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Government Higher Education reforms cost 1 billion more than forecast

A new report by the respected Higher Education Policy Institute claims that the Government reforms in Higher Education funding will cost more than 1 billion more than forecast. The huge oversight is due to over optimistic assumptions, unforeseen consequences, and neglect of potential risk factors. That the Government is sticking to this policy bears out the widespread view that the changes had nothing to do with deficit reduction. Even had the Government not been so way out in their forecast, the policy was always going to cost more in the short term. Only later, it was hoped, would the initial increased expenditure begin to be recouped, as students payed back their loans. Ironically, it now turns out that the new funding ‘system’ could easily end up costing more than the original arrangement it replaced. Supposing that the Government is still in power in the medium term, and that it is unlikely to abandon the policy, which was drawn up by the last Labour regime, this leaves only four viable options.

  1. The shortfall can be met from general taxation, so that the Government and taxpayers contribute more.
  2. Student numbers can be held down or brought down further.
  3. Loan subsidies provided by the Government can be reduced, so that students contribute more.
  4. The remaining HEFCE grant can be reduced, which would impact adversely on Research funding or support for STEM subjects.

In my view option 1. is the only viable one. It is probable that the current Government will opt for 2. and or 3. is almost certain to happen because the government have already given themselves the powers to change the loan terms by means of secondary legislation, which would not require the change to be voted on by parliament.


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