Published Monday 10th June 2019

At the end of May, the UK Government published its landmark report on the current funding structures surrounding post-18 education systems. The review suggested many different measures regarding the creation of a fairer level of funding for various institutions. The most widely-reported suggestion was the lowering of university tuition fees, reducing the maximum cost for students from £9,250 to £7,500 per year.

The report’s findings have been widely reported, with praise and criticism directed at various comments. If acted upon, these measures could have a substantial impact not just on students but also on the institutions affected.

The UK Post-18 Education Review

Announced in February 2018, the ‘Post-18 review of education and funding’ is an independent panel report, designed to set out “policy recommendations for government consideration” regarding higher education in England. Chaired by Philip Augar, the review “undertook an extensive programme of stakeholder engagement and evidence gathering” before being published by Government on 30th May this year.

The wide-ranging report covers many subjects related to higher and further education in England, including flexible learning for level four and above, university competition and retraining for adults. However, the review’s primary focus is on funding, particularly the differences in funding for various further education institutions. The lack of school funding has been well-documented over the past few years, primarily for early education and SEND students. However, this report shines a new light on the post-18 financing debate.

The independent report notes that there are very different funding structures for universities and other providers, such as further education colleges (FECs) and independent training providers (ITPs). Put simply, the report believes that the benefits given to universities, primarily through the student loan system, are unjust when compared to the annual contract arrangement used in FECs. As the report states, “it is no wonder post-18 education is the story of care and neglect we identified at the beginning of this report: the funding system guarantees that it will be.”

Potential Changes to Higher Education Funding in England

As previously mentioned, the headline recommendation in this report was a transformation of the “generous and undirected funding” being received by universities. The post-18 education review suggests that maximum fees for students should be capped at £7,500 a year, as opposed to the current £9,250. It also recommends that more taxpayer money should fund previously-scrapped maintenance grants for low-income students, as well as more high-value subjects. These measures are designed to combat the “over-supply of some courses at great cost to the taxpayer and a corresponding undersupply of graduates in strategically important sectors.”

The report also makes recommendations for “reforming and refunding the FE college network”. These are designed to ensure that FECs play a larger role in further education infrastructure in England, helping create a balance between them and universities. Their recommendations for these institutions include “an increased base rate of funding for high return courses”, a further £1bn of capital investment over the next spending review and improvements in recruitment and retention for the sector.

Education Institutions Prepare for Financial Landscape Changes

It is worth repeating that the report also goes into detail about other post-18 education concerns, with recommendations including “reversing cuts in adult skills provision”, further investment in “second-chance learning” and improving the offer currently made by apprenticeships. However, the biggest focus appears to be on redressing the balance between FECs and universities.

It is perhaps unsurprising, then, that the response to the review has varied between the two groups. The Russell Group of Universities said that the “recommendations for universities raise serious concerns”. Whilst praising the report’s support for further education and lifelong learning, they firmly believe that any cut to university fees must be fully compensated. Meanwhile, the Association of Colleges resoundingly praised the review, noting that “we must not let this report be diminished to just a debate about tuition fees.”

Whilst none of these recommendations have so far been acted upon, it is widely believed that the majority of these recommendations will come into force, one way or another, over the next few years. Therefore, further education institutions must begin planning for these future changes to take effect. As the report itself states, “universities should find further efficiency savings over the coming years.”

Here at ERA, we have been helping various educational institutions reduce school operating costs. Our contingency offer means that we can support education providers in streamlining their procurement strategies through a risk-free agreement. You are only charged when we deliver savings, and only get paid from the money that would have been spent beforehand. The recommendations made in this review could have long-term effects on various funding mechanisms. Therefore, if you are interested in freeing capital in your institution, why not get in contact with our experienced team today and see what efficiency savings we could create for you?