Poorest students face £350m cut in grants

Nov 24, 2013 by

Documents reveal science budget also under threat as NUS president attacks proposals as ‘outrageous’

The Department for Business (BIS) is considering cutting £350m of grants to the UK’s poorest students and slashing £215m from ringfenced science funding in order to plug a £1.4bn hole in its finances, the Guardian has learned.

More than 500,000 students from lower income backgrounds would be affected by plans drawn up by the higher education minister, David Willetts, which are being discussed by the business secretary, Vince Cable, and the deputy prime minister, Nick Clegg.

According to internal departmental documents seen by the Guardian the cuts would take effect after the next election in 2015 and would involve converting £1,000 a year from the maximum £3,250 award received by each eligible student into repayable student loans.

Ministers have been advised that converting £350m – around a quarter of the student grant budget – to loans could create problems for participation in higher education of those from the lowest income households. Students whose parents earn between £35,000 and £42,600would likely lose all or most of their access to student grants under the plans.

Separate to grants, the National Scholarship Programme, which is meant to aid the very poorest students fund their study, will be all but abolished a year early, saving the department £75m according to measures already agreed.

However, the decision requires an “urgent” sign-off from Clegg, who announced the programme in February 2011. The programme was meant to offset the fallout from the Lib Dems breaking promises on tuition fees, which trebled in late 2010.

Figures contained in the leaked documents reveal that next year the BIS will have to find more than £570m in savings and a further £860m after the election.

In an attempt to save a further £215m over two years, the ringfenced science budget, which has already been frozen in real terms, is also expected to be cut by 2%.

A memo warns that the likely fallout of slashing budgets on such a scale and in such haste would be the loss of 700 PhD funded student places and almost 2,000 full-time academics, or the “closure of a large UK-based facility” such as the world leading Central Laser facility near Oxford.

Liam Byrne, shadow universities minister, said Cable needed to come clean about his department’s financial mess. “This is fresh evidence that ministers have lost control of university finances and now the country’s students and science might pay the price,” he said. “Vince Cable needs to come clean immediately on what on earth is going on, and how he’s going to clear it up.”

Toni Pearce, president of the National Union of Students, said the plans were “outrageous”. She said: “Any proposal to balance the books on the backs of the poorest students would be disgraceful. NUS research has highlighted the real difficulties that many students have covering their basic living costs, and has shown the significant detrimental impacts that their financial worries have on performance, dropout rates, and even mental health. As well as introducing a deeply confused £9,000 fees system, the government’s abject failure to manage the influx of private providers has deepened instability and confusion.”

Figures from across science research also voiced anger at stripping out hundreds of millions of pounds from their budgets. Dr Frances Saunders, president of the Institute of Physics, said: “It’s hard to imagine how a government that has been so supportive of science could be considering this option.”

A civil service memorandum drawn up before a ministerial meeting between Cable and Willetts last week says that the package of budget reduction measures “reflects an updated set of options … to focus [financial] reductions on higher education and science and minimise reductions across the rest of the department”.

The memo admits that the budget pressures have come from a failure to police and apply student numbers controls, especially in the private collegesector, the budget for which has trebled to £175m in one year and is expected to increase sharply in the next two years.

The BIS believes it can halt the rapid rise in costs for students studying Higher National Diplomas and Higher National Certificates. It says it will strip private colleges of their designated status –which colleges need to get paid with government-backed student fee loans – if they do not fall in line with lower levels of recruitment.

Freedom of Information requests have revealed that the biggest private college, which last year took up around one fifth of the BIS’s alternative provider spend, is Greenwich School of Management, which is owned by a private equity firm co-founded by the education minister, Lord Nash. However, since becoming a minister Nash no longer has an interest in the company.

Further savings would be met in other areas, “notably science” and by reclassifying tens of millions of pounds as “capital investment”.

The memo adds: “These [measures] will attract Treasury scrutiny. If these are not deliverable [next year] then we would need to increase cuts elsewhere. That means other areas of the department (further education, innovation etc) or deeper cuts from higher education.”Dr Wendy Piatt, director general of the Russell Group said, “We sincerely hope there won’t be any cuts to the research budget. It has already been frozen since 2010 and with inflation leading to rising costs the pressure is beginning to show.

“Spending on research pays both economic and social dividends and research-intensive universities are the engine rooms of long-term, sustainable growth and prosperity for the whole country.

“The UK spends a lower proportion of GDP on research and higher education than our rivals and our universities are already doing more with less.”Sarah Main, director of the Campaign for Science and Engineering said, “We are disappointed to hear that overspends linked to Government Higher Education reforms could result in additional stretching of the science budget that, if enacted, would hinder the realisation of the Chancellor’s aim of ‘making the UK the best place in the world to do science’.

“Our universities are already creating great efficiencies in the sector. We acknowledge the commitment shown by the Treasury to supporting UK science. As the Minister for Universities and Skills has said, our scientific success today is based on the investment of the previous generation. So we caution that the squeeze of this decade will have deleterious consequences in the next.”

A BIS spokesperson said that it would not comment on leaks, but added: “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.”

via Poorest students face £350m cut in grants | Education | The Guardian.

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