shift from maintenance grants to loans announced in the summer Budget. This change, plus the government announcing that the student opportunity fund will be reduced, and the freezing of repayment thresholds for students, presents challenges to ensuring those from disadvantaged backgrounds can enter and succeed in higher education. Universities UK will be considering this in detail as part of the work of our social mobility advisory group.
Major government announcements often raise more questions than they answer. Below we set out what we know so far, our reaction, and what remains to be decided.
The chancellor has committed to protect science funding in real terms. The government has also confirmed its intention to invest £6.9 billion up to 2021 in research capital.
Protection in real terms is an excellent outcome in the context of a tough fiscal environment. However, it will be important to remember that increases in investment will be needed over the longer term, if we are to keep up with our competitors – as universities UK and others have been calling for in the run up to the Spending Review.
The government will maintain Innovate UK support in cash terms, with increased funding for catapult centres, but replace some existing grants with loans. Following on from the Nurse Review, a new overarching research body will work across the research councils and integrate Innovate UK.
Taken together with the recent higher education green paper, the spending review marks a significant change in the landscape for the funding of higher education, research and innovation. After today’s announcements, there is still a lot that is unclear – including significant items such as the amount of funding allocated for higher education. We await clarification in subsequent announcements from BIS, and in the grant letter to HEFCE. The Welsh and Scottish governments are to lay their own budgets on 8 December and 16 December respectively, which will decide outcomes in more detail for Wales and Scotland.
In the meantime, one thing is absolutely clear: while the Spending Review may be over, there is plenty of negotiation still to be done.