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Can students be confident in their future with this budget?


Figures by Sara Cunningham Bell, Victoria College Belfast 2001
The budget (1) appeared to offer little to students that are hard pressed or indeed much incentive for those from a lower income background thinking of pursuing higher education. The prospect of little or no earnings growth for the next 20 years and inflation expanding has been reported widely (2) and confirms that the party is over for most of us.  The risk of spiralling debt will hold back many would-be students from lower income backgrounds. However there are some positive factors to consider first.


Reasons to be cheerful……..


There are many factors for such students to consider even if they have little confidence in the future. There are some concessions that may help in settling the nerves and assist planning for a successful future.  It seems that raising the ‘Student Loans Repayment Threshold’ will cost £615m for the government by 2022/23. This will be offset to some degree by the ‘Tuition Fee Cap Freeze’ that will save the government £235m by 2022/23 but this burden will still land in the lap of the Universities.


The gain of £3000m from the sale of shares in the failed Royal Bank of Scotland in 2018/19 will mainly go to offset a spend of £2,870m for the ‘Help to Buy Scheme’ that will assist many young people to buy houses. There will be over £15 billion of additional support for house building over five years. It is also good news that that there will be an acceleration in the construction of affordable housing from the 'National Productivity Investment Fund'. This will prime housing construction, affordable housing and other infrastructure such as transport and research and development. However, the removal of stamp duty for first-time buyers is an illusion.  The Office for Budget Responsibility has warned that this tax break is likely to push property prices up by about 0.3%, with most of the increase coming in 2018. They noted that, “The main gainers from the policy……are people who already own property, not the FTBs [first-time buyers] themselves.” (3). It would be easier if the government paid the housing developers who will gain most from the deal directly instead of buyers bearing the strain. The plan is to push up investment in R&D in the economy to 2.4% of GDP. This will require talented people and the budget acknowledges a pressing need for skills. Indeed the word ‘skills’ pops up all over the document. This should lead many would-be students to be more confident in their future.  As many workers leave the UK or are not attracted to the UK  because of BREXIT, the opportunities should open up. Universities and Further Education Colleges will be hoping this will benefit them positively and not push them into being even more efficient with ever increasing pressures.
Reasons to be cynical………:

The planned £2.3bn of investment in research and development projects to a large extent covers for a projected loss of research income from the EU. This investment, with an extension of tax credits available to companies spending money on research and development, will provide opportunities for at least some students. The skill shortages in STEM subjects, will be further exacerbated and so those keen on STEM subjects can feel more confident. The UK will have an urgent need to train as many as possible and retraining will be essential. Support for teaching and teachers, particularly in mathematics, will increase.  Almost 50% of UK employers working in technical areas related to STEM report problems already in recruiting people with the right skills. These should attract higher wages in time. An additional £406 m will be pumped into mathematics and technical education.

But bear in mind the challenge and critical situation we are in. One school in Edinburgh is using university undergraduates this term to teach Mathematics as a matter of emergency (4). Also the previous reforms to funding have already led to the current apprenticeship scheme crashing badly and is denying hope to many already. Rectifying a mess caused by the government in the first place will require a lot of effort to re-establish confidence for the future.
Meanwhile the government expresses its confidence in UK education and its citizens by ‘hedging its bets’. It accepts that “international talent” is required for R and D developments and plans to change the immigration rules to attract researchers and “make it quicker for highly-skilled students to apply to work in the UK after finishing their degrees; and reduce red tape in hiring international researchers and members of established research teams “.This confirms a lack of investment in education in the past has led to a reliance upon attracting talented and trained people from other countries. BREXIT will impact on this greatly and it will take a generation for the UK to adjust to the demand and educate and train more of its own citizens effectively. Our graduates can therefore still expect considerable competition for jobs despite BREXIT.


Where are all these ideas coming from?
The projected government debt is rising and will continue well beyond BREXIT. Economic growth will remain very low for many years as our neighbours expand their economies. The policy of balancing the books by 2015 is shattered beyond doubt and investment is needed to prime the economy for growth.  

Hidden in the budget is an astounding suggestion regarding  skills and retraining; “ Creating a new partnership with industry and trade unions to deliver a ‘National Retraining Scheme’, giving people the skills they need throughout life to get a well-paid job, and equipping young people with the science, technology, engineering, and maths (STEM) skills to become innovators of the future”. Included also is the establishment of a new £2.5 billion Investment Fund for the state owned British Business Bank. The bank’s ‘Enterprise Finance Guarantee’ will be extended to March 2022 will increase its provision to support up to £500 million of loans per annum. This is welcome and astute students should be attracted by the proposition of this helping them with well paid jobs.
This all sounds like echoes of a Labour strategy in manifestos past.

The student debt problem will not go away:

The announcement, “Reducing student loan overpayments – The government will tackle the problem of graduates overpaying their student loans. The Student Loans Company and HMRC will update their processes by April 2019, in order to share data more frequently and stop payments after a borrower has fully repaid” is astounding. This apparent 'concession' means that the student loans company, or whoever buys it out, can carry on doing something that should never be happening in the first place well over a year!   


There may be hope for radical reform on the horizon if enough people get involved. The ‘Economics of higher, further and technical education inquiry’ by the House of Lords Economic affairs Committee (5) is ongoing but the deadline for submissions has already passed.

However, the Treasury Committee Student Loans inquiry (6) is at an earlier stage.
The deadline for written submissions is Sunday 31 December 2017. I am sure they would appreciate some advice!


Let’s get back on the bus:
The budget indicates that the government will: “prepare for exiting the EU and ensure a smooth transition by setting aside an additional £3 billion for government”. Add this to the likelihood of a settlement bill of £40 billion with the EU and this equates to about £630 million per week up to the BREXIT date in 2019. 

Time to get back on the bus.















The comments on this site reflect the views of the person posting the comments and do not necessarily reflect the views of  TEFS

Comments

  1. Good observations and yes I did have a free university education with a small grant. Couldn't have completed without it.

    ReplyDelete

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