What (not) to expect from the budget

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Austerity may or may not be over, but universities should not expect any largesse from tomorrow’s budget. They could nonetheless benefit from second-order measures that chancellor Philip Hammond might—and certainly should—take to address the structural economic and social imperatives for post-Brexit Britain.

The budget will, regrettably, provide another reality check on how far universities have slipped in the government’s priorities. Even after allowing for Brexit no-deal contingencies, the queue for long-overdue funding injections is long: health, welfare, social care, defence and local services are all on a promise of help “when economic circumstances allow”.

Against these claims, universities—still regarded in parts of Whitehall as “awash with cash” and by some in Westminster as self-serving fat cats—will struggle even to join the queue. Universities UK’s budget submission might have been better addressed to Father Christmas.

Lost funding

Higher education’s Brexit-related financial concerns, including access to European Union research funds, European Structural and Investment Funds and European Investment Bank capital funding, have already been addressed, albeit only temporarily, by Treasury promises to make good on any lost funding until 2020.

Similarly, access to UK student loans for EU students has been extended for another year. These assurances are as far as the government can go at this stage of Brexit negotiations, so there will be no more on offer there.

If Hammond has nothing to offer universities, might he be inclined to do something about them, in particular regarding the issues of value for money and the fiscal treatment of the student loan book? Both are the subject of ongoing reviews—by Philip Augar’s panel and the Office for National Statistics respectively—neither of which the chancellor is likely to pre-empt, not least because the status quo in both regards probably suits him better than the mooted alternatives.

Universities may nonetheless have much to gain from other possible budget measures. The chancellor will, one hopes, be looking beyond short-term contingencies around the Brexit deal (or lack thereof) to the deep-seated economic and social issues that will become even more pressing for post-Brexit Britain. These include its lamentable productivity record, lagging performance on innovation, flatlining export trade and intransigent inequalities in social and regional prosperity.

In each of these areas, there is scope for relatively inexpensive budget interventions that could make a big difference and benefit locally and externally engaged universities.

Adult learning

A major factor in poor industrial productivity is the shortage of quality provision and employer investment in Level 4 and 5 workforce skills, especially for adults already in employment.

Imaginative incentives for employers, learners and providers in this area, such as the Personal Learning Accounts proposed by Baroness Alison Wolf and others, could pay huge economic and individual dividends, as well as rejuvenating the ailing market for adult and part-time learning provision.

Incentives and help for greater participation in intermediate skills programmes (targeted at the immediate costs of participation rather than the longer-term issue of repaying deferred fees) could also benefit those social groups and localities left behind by the growth in mainstream higher education. These groups have been affected by increasing divisions between winners and losers in every part of the national education system, with such divisions likely to become even more intolerable after Brexit.

Collaboration

In both enhancing workforce capabilities and growing local opportunities, universities have much to contribute to and gain from collaborations with employers, further education colleges, combined authorities and local enterprise partnerships. Plenty of small-scale local schemes of this kind offer huge scope for expansion through relaxing—and perhaps some positive nudging of—devolved funding rules.

A further post-Brexit priority will be improving the competitiveness of British industry through greater and better exploitation of our national research and innovation capabilities. The government is committed to a stretching target of 2.4 per cent of GDP being invested in R&D, which implies leveraging the £6.5-billion UK Research and Innovation budget 10 times over through spending by industry and government agencies.

Incentives to encourage such spending—for example through targeted tax allowances or rebates for small businesses and start-ups—could hugely benefit those universities well geared to sharing the fruits of their research capabilities with industry.

After graduation

Measures to encourage trade and exports will feature prominently in any considerations of post-Brexit priorities, and Hammond is known to recognise the valuable role played by universities in attracting many billions in export revenues from international students.

A cheap measure to protect those earnings, and to ameliorate looming skills gaps, would be to relax the constraints on post-graduation work visas. This would greatly benefit universities struggling to maintain international student recruitment and fees against increasingly aggressive global competition. This would, of course, require a change of heart from some of the chancellor’s cabinet colleagues—not least his intransigent boss.

The message for universities and those lobbying on their behalf looks clear. There is no mileage in pressing for additional funding for institutions or even for measures to boost demand for mainstream higher education provision. But there will be real opportunities for universities that are able to demonstrate how they can play their part in national and local efforts to address the urgent business and social priorities of post-Brexit Britain.