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Response to the Enterprise and Culture
Committee's Scottish Solutions Inquiry
September 2003
Aberdeen University Students Association (AUSA) is the statutory
representative body of students at the University of Aberdeen.
The Aberdeen University Students' Association is an organisation
that provides services for students, run by students. The Association
exists to enable students to survive, enjoy and gain more from
their University Education.
It is a Students' Union within the terms of the Education Act
1994 and, as such, is the voice of 13,278 students.
1. Introduction
We would like to thank the Enterprise and Culture Committee
for the opportunity to give evidence on `The Impact of England's
University Fees on Scottish Higher Education'.
As members of the National Union of Students Scotland we support
both the position and the evidence put to the committee already
by NUS Scotland. We do not wish to repeat the arguments already
made by NUS so in our submission we seek to address a number
of issues, which we feel are important and have not been put
forward by other witnesses so far.
The evidence contained within is based on the education policy
of the Students' Association, which is passed by the democratically
elected and active committees of the Association. We believe
the views included here reflect the priorities of our thirteen
thousand members.
We would like to challenge the assumption that the introduction
of top up fees in England will cause Scottish institutions to
suffer a huge competitive disadvantage. We do not deny that
a competitive disadvantage may accrue from the proposals but
we would take issue with the nature, the size and the timescale
of that disadvantage. We would also like to offer some possible
Scottish solutions to the issue of funding increased investment
and finish by stating we believe that in Scotland there is a
distinct competitive advantage over the sector in England.
2. Top Up Fees and Barnett
The idea that Scottish Universities will be placed at a competitive
disadvantage to English Universities centres on the assertion
that because English institutions will have recourse to a funding
stream that Scottish Universities do not they will have greater
resources.
This is a logical argument and at face value would appear to
be true. However we believe that there are a number of factors,
which make this situation much less clear-cut.
The Government's proposed scheme for top up fees will come
online in AY 2006-07 but because the payment of fees will be
`back ended' the first point at which any significant income
form fees will come on stream is likely to be at least three
years after the introduction of feesi
The DfES recognises this and has pledged to provide the funding
that Universities are calculated to receive from top up fee
income upfront in order that there is no delay in `increased
investment'.
Because the Government has pledged to provide this money up
front we would argue that this amounts to an increase in public
spending on English Higher Education.
Since the way most of Scotland's block grant funding is based
on how much is spent on equivalent English departments and services
(calculated through the `Barnett formula') we assert that this
provision of up front fee monies amounts to an increase in public
spending which should mean that the block grant monies given
to Scotland for education should increase as a result.
If this is true then it would mean that the competitive advantage
English institutions had would not be so great because Scottish
institutions would have access to an increased funding stream
without recourse to charging top up fees.
We recognise that the Barnett formula is not a like for like
exercise, nor that is it an exact science. Extra `Barnett monies'
would not account for the whole shortfall/competitive disadvantage.
However they would account for a significant proportion of it
and mean that there will be an increased income stream for higher
education that so far has not been identified.
This would mean that the competitive advantage would not be
as significant as at first assumed. Further to this, we believe
the freedom institutions will have to spend the extra income
on activities, which would lead to a situation of competitive
advantage, will be quite restricted.
3. The Nature Of The Competitive Advantage
AUSA believes that Universities will not have the freedom,
which the model of competitive disadvantage assumes, to use
the `increased' monies in any way they choose. On the one hand,
this is because much of the money will be tied or ring-fenced
to specific initiatives and on the other because the increased
administrative costs will have to be in part borne by institutions.
The Government has indicated that it will expect Universities
to use fee contributions to a) fund widening access initiatives
and b) fund bursary schemesii
Although we do not know how much of the potential funds this
will eat up it will mean that on top of the numbers of students
exempt form fees, fully or partially, the net income which institutions
will be able to use for the things that many fear will give
English institutions a competitive advantage - staff salaries,
research and teaching facilities - will be significantly smaller
than what has been speculated thus far. Thus the potential competitive
advantage will again be lessened.
None of this even touches on the as yet unknown administrative
costs, which may have to be found out of the fee income to administer
this system.
Speculation about the level of income Universities are actually
going to receive for things like pay rises are based on
assumptions that institutions will receive the gross amount
of any contribution and will be able to allocate that resource
any way they choose. We believe this to be an unsafe assumption.
AUSA would also argue that the possible income from fees is
impossible to calculate at present because the fee eligibility
remains unclear. It simply is not known how many students will
be expected to pay the full fee.
We have already seen potential concessions emerge in the last
few weeks form Ministers that the poorest students are likely
to see full exemption from fees, on top of the proposed continued
exemption, in the White Paper, from the £1,100.
Thus, not only will the uses institutions are able to put the
extra income to be restricted there is no clear data as to exactly
how much income top up fees will yield. The nature and extent
for the competitive advantage thus remains unclear but are likely
to be less than the speculative amount based on gross calculations.
If Scotland also receives extra monies through the Barnett
formula then this would place Scottish institutions at an advantage
since such monies would not be restricted in the use they were
put to and because the proposed bursary schemes which the ring
fencing of fee money is proposed to fund already exist in Scotland
through the Young person and Mature Students' Bursaries there
would be less pressure to provide further bursaries with that
income.
4. The Alternatives to Top Up Fees
It is important to bear in mind that Top Up Fees are the only
additional funding stream which Scottish Universities will not
have recourse to, but fees are not the only funding stream that
the Government promotes in the White Paper for increasing investment
in Universities.
If it is felt that there is a significant competitive disadvantage
accruing to Scottish institutions from their inability to charge
fees then there are three possible options open to the Executive
to address the funding gapiii
5. The Executive's Contribution
The Executive could make up the shortfall through increased
general public expenditure. This seems the least likely option
- notwithstanding the increased income from the Barnett formula
calculations outlined above - since the Executive has no plans
to significantly increase the proportion of the budget to be
spent on higher education.
6. The Contribution From Business
Business has, overall contributed very little to higher education
while constantly demanding things of it - skills, graduate employability,
research etc.
One possible option available to the Executive would be to
use revenue from Business Rates to increase funding to higher
education.
We are acutely aware that the possibility of raising Business
Rates is not a political possibility and that the rate has been
frozen with a view to a possible reductioniv
The possibility exists however of reducing Business Rates per
se but maintaining the present headline rate and investing
the difference into higher education as a form of higher education
business levy.
This would have the effect of not increasing the overall burden
of taxation but utilising an intended cut in rates to fund increased
investment in higher education.
Since the Executive recognises the importance of Universities
in achieving its aims in Smart Successful Scotland,
in terms of skills, employability and spin off companies as
well as the economic value of research then it should be prepared
to support higher education through funding from business.
Using monies from business rates would have the added advantage
that it would not be an additional levy and the infrastructure
for collection of the levy is already in place so the administrative
costs would be kept low.
An alternative would be to provide tax relief from Business
Rates to businesses that contributed money to local Universities
or to a national University endowment fund. This would have
additional administrative and set up costs but would provide
a vehicle where there could be a transparent contribution form
business to higher education.
7. The Contribution From Students
AUSA believes the contribution from students can be divided
into three, roughly based on the three ages of studentdom.
Firstly up front from undergraduates while they are studying.
This is the tuition and top up fee model, which has been rejected.
Secondly, from students upon graduation, this is the model,
which has been adopted in Scotland under the Graduate endowment.
Thirdly the contribution from alumni, usually students whom
have been graduates for some time and have built up both stocks
of capital and stocks of sentimentality about their alma mater.
We feel that there are limited options in this preserve as
tuition fees have ruled out and to increase the graduate endowment
would be politically unsafe ground.
Alumni are a different concern where the emphasis is on encouragement
rather than compulsion but it is unlikely that we will see significantly
increased contributions from alumni until Universities start
treating their students better while they are at University.
8. Scotland's Competitive Advantages
There are a number of competitive advantages, we believe,
which the Scottish sector offers over the English. Most of these
are due to specific policy decisions which have been taken by
the Executive and its agencies which run counter to the polices
adopted in England.
Scotland has promulgated a divergent policy on research funding
thus far avoiding the overt policy decision to concentrate the
bulk of research funding in elite institutions and continuing
to fund emergent research and departments with the potential
to become world class.
We note that the higher and further education sectors are far
closer aligned in Scotland, as is the alignment between established
and new Universities. The sector is much more homogeneous and
is likely to become more so with the merger of the funding councils.
This should be recognised as a good situation where
the goal, of seamless provision of lifelong learning based on
opportunity to benefit not ability to pay.
Scotland has the closest thing to a truly tertiary
education sector of any of the UK nations. No policy or funding
solution should undermine this.
These two policies, which are distinctly divergent from the
polices being pursued in England, belie the different philosophy
which underpins the provision of education in Scotland. Opportunity
for all, education as a social good and the collective provision
of education are the values which underpin the provision of
education in Scotland.
On the other hand the philosophy, which underpins the policies
being pursued in England, is distinctly different and one that
we believe the Committee should stand in total opposition to.
The philosophy which underpins the Top Up Fee proposals and
which can be clearly seen in the language used in the DfES White
Paper is the language of the free market - the idea that because
the individual benefits the individual should pay. We would
take issue with this. We believe that education is a social
good and as such it is in the community's interest that high
quality, inclusive multi level education is provided free at
the point of use.
The White Paper (Chapter 7) talks about freeing universities
from state funding - "to be really successful universities
must be free to take responsibility for their...financial future"vor
"higher education institutions need real freedom - including
the freedom to raise their own funding, independent of government
- if they are to flourish"vi
AUSA believes that this is a false notion of freedom and that
the Government is attempting to distance itself form the provision
of education and to abdicate responsibility for ensuring a high
quality, fully inclusive higher education sector.
We would agree that it is important higher education flourishes
but that it is also important that the sector both reflects
national priorities and is accountable for the public money
it spends.
It is essential that higher education institutions are accountable
for the public funding they receive and that through dialogue
with the sector the Executive can ensure priorities of the nation
are reflected in the provision of education at our institutions
of higher education.
It is the considered belief of the Aberdeen University Students'
Association that the policy advocated in the White Paper represents
a significant policy shift in the provision of higher education
and that is a shift of responsibility from the state to the
individual.
Ministers have been keen to stress that because Graduates benefit
so much from higher education they should bear the cost. If
we were to apply the same logic to provision of healthcare there
would be an instant outcry that the Government was abandoning
the NHS. Thus if the Government were to say "we will
continue to provide the `lion's share' of funding, to prop up
the infrastructure, but you must pay for your treatment because
it is you who will benefit the most from it and it is not fair
on those who don't use the NHS to pay for your treatment
", it would be instantly recognised as privatisation, the
shifting of the burden of funding from the state to the individual.
The question may therefore need to be posed if the White Paper
proposals demonstrate a deliberate policy shift in order that
the Government can meet its future obligations under international
negotiations in higher education.
We believe that the Government will seek to use the introduction
of top up fees to subtly reduce the proportion of funding it
provides to fund Universities. It has already proved ready and
willing to do this. When Tuition Fees were introduced in 1998
it was pledged that this would mean extra money for Universities,
instead the Government went back on its word and reduced its
share of grant funding in proportion to the fee money Universities
took in.
The DfES have consistently failed to deny that it will reduce
state funding in line with the income from top up fees and the
language used about `freedom' and `shifting the burden' would
suggest that this is the Government's real intention in introducing
top up fees - not to increase investment but to shift funding
higher education from the state to the individual.
9. Recommendations
In conclusion, we would make the following recommendations
based on the evidence we have presented.
The Scottish Executive must fight to ensure that the up front
investment is recognised as public sector funding for the purpose
of the Barnett formula and that the Scottish Block Grant in
increased accordingly.
The Scottish Parliament must work to ensure that any consequent
increase in the Scottish Block Grant is ploughed into higher
education.
The Executive should investigate the various options available
to it to encourage a greater contribution form business, as
part of Smart Successful Scotland.
FOOTNOTES
i
In fact we calculate that the first year in which fee
income will fully come on stream will be AY 2010-11 and the
first point at which the income will make a significant difference
to funding would be 2011-2012. This is based on the assumption
that most students will complete a three-year degree, starting
in AY 2006-07 and will graduate in the summer of 2008. The first
point at which graduate income could be realistically and cost
effectively measured, following graduation, would be at the
beginning of the tax year following graduation, which would
be April 2010. This would follow the pattern already set by
the Student Loans Company for determining those who have reached
the income threshold (currently £10,000) for repayment
of student loans. It would seem highly likely that the most
cost-effective way to measure eligibility for the payment of
fees would be to use the same process as is presently used to
determine student loan payments. It is also highly likely that
the income from tuition fees will be collected centrally, by
an agency of the DfES and then distributed in the following
year's grant payment through the Funding Council. Again this
would appear to be the likeliest most cost effective way of
administering the system. Thus significant amounts of tuition
fee income would not begin to make an impact until AY2010-11
at the earliest. However since the payback of income is likely,
as is the case with student loans, to be quite gradual and paid
back over a long time the lead in time for top up fee money
to make an impact may be even longer than suggested. The reason
why this is important is that it is likely to mean that there
is not a sustained surge of significant extra funding available
to English institutions, which will give them a significant
competitive advantage.
Note- by `significant' we mean that it is possible that some
income from two-year Foundation Degrees and students who fail
to complete their course may come on stream prior to 2009 but
the assumption would be that most students would want to complete
a full three-year degree as at present.
ii
See DfES Consultation on Wider Access Regulator - Widening
Participation in Higher Education.
iii
This is based on the Dearing principle that in contributions
to higher education should, in descending order, come from the
government, business and students.
iv
See the Scotsman, Friday September
26th.
v
The Future of Higher Education, DfES Cm 5735, Chapter
7, p76
vi
Ibid, p77
For more information please contact:
Ms Jenny Duncan, AUSA President, Mr James Dunphy Academic Affairs
Convener
or
Mr Robert McGregor, Education Policy Officer
at
Aberdeen University Students' Association,
Luthuli House,
50-52 College Bounds,
Old Aberdeen,
AB24 3DS.
Tel. 01224 272965
Fax. 01224 272977
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