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What of the black hole in the BIS budget?

December 6, 2013

When I first heard reports of the Autumn Statement, I thought that the proceeds of the planned loan sale were to be used to plug the budgetary problems BIS has been experiencing.

I no longer think that’s the case, but what that means for further announcements is obscure.

The budgetary problems reported in the Guardian two weeks ago, included the following BIS statement:

“Work continues to resolve the difficult but important challenge of balancing the departmental books while not damaging growth. A range of proposals are being considered but final decisions have not been made.”

Planned cuts were on the table amounting to £570m in 2014/15 and £860m in 2015/16. The first £75m of the savings for 2014/15 materialised when the government brought forward the planned winding down of the National Scholarship Programme (announced in Parliament on 28 November).

Since the pressures appear to have been caused by overrecruitment at private providers and HEI’s in 2013/14, the announcement of new places for the latter may mitigate the situation (though the over-recruitment relates to 2012/13, for private providers -£80m , and 2013/14, for both, though the scale is not yet confirmed and may also be reined in by the suspension of funds to various classes of students). An additional £120m for 2014/15 and £290m for 2015/16 only goes so far.

Writing for wonkhe.com yesterday, Andy Westwood enthused:

What of last week’s rumoured ‘black hole’? Well something obviously still needed filling. Private providers still get a tight number control for this year and next (though they will be happier about the promised ‘level playing field’ for 2015-16), the National Scholarship Programme is all but over and it looks unlikely that any of the 30,000 extra places will be filled by people with Bulgarian or Romanian accents. But in the context of expansion, any overspend this year simply matters less. The Treasury has changed its mind.

I don’t see any evidence of this change of mindset yet (especially if this expansion is being paid for with putative loan sale proceeds). Perhaps, BIS has had another emergency reserve acccepted, we’ll have to wait for letters to HEFCE and the research councils early in 2014 to feel relieved.

If the plans for 2015/16 to reduce maintenance grants and make up the difference with more loans were off the table, I’m sure we would have had a statement to that effect.

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