I have received an email message from John Denham, who is my Member of Parliament, which I reproduce here. Within it, he gives further reasoning for the funding cuts and does say that the fine detail will be worked out at the end of the consultation exercise.
I will have further comments on what John Denham has said later on because I have asked colleagues within the campaign to consider what the email is saying. There are implications within the document that have not been fully considered, such as the woefully adverse effect on distance learning organisations.
Dear Donald Hedges,
Thank you for your further email of 11 October, about our decision to redistribute institutional funding away from “second degree” students towards those entering Higher Education (HE) for the first time.
You asked a range of supplementary questions about the withdrawal of funding for students doing second degrees and, as a constituent of mine, I shall be happy to answer them. Before I go into the details I ought to start by saying that we are doing this firstly because we think it is fairer and secondly because we need to change the financial incentives in the system to increase the proportion of the workforce with graduate level skills.
In answer to the queries you raised, we know this applies to all higher level qualifications at the same or equivalent level, not just degrees. While we will not decide on which subjects and courses should and should not be treated as exemptions until the end of the consultation, the proposed exemption for Foundation Degree courses is because they are co-designed by employers. You will know from my previous letter that we are keen to change the system in ways which encourage greater employer engagement with HE, both financially and in terms of helping to shape the content of courses.
We are only planning to re-distribute about 0.2% of the total income HE providers generate. I do not accept that, across the system as a whole, there will be insufficient capacity or infrastructure to deliver more opportunities for the additional students we want to attract. But of course, the changes imply that all 250+ providers will have to compete to maximise their share of the £100 million we are re-distributing. So at the level of individual programmes or departments, there could be changes. I make no apology for that. It depends on how well providers respond to the new incentives we are putting in place.
I do believe that employers in both the public and private sector will increasingly be prepared to co-fund HE provision. The Government would not have responded to Sandy Leitch's report in the terms it has if we did not believe that this should happen. Employers are of course already paying for what HE can offer, in the form of the wage premium they pay for graduates which is amongst the highest in the world. There is also more scope for HE providers to get involved in accrediting employers’ existing continuing professional development for their staff – a potentially large market (now estimated at £4.4 billion, of which higher education currently has a £250 million market share). We will not be forcing employers to do anything but many employers in all sectors realise that if they are to be competitive in the 21st Century, they have to be able to develop the skills of their workforce and it is not unreasonable to expect them to meet some of the costs given the extra benefits associated with higher skills.
To take the example of "fairness" you mention. If someone took a degree forty years ago, their lifetime earnings after taxation are likely to be over £100,000 more than someone with just A levels. I strongly believe that it is a fairer use of taxpayers' money to give someone who has not been to university before the chance to benefit from HE.
On the other issue you raised, I am afraid that we do not recognise the figures you mention. HEFCE's total administration costs on all of its services are about £17 million a year which is about 0.2% of the total grant it distributes. Universities of course are large organisations operating on an annual turnover of over £15 billion. If their collective expenditure on administration was in the region of £250 million, that would only represent about 1.6% of their total funding.
To recap, I know that this is not the most popular reform we have ever announced. But if we are serious about widening participation and enabling more of the 70% of the existing workforce who do not have graduate level skills, it is one of the things we need to do to encourage HE providers to recruit more first time students who, in my view, have to be given priority.
I hope this further information helps clarify the position for you.
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