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Balancing the Books What did the budget do for us? SAF-UIS Sally Faith, University of Sussex. Who’s in charge?. The Boss: Rt Hon David Lammy MP Minister of State for Higher Education and Intellectual Property
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Balancing the Books What did the budget do for us? SAF-UIS Sally Faith, University of Sussex
Who’s in charge? • The Boss: Rt Hon David Lammy MP Minister of State for Higher Education and Intellectual Property • The Boss’s Boss: Rt Hon Lord Mandelson, First Secretary of State for Business, Innovation and Skills and Lord President of the Council
Where do we stand financially? • Financially, as a nation, things are not that great right now! http://www.hm-treasury.gov.uk/bud_bud09_index.htm • The UK has a ‘borrowing requirement’ of £175bn • 6.3% of national income (or £90bn p.a.) is needed just to cover the cost of the recession • Of this, £140bn will need to be found even if the economy gets better. How…? • £30bn has been earmarked in the recent 2 budgets to help kick-start the economy
How does the future look? • Current spending expected to show less than 1% growth in real terms: the lowest for a long time! • Investment spending expected to fall substantially • Thus total spending to be cut by 0.1% p.a. in real terms
Where do we stand against the others? • In the euro context GDP was at @3.5% on Q1 ’06 – in Q4 ’08 it stood @-6% (source Eurostat) • UK projected to hit -4% in ’09 & -0.4% in ’10 (France -3% & 0.4%. Germany - -5.6% & -1%) (source IMF) • Only UK & Sweden (in Eurozone) have invested more in Government Support - more than £50m (source IMF) • Sovereign Financing Requirement? Better than many! • Lots more information can be found on the World Bank & IMF web sites.
So, all this borrowing…how will we pay it all back? • Government intends to raise £90bn extra per year from next year • 10% from tax increases • 40% from public sector spending • 50% from … to be announced after the next election! • Meanwhile, capital investment programme cut this year
How will this play out for HE? • Extra £5bn vfm saving required in 2011 which increases the CSR savings (identified in 2007) needed to £35bn. • DIUS were asked to find £1.94bn out of £23.2bn savings (not yet clear how this equates to BIS) incl • £118m increased efficiency & decreased admin • £116m saving from Research Councils (to be reinvested!) • £50m improved procurement • £400m improved efficiency in FE & HE • A further £9bn on top pf the £35bn required in 2013/14. HE’s share to be confirmed!
And there’s more… • Caps to remain in place for: • Student Numbers • ELQs • Student grants & loans • However…the commitment to increase the science budget by 6% is being upheld.
Can it get any worse?! • Other factors that could impact on the pressures include: • Pay settlements and related disputes • Cost of pensions • Low returns on investments & reductions in other income areas. • No substantive outcome from the fees review • Quicker economic recovery outside of the UK
What changes can we expect in HE as a result of all this? • Potential concern over the capacity for all institutions to survive in current form • Jam-jar funding • Pressure on levels of quality • Pressure on administrative & central funding that may have long term implications for the academic workload etc.
To conclude • How long will this go on? • What are we going to do about it?