Every term, the EPC Chief Executive, Johnny Rich, provides an update to EPC reps in each university and to the Heads & Deans Community about the big stories from the policy landscape and the impact for Engineering higher education. Here’s his latest update for Winter 2024.
Budget hopes and fears
Rachel Reeves presented the new government’s first budget and for HE it was a mixed bag of hopes being dashed, but fears not being realised.
Money worries
The top hope was that Reeves would ride to the rescue in the financial crisis where now over 80 unis have announced redundancies, 70% are projecting deficits next year, international student numbers are down and English domestic fees have fallen by over a third in real terms in the last 12 years (and a similar picture in the other UK nations). Reeves stayed schtum and made matters worse by raising employer National Insurance contributions and, unlike schools, unis weren’t exempted as employers.
Similarly, there was no increase in living cost loans to help students who’ve seen several years of real-terms cuts to maintenance and more than half of whom are now doing paid work for over 15 hours a week, although maybe not engineering students as much as some others. That said, Reeves raised the minimum wage which may help working students. She also raised the price cap on bus fares from £2 to £3 which won’t. For many students that’ll add as much as £150 a term to their living costs.
Research and Development
The top fear about the budget was that we might hear that the Department for Science, Innovation & Technology was having its budget “protected”. That would mean no increase. However, given that we’ve just rejoined Horizon Europe and now need to pay membership fees, no increase would actually mean a cut of about £1Bn.
That hasn’t happened. DSIT had a sufficient increase to fill the hole and the government is moving to 10-year settlements for research funding to provide stability and encourage private investment. Of course, 10-year plans often don’t survive 10 years, but the label helps.
DSIT’s allocation also includes more funding for Innovation Accelerators, which are initiatives to build R&D clusters in Glasgow, Manchester and the West Midlands. Also there’s £40Mn to support university spin-outs.
Rule changes
There was one other change in the budget that will have dodged most people’s attention. It’s a change to the definition of the national debt and in time it may prove more important than almost all the headline-grabbing measures. Instead of using the Public Sector Net Debt (PSND) to measure how much the country owes, the Bank of England will now switch to ‘persnuffle’.
‘Persnuffle’ is the civil servants’ nickname for the Public Sector Net Financial Liability. Until now, using PSND, student loans haven’t been counted in the national debt because they’re an individual debt not a nation’s one. But, for the government, loans are an ‘illiquid asset’: they’re money the government is owed, but can’t get yet. They are counted in persnuffle.
The rule change brings illiquid assets into the debt calculation as a plus sign: ie. money the nation is owed, bringing down the national debt.
That means that Reeves can spend, borrow or invest more – choose your own verb here. Importantly, it also means lending money to students is a far more attractive thing to do in national accounting terms.
This accounting wheeze is a similar trick to the one that was pulled when the £9k fees were introduced in 2012, which made so much lending very attractive in accounting terms. Arguably it saved the HE sector from the worst of austerity. However, eventually the National Audit Office called it a ‘fiscal illusion’ and the rules were changed. Loans that might never be paid back suddenly looked expensive and the government’s enthusiasm for university expansion evaporated.
In the budget, rule changes matter.
Two cheers for fees and maintenance
Sure enough, days after the budget, Education Secretary Bridget Philipson announced that fees and student loans in England would go up by 3.1%, basically pegged at last year’s inflation rate. Vice chancellors burst into a single hand clap. It would have been a round of applause, but they realised halfway through that the increase was only just enough to cancel out the NICs increase.
Students will also receive a 3.1% increase in their maintenance, but it was all in the form of a loan rather than a return to grants for the poorest students, which many had hoped for or even expected.
The rises to institutions and to students have not (yet) been followed in the devolved nations.
A review
These increases were only a stop gap and the new HE minister Baroness Jacqui Smith said there would be a wider review which will announce the government’s plan for HE next Summer. We have no details of the review, whether it will be internal by civil servants or quasi-independent or fully independent and led by someone like Philip Augar (who led the last one which Theresa May ordered in 2016). We have no terms of reference of the review. The only detail that’s been announced is that something – don’t know what – will be announced by next Summer. Rather than any conclusions of the review, it may be that the announcement will be no more than that a formal open review is starting.
What we do know, is that the Government is making any further help for the sector conditional, demanding that unis do more on five areas including access, standards, civic engagement, eliminate waste, etc. One of the things I found most interesting was how closely those areas aligned with UUK’s Blueprint published a couple of weeks earlier. More about that in a moment.
There was no detail how Baroness Smith’s demands would be followed up or measured, but she did mention OfS in the same breath so they may find themselves with new or changed powers.
Industrial Strategy
Most of what Rachel Reeves said about research and development (R&D) investment in the budget was framed around the government’s new Industrial Strategy, which was published last month as a green paper called Invest 2035. A green paper signals a consultation and the EPC is working on absorbing what it says and perhaps preparing a consultation response. If we do, it may be in partnership with the National Engineering Policy Centre (RAEng, the PEIs and EngCouncil).
The last industrial strategy was launched by Theresa May’s government shortly before she resigned. Some right-wing thinkers regard industrial strategies as a bus-stop on the road to communism, so Johnson dropped it and so we haven’t really had one for over 20 years.
In May’s strategy, there was a plan to identify high-growth companies and foster them. In Starmer’s, the focus is on eight high-growth sectors, which include 4 that are specifically engineering-focused; advanced manufacturing; clean energy industries; defence; and digital & technologies.
Many of the budget measures about R&D were specifically shifting money to support that strategy and those sectors.
This may mean a shift away from the ARIA model for R&D which was the last government’s plan to invest in blue sky research. No actual changes were announced, but as ARIA develops, we may see its funding more directed towards blue sky in certain areas. And of course the more you tether research in that way, the more the blue sky becomes more traditional down-to-earth research.
LLEave it till later
One final thing from the budget, the accompanying Red Book which is the detail behind the speech, shows funding for the Lifelong Learning Entitlement starting from January 2027. In other words, that’s a delay of another year on top of the delay announced by the last government.
What’s relevant about this is that the funding is there at all. This shows the government has decided to plough on with LLE and not just quietly drop it. This will be a big change to the way HE – and other tertiary – funding works and should incentivise unis to explore new markets and new modes of learning.
The delay recognises the fact that there are loads of problems facing LLE. The Student Loans Company isn’t even close to being ready to providing a working platform. LLE relies on credit transfer systems which don’t exist. Accreditation will be like untangling eight balls of wool all the same colour. And student demand won’t develop without brilliant careers guidance, which isn’t likely to develop in the face of no student demand.
This may not be the last delay, but LLE is definitely not going away.
UUK Blueprint
Back before the budget, even before the general election, the HE sector knew that it needed to get on the front foot with the new government. Special pleading for more funding from the last government hadn’t proved very successful among many who thought universities had done quite well through austerity and were hotbeds of woke ideology with poor value outcomes.
Universities UK’s idea was to come up with a grand plan along the lines of asking not what you can do for us, but what we can do for you. When the election was called earlier than expected, they ended up having to reframe it as a blueprint for a new compact with the government that had just been elected rather than a big vision for party manifestoes.
So the ‘UUK Blueprint’ – or Opportunity, Growth and Partnership: a blueprint for change from the UK universities, to give it its full name – was published last month with a host of celebrity authors (if you’re policy geek like me): Peter Mandelson, David Willetts, Andy Haldane, Ann Limb and various VCs and bigwigs.
It makes five suggestions about how HE can improve the country:
- Increased opportunity by raising the participation target for HE (ie. any level 4 or above) to 70% for England by 2040.
- Closer collaboration between HE, FE and schools.
- Closer collaboration in local areas, especially between universities and businesses.
- A stronger research base.
- Greater global reach for HE (including more international students).
In return, the Blueprint asks for a firm financial footing for HE, better regulation and a better system of assessing the impact of HE economic and non-economic returns.
Given what I was saying earlier about the Governments’ demands for unis to step up and the areas it highlighted, it seems like UUK’s blueprint landed very well at the DfE.
BTECs-ecution
As you may remember, the last government was planning to axe the funding for almost all BTECs and other qualifications that, to use their terminology, ‘overlap’ with new T levels. You might say, ‘compete with’. That includes a number of engineering-related BTECs.
In its first week, the new government did what it had been saying it would do and announced an immediate ‘pause and review’ of the cuts. However, the stay of execution was very limited and only in the short term. And the review is entirely internal, ie. by civil servants, without seeking wider input. It’s due to report next month, but that’s left colleges with a lot of uncertainty about whether they’ll be able to offer courses next year just at the time they need to promote them to students, work out staffing, and so on.
The OfS switch
The last government was very concerned about the perceived lack of free speech on campus, especially for views with which members of the last government happened to be sympathetic. So they passed a law creating a Free Speech Tsar at OfS, Cambridge philosopher Prof Arif Ahmed, and gave him a bunch of largely self-contradictory powers and a responsibilities.
The new government regards this as culture war nonsense and has suspended the introduction of the Higher Education Freedom of Speech Act. Ahmed is still employed by OfS, but as far as I’m aware, no longer seems to have anything to do. As a philosopher, no doubt he can make explain how he is doing the job without really doing anything.
This isn’t the only big change facing OfS with the change of government. There were various reports and reviews of OfS prior to the election slamming its methods, its approach and its dubious independence. One of these reports was by the House of Lords which drew extensively from the EPC’s own consultation response and might as well have had a big ‘burn’ emoji on the cover.
This was followed by an official review commissioned by the last government and led by Sir David Behan, which wasn’t much kinder.
Within days of the new government taking over, Lord Wharton – who is a close personal friend of Boris Johnson; who was ennobled by him; who was appointed Chair of the OfS by him despite having shown no previous interest or expertise in higher education or regulation; who refused to resign the Conservative Whip while chairing the independent regulator; and who hadn’t seen fit to make a public statement about the criticism of OfS – resigned. Or ‘was resigned’ by Bridget Phillipson would perhaps be a more accurate way of putting it.
And David Behan was appointed in his place on an interim basis.
Meanwhile last month, the OfS published a report congratulating itself on the improvements it’s making in consultation and engagement with the sector.
Curriculum & Assessment Review
The English government has launched a major review of the Curriculum and Assessment landscape in schools. This is being chaired by Prof Becky Francis, former Director of UCL Institute of Education and current CEO of the Education Endowment Foundation, the powerful charity that explores the effectiveness of education.
There will be important questions about knowledge vs skills, applied vs theoretical learning, assessment by exams vs course work, do we need GCSEs, how can we close attainment gaps, how should we prepare pupils for the working world, etc. This may be relevant to engineering as there’s the potential to strengthen or weaken pathway subjects – or even introduce engineering as a subject in its own right.
The EPC has submitted a response calling for more to be done to support pathways to engineering and suggesting the review learns from approaches to learning in engineering HE.
Russell bustle
One final update from the world of schools: the DfE has formally dropped progression to Russell Group universities as a measure of schools’ success.
I suspect that even Russell Group members would acknowledge this was always a particularly unsophisticated metric, especially in engineering where excellence and high-tariff courses can be found throughout the sector. Of course, many schools and parents may go on being interested in how many go to Russell Group unis – even if they don’t know which universities are included.
