Mind the gap

David Eiser suggests that we need more comparative studies like the ‘Mind the Gap’ report if we are to benefit from the ‘policy learning’ that devolution is hoped to provide.

The core case for devolving policy responsibility in areas such as education is that it enables devolved governments to tailor policy to the needs and preferences of their electorates. The resulting policy variation across areas informs understanding of which policy approaches work best under different circumstances, enabling ‘policy learning’ to take place more quickly than if policy approaches were uniform.

The downside of policy variation is that it can make comparisons of policy inputs (funding) and effectiveness in different parts of the country exceedingly complex.

A new report called ‘Mind the Gap’ by London Economics for the University and College Union grapples with these issues in analysing differences in higher education spending across the UK’s four devolved territories. The report’s aim is to benchmark funding per student (for different types of student, and by funding source) across the UK. The fact that the funding systems are so different makes this kind of comparison tricky. Across the four territories, different types and levels of grant and loan are available to different types of students (depending for example on whether students are full or part time, undergraduates or post graduates, and so on). These definitional issues are compounded by differences in the type and level of data that is available on each education system.

The report looks at the total amount of funding per full-time student at higher education institutions. This includes funding from all sources, including government grants to the universities directly for teaching and research, and grants and loans paid to students to fund tuition and maintenance. In 2013-14, there was a wide variation in the total level of resource per student – ranging from £14,000 in England to £11,300 in Scotland.

The total level of funding per HE student is higher in England than in Scotland because of the higher tuition fees in England that students are expected to pay themselves. But the fees paid by students in England are largely supported by tuition fee loans from the government to students. To calculate the total level of public funding per student, assumptions must be made about what proportion of these loans will not be repaid.

Who gets what?

The proportion of a loan that will not be paid back is known as the RAB charge (Resource Accounting and Budgeting). Loans are not always paid back in full because students only have to pay their loans back when they are earning above a particular threshold.

Assumptions about the RAB charge are critical in determining the value of the total public subsidy per university student, and the public-private split in total funding. The assumed RAB charges used in the report vary depending on the type and value of loan. RAB charges for tuition fee loans in England for example are assumed at 45%, (implying 45% of the total value of student loans will not be repaid), whereas the RAB charge is lower for Northern Irish and Welsh students, who face lower tuition fee caps and therefore borrow less.

Once RAB charges for fee and maintenance loan repayment are factored in the level of public funding per full-time undergraduate is broadly similar in England, Wales and Scotland – £8,900, £9,500 and £9,000 respectively – although lower in NI (£7,700).

Learning from different policies

The report highlights a number of apparent funding inequities, particularly in terms of the total resource per full-time undergraduate (and the differences are even greater for part-time undergraduates). There is less ‘funding per student’ going to HEIs in Scotland than in England for example. But given differences in funding models, it is more difficult to assess the level of public-sector contribution, factoring in non-repayment of loans.

In itself however, it is not immediately apparent that such differences are undesirable. After all, the objective of devolution is to allow devolved governments to allocate spending as they (and their electorates) see fit.

But what is clear is that balancing the need to maintain (or increase) total funding for higher education, while ensuring accessibility to university by students from all backgrounds, is likely to become increasingly challenging.

Important questions to be debated include where the public-private funding split should lie in total and how this total split should be distributed across students of different financial means. There’s also a question on whether private contributions should be paid upfront (as they currently are through loans), or, for example, through a higher graduate tax payable throughout their working lives.

The Mind the gap Report does not discuss these wider points, but it provides a useful benchmarking analysis which can begin to inform the more general HE funding debate. We need more comparative studies like this if we are to benefit from the ‘policy learning’ that devolution is hoped to provide.

This is an edited version of an article that originally appeared on The Conversation.

 

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David Eiser's picture
post by David Eiser
Fraser of Allander Institute
23rd November 2015
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