Irish higher education and the 2012 Budget

Throughout my time as President of Dublin City University the annual statement of public expenditure – the so-called Book of Estimates – was a nail biting event. It was also an odd one, because this was how I found out, nearly three months into the financial year, what allocation I could expect from the government for that year. It was never a process that made much sense.

Anyway, here I am in Scotland, but there goes the process again back in Ireland: yesterday the government announced, as the first stage in the annual Budget dance, what the public expenditure estimates are to be for the coming year; though on this occasion it has also announced what sort of thing will happen in the two years to follow. And overall it is not a pretty picture for the universities.

Last year the government allocated €1,177,032,000 to the sector. For 2012 the allocation is €1,119,694,000, which represents a cut of 5 per cent. This is a larger cut than that applying to education overall, at 3 per cent. The government has also announced that there will be further (albeit smaller) cuts in the two subsequent years.

The government has also declared that the ‘student contribution charge’ will go up by €250, but this will not come anywhere near compensating for the funding cut.

Irish higher education is already dangerously under-funded. Every survey conducted has found the same thing: that substantial additional money is needed to allow Irish universities to compete on an international stage. We have now been told that there will be continuing cuts over the coming three years. It has to be emphasized that this is not an environment in which Irish higher education can carry out the tasks necessary for economic and social revival. To avoid a major collapse in morale, the government needs to declare now how it intends to handle higher education through the rest of this decade, and how it will enable the sector to meet expectations made of it. Otherwise Ireland will slip into a third world higher education system by stealth. There is very little time.

Funding Scottish higher education

Following the outcome of the UK spending review, the Scottish government has now published its draft budget for 2011-12, and as part of that has indicated the funding to be allocated to higher education. Recurrent funding will be reduced from £989 million in 2010-11 to £926 million, which represents a cut of just over 6 per cent. This is a marginally smaller cut then the reduction being applied to Scottish government spending overall, and therefore signals, at least in some measure, a desire to continue to support higher education as a priority. Nevertheless, it is still a significant cut, and it will not be easy for some of the universities to cope with it.

The key passages in the budget statement as regards higher education include the following:

‘Though the Scottish Funding Council’s budget is falling we have agreed with the further and higher education sectors that they will work collaboratively and efficiently to manage this reduction without reducing overall learning opportunities. Both sectors have agreed that core college and university student places will be maintained. In addition, and mirroring the position in England, the Scottish Funding Council’s main research excellence grant will also be protected in cash terms.’

And…

‘The scale of the reductions required mean that we have had to take the difficult decision to reduce the overall resources for the further and higher education sectors in Scotland. In doing so, we have been very clear that our objective, in this current economic climate, is to continue to protect student numbers and to protect our investment in research. We have asked the sectors to extract maximum value from the unprecedented levels of investment they have received over the past four years by managing these reductions through greater efficiency and collaborative working. They have responded to this challenge. So we have agreed with the sectors that we will work in 2011-12 to preserve the number of core college and university student places. In addition, and mirroring the position in England, the Scottish Funding Council’s research budget will also be protected in cash terms.’

The Scottish government will, it appears, stay away from any student contributions for now. But it is clear that the existing arrangements for funding, even with the visible support the government is giving higher education, will not be sufficient over the medium term. There should be interesting discussions ahead.

Higher education in a recession: cut it or grow it?

Two news items yesterday indicate how it is possible for governments to take very different views as to how higher education should be handled in a recession. In Washington US President Barack Obama unveiled his administration’s $3.8 trillion budget proposals, and amongst these was a7.8 per cent increase for education. The thinking behind that was explained by Education Secretary Arne Duncan:

‘We have to educate our way to a better economy. This is one area where the president is significantly increasing resources because he is convinced this is a long-term answer to the economic challenges that face our country.’

Part of the purpose of the budget increase is, according to the Obama administration, to make the United States ‘the world leader in college graduations by 2020’. In addition, there is a significant increase (to the tune of $3.7 billion) in research funding.

Meanwhile on the same day, England’s universities received the first official information from the Higher Education Funding Council for England (HEFCE) about next year’s allocations to higher education, and here there is a very different story. Funding for teaching is being reduced by 1.5 per cent, and the capital building programme by 15 per cent.  Research funding is being maintained at current levels.

Of course different countries have varying levels of capacity to fund budget items, no matter how important. The United States has the ability to carry and to increase deficits (though not without consequences) in a way that, say, Ireland does not. But all countries are able to set priorities and to discriminate on policy grounds between different aspects of government expenditure. In America a strong focus has been placed on education and it is recognised as a key driver of economic recovery. Appropriate use of money allocated and close monitoring of the effectiveness of expenditure are of course important accompaniments to budget increases But having the capacity to educate the brightest minds and to attract the greatest talent to the country are invaluable supports during a time of economic crisis.

Budget and Estimates woes?

It is probably better to comment in more detail on today’s announcement of the Budget for 2009 and the Book of Estimates after I have had an opportunity to study the fine print a little more. As far as I can see from the announcement by the Minister for Finance and the accompanying documentation, third level education has been hit in a number of ways – but we must await a more detailed explanation of some of the elements before we can offer a balanced assessment. The Education and Science vote as a whole did not fare too badly, with an increase over 2008 of 2.7 per cent. However, the allocations made through the HEA (i.e. the grants paid to universities and institutes of technology) have been cut in nominal terms by 2 per cent, which in real terms is a cut of not far off 10 per cent. Whether this turns out to be the position will depend somewhat on what happens to the revenues generated by the increase of the so-called ‘registration charge’ to €1,500. If this is clawed back by the government, then things are as stated above. If it (or any of it) goes to the institutions, then the position may be better.

However, it is tempting to identify in this a message to the third level sector that it is not seen as a significant contributor to national strategic aims at this time. Allowing also for the fact that many of the institutions are already in financial crisis, the worse case scenario above would have a catastrophic effect on the system.

To balance this a little, I should point to the sum made available for capital projects (which is quite substantial), and the increase in funding for Science Foundation Ireland. The Minister in his speech also made a passing and slightly veiled reference to the possibility of the return of tuition fees.

Other than that, seems like bad news. We all had to expect a very tough outcome today, but overall the government’s approach to public spending as a whole turned out to be less tough than some had anticipated – so putting into relief the treatment of third level education.

In addition, the Budget documents announce the abolition of the Irish Universities Quality Board (IUQB) – though whether this can be done that simply remains to be seen…

I shall make some more informed comments when I had studied the documentation more closely, and when the IUA has had the benefit of a briefing from the HEA.

The Budget and Book of Estimates – what awaits us?

On Tuesday of this week we will know our fate for the coming year. Or rather, we’ll have a bit more information about our fate. Of course we all know the difficulties faced by the Government in putting some order back into the public finances after the major erosion just experienced of tax revenues. And we have been told to expect that we will be badly hit.

For those who may not be aware of the distinction, on Tuesday the Government will announce both the Budget for 2009 and the Book of Estimates. The former deals with changes to fiscal policy and related matters, while the latter sets out what the Government proposes to spend from tax revenues in the coming year. In the past, the two were announced separately, with the Estimates coming first, followed a few weeks later by the Budget. Last year the Government put both together in one announcement, and this year the same was planned again, and was to take place in December. But because of the rapidly deteriorating position of the public finances, and because of the global financial and economic crisis, the Government brought this forward to October 14.

Whatever is to happen on Tuesday has already been decided as I write this – but I hope that it will not undermine the viability of Ireland as a knowledge society. Much depends on that, and in particular our ability to escape from a longer term economic downturn and the erosion of high value, knowledge-intensive investment.

I believe that the Estimates in particular will also clearly demonstrate the futility of the view that Irish higher education can successfully be funded by the taxpayer alone. We need to raise the ambition levels for Irish universities, and to do so with a level of funding that the taxpayer simply cannot afford.We cannot aim to be a leading knowledge economy while maintaining universities funded like those of a developing country.

Keeping out of recession: the role of universities

Last week the Irish Government announced a key measure in its programme to deal with the downturn that has overtaken the economy and which has had such a dramatic effect on public finances. The announcement of the annual Budget and of the Book of Estimates (which sets out the public spending programme for the coming year) has been moved from December to mid-October. This decision is designed to show a determined approach to the management of the economy and also to convey a sense of urgency. It was generally praised in the media.

One of the consequences of this change in the calendar of events is that anyone who might have hoped to lobby the government on expenditure r Budget measures can now forget it – the timetable is too short for any such lobbying to be capable of having a practical effect. From the point of view of the universities, therefore, whatever has been decided on university funding is what we will get; what we say now won’t have much further effect. We don’t of course know what has been decided, but we can have a pretty shrewd guess. We know that, in common with all parts of the public service, we are to cut our pay bill by 3 per cent. And we know that fees (paid for students by the government under the ‘free fees’ scheme) are to raise by a small amount, significantly less than the rate of inflation. So we can guess that the other main component of public funding, the recurrent grant, will also be cut back significantly.

The government is in a difficult position, and must act decisively to correct the problems that threaten to undermine public finances. But it must also ensure that it takes the steps to enable the economy to avoid recession and to resume significant growth. Two of the key elements of that aim are the stimulation of new inward investment, and the encouragement of indigenous business through entrepreneurship and innovation. All of this needs to happen within a high value knowledge economy; we cannot any more return to a cheap labour market or low cost services.

The most important ingredient in all this is confidence: confidence in a consistency of policy, and confidence in the capacity of the institutions in Ireland to deliver high value. All of this requires strong and ambitious universities; if doubts emerge about the capacity of the universities to deliver highly skilled graduates and world class research, then it is unlikely that we can succeed in attracting business activity of the kind we now need. The Irish universities already operate on budgets which are typically half (on a proportionate basis) or less than are available to universities in the UK and the US; but we need to be able to persuade potential international investors that we are as good as those other universities. If our resources are cut even further that will become impossible.

It is, I suspect, difficult to make this case without it sounding like special pleading. But it is nevertheless true that, to a much greater extent than was the case in previous economic cycles, Ireland’s prosperity is now tied up with the health and confidence of the university sector. Much progress has been made on that in recent years, but it is now at risk, and if it falters it cannot be corrected quickly and easily. Universities are willing and eager to work with the government and with bodies such as the IDA to help lift us out of the economic downturn, and to do so while managing our resources prudently. But we also need the government to work with us, so that we can achieve these ends.

The right decisions need to be taken in October.