Tracking higher education policy in the UK has never been a simple undertaking. While some policy changes apply to universities across the country, the devolved nature of education means that most announcements made by the Department for Education tend only to apply to institutions in England.

The patchwork of implications this creates has been on full display since the UK government’s first Budget, which took place on October 30.

Budget blues

In the run up to the big day, the new Chancellor of the Exchequer, Rachel Reeves, had been careful to manage expectations and prepare the nation for some tough fiscal announcements. Though many in the higher education sector were still left disappointed when the Chancellor’s speech failed to contain a single mention of the word “universities”, even in the context of boosting growth, innovation and opportunities.

Further disappointment was felt as the Chancellor did nothing to clear up confusion whether UK research and development (R&D) could be heading for a real-terms budget cut if funding for the UK’s association to the EU’s Horizon framework programme is to be absorbed by the Department of Science, Innovation and Technology (DSIT).

With the Budget red book revealing a near flat-cash settlement of £20.4 billion for UK R&D, the sector will have to wait some time yet for DSIT’s spending allocations to see if Horizon association has been accounted for separately.

The most immediate blow for universities nevertheless came in the form of the Chancellor’s decision to increase employers’ National Insurance contributions by 1.2 percentage points to 15% – a move the Universities and Colleges Employers Association (UCEA) calculates will cost the sector £372m annually. Together with planned raises to the National Minimum Wage levels, the impact on institutional balance sheets can be expected to be much larger.

University budgets across the UK are already under immense strain from years of insufficient funding, declining international student numbers, increasing pension contributions, and rising operating costs. The last thing the sector needed is yet more financial burdens to add to this list.

DfE to the rescue?

Universities in England did not, however, need to wait very long before the education secretary, Bridget Philipson, came along on November 4 to change the rules of the game by announcing a one-off rise for domestic undergraduate student fees. These will rise from £9,250 to £9,535 from the next academic year and will apply to all students, including those continuing their studies.

On the bright side, an inflationary increase to domestic student fees is long overdue following eight years of consecutive freezes and will be much appreciated by heads of institutions. Yet, questions remain whether the gains are worth it given the long list of downsides that come with it:

First, the new £9,535 sticker price is still a long way off the £12,000-13,000 fees that are reported to be needed to cover the full costs of undergraduate provision, and further fee rises are not guaranteed.

Second, the optics of pushing this increase onto students must not be underestimated and may infuriate current students, as well as impact the decisions of future applicants not to embark on higher education.

Third, the government has been clear that any more money and financial reform is going to come with trade-offs, so universities need to head into future negotiations fully aware of what they might have to cede in return.

Fourth, the financial uplift that has been granted only really plugs the gap created by the planned National Insurance rise and minimum wage increases, so universities are not going to be much better off than they were before Budget Day.

Fifth and finally, let’s remember that any benefits from this fee increase are only going to be felt by higher education institutions in England. Those in Scotland, for example, are still facing National Insurance hikes, yet will have to wait for the Scottish Budget on December 4 to see if a similar cushion will be provided by Holyrood. Welsh and Northern Irish institutions will also likely be looking to their respective administrations for any further reprieve.

With the UK government having changed the situation for universities and students across the country so dramatically within the space of a week, the sector does not have long to propose reforms that are fair for institutions, fair for students and fair for society.

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