Cutting English higher education
According to Times Higher Education. the heads of England’s universities have received a rather chilling warning from the British cabinet secretary, Gus O’Donnell: they were told ‘it would be prudent for the sector to plan for 35 per cent cuts over 2011-15’. It is difficult to translate this statement into precise funding predictions, because public spending on universities comes in many shapes and sizes, from capital to recurrent, from teaching to research. But perhaps the message is simply intended as a fairly crude warning of heavy pain to come. The suggestion has already been made that this will be the most severe cut since the 1930s.
What this situation re-emphasises is the unreliable nature of the taxpayer as the sole or main funder of higher education – there are other examples of this in other countries. Economic cycles push governments into sudden changes in expenditure, and for better or worse governments always assume that higher education is capable of absorbing sudden funding shocks. In fact, it is doubtful whether it is; but more importantly, higher education is the key driver of economic growth in an advanced economy, and creating an unpredictable funding environment seriously undermines its capacity to play this role.
In Britain the ‘Independent Review of Higher Education Funding and Student Finance’ (the Browne review) may provide a basis for more rational resource planning for the sector, as in theory the Hunt review may do in Ireland. But if we really believe that universities are the engines of economic development, we had better find a different system of paying for them. Fast.
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University Blog 
August 13, 2010 at 8:24 am
Isn’t it ironic that as soon as banks fail the expectation is that they will be funded directly by tax-payers yet universities are expected to find other ways of paying for themselves? Why have we painted ourselves into this corner of ignoring the simplest way of providing the required finance, namely taxation? We pay income tax, levies, PRSI, whatever and each time Anglo needs to burn more cash, no problem, raise the levy. Our rage should not be focused on which citizens are able to pay university fees and who aren’t, but on the much more egregious issues of the billions of euros that are being pumped into a failed economic system. Our children will be paying for this for decades to come and we’re also asking them to pay fees, increased mortgage rates, charges for other services, etc, piled on top? Pay fees to go to university so that you can get a ‘decent job’ to pay tax to pay for economic mistakes? Great system.
As for Britain? 100 billion on the next generation of nuclear weapons doesn’t seem particularly prudent, but there you go, got to ringfence that seat on the UN Security Council somehow.
sorry, just ‘cynical Friday’ a new national tradition perhaps, based on a week of reading newspapers and gradually losing patience!
August 13, 2010 at 12:01 pm
Iain, whatever about the arguments for and against higher personal taxation, or corporate taxes, none of that would help higher education as experience shows. It is not possible to ringfence taxation revenues for particular purposes, and we know that once the going gets tough HE gets cut first.
I suppose you also ned to bear in mind that when tax rates were higher in Ireland, the actual revenue received was lower. When taxes were reduced, revenues increased.
August 13, 2010 at 12:05 pm
yes I know that was an interesting cultural dimension of the Irish situation! 😉
August 13, 2010 at 12:57 pm
If government (taxpayer) income is so unreliable, then what guarantee is there that the following sources are any more reliable:
– fees (presumably depends on students’ ability/willingness to pay and possible competition from overseas/online providers &c
– philanthropy (yeh, well, unfortunately Chuck Feeney has moved on to other things) – also subject to vagaries of economic cycles
– investment income (where are the ‘blue chip’ companies now?)
– sales of services – eg conference rooms &c. Major competition from zombie hotels and new conference centre
– research funds – if Irish just as unreliable as the block grant (cf PRTLI postponement) and EU subject to greater competition from Central Europe &c and all other countries also in economic crisis.
It may be said that a combination of all these unreliable sources would be more reliable, though I fail to see how that would get around the problems.
August 13, 2010 at 1:45 pm
Perry, you’ve answered your own question. The problem is not the taxpayer as provider per se, but the excessive reliance on the taxpayer. Creating a diversity of revenue sources is always more likely to hedge against unexpected developments. Of course there will be times when all sources become insecure.
The problem also is, however, that those who take decisions about public funding invariably are biased against higher education as a priority, so public money is genuinely sometimes the least reliable of all the sources. So for example, during my presidency of DCU all non-exchequer sources of revenue, with the exception of one year only (2009), increased year-on-year in absolute and real (i.e. inflation adjusted) terms. Public money increased during four years, stayed more or less stagnant in 2, and fell in 4 years.
August 19, 2010 at 6:44 pm
Perry’s criticism of the reliabilty of fees as a stream of income is that it “presumably depends on students’ ability/willingness to pay and possible competition from overseas/online providers &c”.
There are two reasons why this might not be something to worry about excessively:
1) if the number of students willing to pay (or take on debt to pay) fees declines, so also do the expenses associated with serving these students.
2) such a decline might actually mean that the marginal social benefit of putting an extra student through third level surpasses the marginal cost of so doing. In other words basing the revenues of third level institutions on fees (and hence on the preferences of their students) to a greater extent than at present might help us reach the “right” amount of social resources to expend on higher ed.