The funding of higher education in Scotland: implications of further devolution and/or independence Professor David Bell ESRC Research Fellow University of Stirling 1 INTRODUCTION 2 Constitutional Options for Scotland • Status Quo • Devo + • Devo More • Full Fiscal Autonomy • Independence 3 The Status Quo - Scottish Budget 2013-14 SG Spending Limits — Cash Terms 2010-11 2011-12 2012-13 2013-14 2014-15 £m £m £m £m £m Revenue DEL 27,259 26,270 25,896 25,429 24,961 Capital DEL 3,462 2,837 2,707 2,319 2,320 Total 30,721 29,107 28,603 27,748 27,281 Real-Terms Change – year on year -5.3% -1.7% -3.0% -1.7% Real-Terms Change – cumulative -5.3% -6.9% -9.7% -11.2% 2012-13 2013-14 2014-15 Budget Draft Plans Scottish Further and Higher Education Funding Budget Council £m £m £m Scottish Funding Council FE Programme 506.9 511.7 470.7 Scottish Funding Council HE Programme 1,002.2 1,041.6 1,061.8 Scottish Funding Council FE/HE Capital 60.7 45.9 56.4 Scottish Funding Council Administration 7.9 7.9 7.9 Total Level 2 1,577.7 1,607.1 1,596.8 of which: DEL Resource 1,517.0 1,561.2 1,540.4 DEL Capital 60.7 45.9 56.4 4 The Status Quo - Scottish Budget 2013-14 Higher Education Student Support 2012-13 2013-14 2014-15 Budget Draft Plans Budget Level 3 £m £m £m DEL Student Support and Tuition Fee Payments 325.9 302.4 307.0 Student Loan Company Administration Costs 5.0 5.0 5.0 Student Loan Interest Subsidy to Bank 4.5 4.5 4.5 Cost of Providing Student Loans (RAB Charge) (Non- 88.4 134.0 181.6 Cash) Student Awards Agency for Scotland Operating Costs 8.4 8.7 8.7 AME Net Student Loans Advanced 241.3 408.3 468.3 Capitalised Interest (47.0) (50.0) (52.0) Student Loans Fair Value Adjustment (69.0) (69.0) (69.0) Student Loan Sale Subsidy Impairment Adjustments 0.5 0.5 0.5 Total Level 2 558.0 744.4 854.6 of which: DEL Resource 431.8 454.2 506.4 DEL Capital 0.4 0.4 0.4 AME 125.8 289.8 347.8 5 Alternatives to independence • Devo plus and devo more – No obvious implications for HE sector relative to status quo. • Fiscal autonomy – research councils part of “shared services”? “A payment from Edinburgh to London would be required to cover common UK public goods and services (i.e. “shared services”). The range of services included in this basket of “shared services”, how they would be paid for, and the authority the Scottish Parliament would have over such policies, would be subject to negotiation at the time of any revised settlement” (Fiscal Autonomy in Scotland, Scottish Government 2009) Would the research councils form part of these shared services? 6 Independence and Higher Education • Key questions for Scottish Government – Would an independent Scotland want to increase/decrease level of support for HE – Could it afford increased support? • Existing structures and relationships – Student demography – stocks and flows – University funding • The tuition fee issue – A proposed solution 7 DESIRABILITY AND AFFORDABILITY OF POST-INDEPENDENCE HE SUPPORT 8 workforce Scottish of the share an increasing up make Graduates Number of employees (millions) 0.00 0.50 1.00 1.50 2.00 2.50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Non-graduate Graduate 9 Graduate premium declining slightly 100% 90% 80% 70% rUK Scotland 60% Graduate (%) Premium Graduate 50% 40% Graduate premium = Graduate wage/non-graduate wage – 1 Source: Labour Force Survey 10 Spending on HE in UK low, but effective 3.0 2.5 2.0 1.5 1.0 Spending on HE Spending onHE as ofShare GDP 0.5 0.0 Iceland United Norway Ireland Sweden Denmark Finland Korea United Kingdom States 29 of the world top 200 universities in the UK 11 Scottish HE Institutions 2012 – Significant Income Generation £1,000m £900m £800m £700m £600m £500m £400m £300m £200m £100m £0m Funding Tuition fees Research Other income Endowment Council grants grants and and contracts investment income 12 Scottish Growth Sectors Have Strong Links to HE • Oil and Gas • Food and Drink • Technology and Engineering • Renewable Energy • Life Sciences • Tourism • Creative Industries • Financial and Business Services • Chemical Sciences • Construction • Forest and Timber Technologies • Textiles Unlikely to change immediately post-independence 13 HE as an export earner in an independent Scotland? • Issues – Migration/visa policy • Implications for border arrangements? – Co-operative/competitive outcomes among institutions – Technological challenges – Product differentiation • What makes a Scottish HE course better? – Policies to attract best scholars • Salaries, working conditions etc 14 STUDENT DEMOGRAPHICS 15 Potential student numbers in Scotland static, growing in England 120 110 100 Scotland 90 Wales 80 NI Index 2013 = 100 2013 Index England 70 60 181716151413121110 9 8 7 6 5 4 3 2 1 0 Current Age 16 Scottish Higher Education Initial Participation Rate (HEIPR) static 60% 50% 40% Other HE 30% HNC/HND First Degree 20% Cumulative HEIPR Cumulative 10% 0% 2006-07 2007-08 2008-09 2009-10 2010-11 17 Share of Students studying in HEIs in the UK by domicile and country of institution: 2009-10 100% 11.5% 90% 17.9% 17.3% 18.2% 2.4% 2.6% 80% 12.6% 70% 25.5% International students 60% Other Uk students 50% Home students 92.1% 40% 84.5% (%) 72.4% 30% 58.0% 20% 10% 0% Scotland England Wales Northern Ireland Country of Institution Percentage share of student population in each country eachcountry populationstudentin ofshare Percentage 18 RUK students share varies by institution Proportion of RUK Students in Undergraduate Intake The University of St Andrews The University of Edinburgh Glasgow School of Art Edinburgh College of Art The Royal Scottish Academy of Music Heriot-Watt University The University of Aberdeen Queen Margaret University The University of Glasgow The University of Stirling The Univerisity of Dundee University of Abertay Edinburgh Napier Glasgow Caledonian The University of Strathclyde The Rober Gordon University Scottish Agricultural College UHI Millennium Institute The University of West of Scotland Bell College 0% 10% 20% 30% 40% 50% 60% These data are calculated from HESA microdata and provided by Marta Odendal 19 Significant post-graduation cross-border flows First Career Destination of Students Entering University 2003-2006 100% 90% 80% 70% First Career Destination World 60% 50% First Career Destination EU 40% 30% First Career Destination RUK 20% 10% First Career Destination 0% Scotland Scottish Students RUK Students at Scottish Students at Scottish Scottish at RUK Institutions Institutions Institutions These data are calculated from HESA microdata and provided by Marta Odendal 20 FUNDING 22 Spending relative to population on HE is high in Scotland 140% 120% 100% 80% Public Spending 60% Higher Education 40% 20% 0% England Wales Northern Scotland Ireland 23 Income by Institution 2011-12 The University of Edinburgh The University of Glasgow The University of Strathclyde The University of Dundee The University of Aberdeen The University of St Andrews Heriot-Watt University Glasgow Caledonian University Edinburgh Napier University The University of Stirling The University of the West of Scotland The Robert Gordon University University of the Highlands and Islands SRUC Queen Margaret University, Edinburgh University of Abertay Dundee Glasgow School of Art Royal Conservatoire of Scotland £m £100m £200m £300m £400m £500m £600m £700m £800m 24 The Funding Status Quo • No tuition fees charged for higher education in Scotland • Fees of up to £9000 per annum payable in rest of UK. Those charging fees above £6,000 have to allocate some funding to widening access initiatives. • But according to the NUS, even with tuition fees in England, “Scotland has the worst record on widening access in the whole of the UK” 25 Income from tuition fees and education contracts by country of HE institution 2011/12 Northern Ireland Scotland Full-time undergraduate Full-time postgraduate Part-time undergraduate Part-time postgraduate Wales Non-EU domicile students England 0% 20% 40% 60% 80% 100% 26 domicile: by colleges and HEIs Scottish Non Non-Scottish domiciled students - 25,000 30,000 35,000 10,000 15,000 20,000 Scottish domiciled students in higher education in education higher in students domiciled Scottish 5,000 0 2000- 01 25,845 7,850 10,830 2001- 02 26,730 7,985 12,750 2002- 03 26,870 8,370 15,370 2003- 04 26,235 9,195 16,915 2004- Academic Year Academic 05 25,955 9,870 18,230 2005- 06 26,700 10,875 19,475 2006- 07 27,270 12,070 23,085 2000 2007- 08 28,290 12,670 22,445 2008- - 09 28,520 13,850 01 28 25,155 2009- to 2009 to 10 29,830 16,075 25,995 Non-EU EU UK of Rest - 10 Increased flows from rUK during “noughties” – fee effect? % Change in student numbers in Scottish HEIs and colleges from UK countries since 2000-01 25% 22.1% 20% 22.9% 01 15%- 10% 5% Scotland -0.1% 0% England The zero line represents no-5% change since 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- Wales 2000-01. -10%% Change since2000 01 02 03 04 05 06 07 08 09 10 Northern -15% Ireland -20% -19.0% -25% Academic Year 29 POST-INDEPENDENCE - SOLVING THE TUITION FEE ISSUE 31 Post-independence – must treat rUK students as EU • EU citizens are automatically entitled to study in other EU member states: they should not be paying higher tuition fees and they should be able to receive a residence permit (in order to obtain financial sustain as any other national student) – after 5 years • Hence, substantial increase in inflows post-independence from rUK? • Studying in Scotland would not be free – living costs incurred • Recent NUS estimates of living costs = £12,056 per annum (£4,834 for rent, £1,956 for food, £316 for household goods, £42 for insurance, £2,074 for personal items, £1,524 for travel and £1,310 for leisure).