Comprehensive spending

by Mark Leach on July 16, 2012

Last week, it was announced that venture capitalist Michael Mortiz is giving a donation of £75 million to the University of Oxford to provide a helping hand to its poorest students. I begin from the principle that if anyone wants to inject money into education, they should should be supported and encouraged. Because it’s a really great thing. However, a few things about the deal gave me pause for thought.

Firstly, Oxford announced that half the money would go on fee waivers to lower the ‘sticker price’ of their degrees for students from households on less than £16k a year. This doesn’t seem like the best use of the money and it also raises other questions. It’s not a great use because rather than going to students’ pockets, it is effectively going back to Her Majesty’s Treasury as it simply means that less money will need to be borrowed for each of these students. Oxford graduates have excellent graduate earning potential, and are likely to pay off the entirety of their fees and support loans. So the only reason to structure the donation in this way is to offset the fear of debt, which we know can be a problem. However, fee waivers send a mixed signal – on the one hand we try and tell people not to worry about the debt, the Government carries the risk and you don’t have to pay it back if you don’t earn enough. On the other hand, fee waivers send a conflicting signal that in fact the high price is a potential problem, and something to avoid. What I worry is that such moves will ultimately serve to further entrench debt-aversion, and counter broader efforts to widen participation in higher education.

Secondly, £75 million pounds is a lot of money. It sounds like an obvious statement to make, but I think it’s a good idea to place it in context. And in the context of UK higher education, this really is a lot of money. Consider the fact that the entire teaching grant for the University of Plymouth for 2012-13, which includes cash for WP, is £63.8 million or Aston University which gets about £24.8 million. With 75 million pounds to spend in UK higher education, you could pay for Plymouth to teach 30,000 students in one year, or fund 3 years of Aston with its 10,000 students. Both of which have significantly more places than Oxford for students from families on £16k or less. Or taking a step back from HE, imagine how many schools could employ a full time advisor to help students make good choices if that donation was spread around?

A overly simplistic point perhaps, but if I was a wealthy philanthropist that cared about social mobility and higher education, I’d shop around to see what I could really achieve with that money, and I’d certainly ensure that half of it didn’t go straight into Treasury coffers. Of course Moritz and his generosity should be applauded, but these things don’t happen very often and when they do, it’s hard not to dream about how we might go about changing the world if only we knew how to be venture capitalists.

Comprehensive Spending Review

On Friday night we learned that the next Comprehensive Spending Review (CSR) is likely to be put back until late 2014. And when it comes, the exercise will be in name only, with budgets handed down merely to tie the Government over until after the 2015 General Election. The CSR was expected to kick off in the Spring of 2013 and the process running until the end of next year.  But another CSR would present the Coalition with a number of political difficulties because making unpopular choices makes for unpopular governments. And unpopular governments tend lose elections. Coalition relations are tense, and the Lib Dems can’t sign up to more big cuts in the run up to an election. A position that betrays the overall weakness of the Government as it stands.

Not having a CSR could be good politics, but it doesn’t mean that further cuts can’t still happen. Budgets will continue to be under pressure through this period, and so extra vigilance will be needed to see that cuts aren’t happening by the back door. No CSR means less headlines about cuts, and less systematic preparation to defend budgets across Government and sectors supported by the public purse (much of the organs of HE policy representation were preparing to do just that for universities in 2013).

I also worry about what a weak Government, struggling to make serious decisions about spending because of their political vulnerabilities, might choose to get up to. Such gridlock can not be good for policymaking, and so as we enter this strange political hinterland we need to stay alert.

{ 2 comments… read them below or add one }

Mike Ratcliffe July 16, 2012 at 9:06 am

I agree with your point about fee waivers.

One of the things that this gift reminds us, is that if you want to provide an endowment to perpetuate something as recurrent expenditure, it takes an awful lot of money. £75million (although I’ve not got my head around the 3 tranches of £25million and their role in making this a £300million pot) gets you 100 scholarships at £11k each. The Rhodes scholarship fund has something like £120-140million and provides 83 scholarships a year. Although you could teach all of Plymouth’s students for a year, what would you do next year?

But, how many of the students who will get AAA and be able enough to get through Oxford’s admissions process *wouldn’t* be going to university anyway?

Mark Leach July 16, 2012 at 5:47 pm

Precisely. I imagine it’s not a lot!

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