Vikki Goddard Posted by Vikki Goddard on 22nd March, 2016

The Budget 2016: putting the next generation first?

Vikki Goddard, Chief Operating Officer, University of Salford, highlights key elements of the recent budget for education.

If there was one thing that was a near certainty for the 2016 Budget, it was that Higher Education was not going to feature in any significant way. There was no ‘waiting with bated breath’ across the sector as there was for the Autumn Statement.

The pending EU referendum will be giving many university leaders far more sleepless nights than any of the pre-leaked contents of the budget. The significance of a leave vote in the EU referendum is clearly also keeping the Chancellor awake, as only a few minutes into the budget he used the words of the OBR to highlight the likely negative impact on the UK economy of that outcome.

All of the education-related briefing ahead of the budget had been focused on the early stages, most notably making all schools academies by 2020. However there was a small surprise in the post budget documentation, in which we learned that from 2018/19 there will be PhD loans of £25k available, and a review of the gaps in ‘lifelong learning’. This could yield more welcome news in future budgets, especially given the decline of part-time numbers.

The Chancellor started his budget speech by straining to emphasise that although he had missed his rule on national debt as a % of GDP, national debt in absolute cash terms is £9 billion lower than forecast. This he said was in the face of a slowing world economy and dropping UK productivity meaning the UK growth forecast was cut from 2.4% to 2%, but offset, in part, by borrowing costs falling further and employment continuing to rise.

This then translated into a £3.5 billion cut to the public sector by 2019/20. There will most likely be some implications for BIS, but nothing on the scale feared ahead of the Autumn Statement last year.

Unusually for a budget this early in the cycle, with growth and productivity forecast pressures, it was, to an extent, a budget giveaway. Given George Osbourne’s significant slump in the ‘next Conservative leader’ polling of party members (he has dropped to fourth) since he backed remain and Boris came out for Brexit, it’s not surprising he wanted to re-enthuse this particular audience.

The give-aways aside, education was a key plank of this budget, which purports to put ‘the next generation first’. The focus is on early stages, with a target to have every secondary and primary school on the road to becoming an Academy by 2020. This was backed up with an extra £500 million for sport in schools, and possibly compulsory teaching of maths to 18.

However, the pressure on FE budgets was not addressed, there was no increase in money for science or HE, and Jeremy Corbyn highlighted that there was no investment to address the teacher shortages and build new schools to address class sizes.

For those of us in the North, the ‘Northern Powerhouse’ took a step closer to becoming more of a reality with HS3 getting the green light connecting Manchester and Leeds directly by rail, and the M62 between Manchester and Liverpool to be widened.

There was a raft of new city deals, and more regional devolution, which may provide opportunities for universities to engage with their region more closely on the skills agenda, but time will tell whether this is backed up with any investment to make it a reality.

Overall, this is a budget with an eye on the EU referendum and on a divided Conservative Party, by playing to its core audiences of businesses and middle-class earners. This is at the expense of meaningful investment in public service infrastructure, and further cuts to government departments.

In summary, it’s a very quiet budget for HE, which given all the recent turbulence in the sector, and the continued focus on austerity in the public sector, is a welcome change. However, there is widespread commentary and analysis on how realistic some of the forecasts contained in the budget are, especially the significant savings forecast for a general election year.

This may well turn out to be the quiet before another storm….

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