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Why merging post-18 education spending may not help

  • 18 June 2018
  • By Nick Hillman

All eyes are on the Review of Post-18 Education and Funding and the independent panel of experts headed by Philip Augar that is feeding into the Review.

Select committee reports keep emanating from Parliament aimed at the Department for Education and with an eye on the Review panel. There have been at least three in recent times (see here, here and here).

As part of this debate, there is a growing consensus around reclassifying some or all student loans as current public spending. Professor Nick Barr, who is commonly seen as the grandfather of the income-contingent student loan system, is among those to have called for this. In particular, he wants the part of any student loan that is expected to be written off to count as current public spending when the loan is made, which does not happen now.

The theory is that, if post-18 education spending is poured into the same pot, then more rational decisions can be taken about where the money should go. The aim seems to be to boost alternatives to full degrees. For example, Nick Barr’s submission to the Augar panel says the current accounting treatment ‘contributes to a financial bias towards full-time degrees, crowding out level 4 and 5 courses that would be a better fit for some individuals and the economy.’

It is an issue for the accountants rather than the politicians, and the independent Office for National Statistics is currently reviewing the question. No one doubts their answer could affect policy, Indeed, there is a chance their conclusions will be just as important as the Augar review itself.

It is hard to deny that alternatives to regular degrees have been underfunded in recent times. There may even be a case for looking again at the accounting treatment of student loans. But, personally, I am doubtful that reclassifying some or all of the student loan book as current public spending will provide the boost to so-called ‘sub-degree’ provision that people want to see.

If more post-18 education funding is poured into the same pot and then mixed vigorously, political priorities might well change. But the end result seems – to me – likely to be some resources sloshing out of the pot and ending up on other government priorities. That could be the NHS, social care, early years’ provision or even tax cuts.

What is left behind in the pot to spend on post-18 education could be less than what went in. Moreover, traditional universities are still likely to get the lion’s share, potentially leaving alternative institutions, including further education colleges, even worse off than now.

So it is not clear that either traditional universities or the alternatives to them would benefit. It is likely to be better for policymakers to focus on the quantum of funding. Or at least this is my argument in a new article for FE News, which is available to read in full here.

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