Education boost from budget restricted by the detail
If you are writing on the Budget announcement regarding
the Education Modernisation Fund, please consider the following
comment from David Barnes, Education Partner at Grant Thornton UK
LLP;
"I am delighted to see that against a backdrop of a challenging
funding environment for both further and higher education, the
Government has re-stated its belief in the role of the education
sector in driving forward economic recovery and prosperity.
"The pledge for 20,000 new university places funded through a
£270m 'Modernisation Fund' is to be particularly welcomed, but this
increase needs to seen in the context of a 23% increase in
applications on last year with a number of universities being
financially penalised for 'over-recruiting' this year.
"The sting is in the tail, with the £270m being only a one-off
funding boost. The Chancellor also insisted 'universities must make
efficiency savings whilst focusing their funds rigorously on
quality teaching and research'. With his description of the next
public spending settlement from 2011 as 'the toughest for decades',
it is clear that universities are expected to make significant
efficiency savings over the coming months.
"To help achieve savings, the Department for Business,
Innovation and Skills has announced that £20m of the £270m will be
allocated to HEFCE for projects to raise efficiency and value for
money through the development of shared services, collaborative
procurement and other innovate ways of cutting overheads and
back-office costs.
"Yet, the Budget papers recognise that the sharing of services -
one of the most important means for securing efficiency gains - is
severely hampered by the current VAT regime. If a number of
organisations set up a shared service arrangement, VAT is
chargeable, often removing any financial saving that might be
achieved.
"While the Government recognises this problem, it has been
rather lukewarm in actually dealing with it, saying only that it
will 'work with affected sectors to consider options for
implementing the EU cost sharing exemption' - the possible solution
for which is hidden away somewhere in European law. If sharing
services is seen as a way of making significant savings, this
represents a weak call to arms.
"The announcement of a £35m university enterprise capital fund
to strengthen links between universities and businesses is
particularly welcome as the contribution that universities and
their research can make to business success is beyond question.
"Again the devil is in the detail and I hope that when the
details are announced, the process for accessing the funding is
straightforward, transparent and rapid. We have seen many examples
of funding being made available to universities which require such
lengthy and detailed application and bidding processes, that many
universities simply don't bother incurring the cost and
inconvenience of applying.
"The guarantee of a place in education or training for all 16
and 17 year olds, guaranteed job, work experience or training for
every 18-24 year old and support for a higher number of
apprenticeships is, of course, valuable. The budget speech refers
to this as a 'one-off growth package', so the hope must be that the
economy recovers rapidly enough for the recipients of all this
training and education to find real, permanent, added-value jobs
when they complete their courses."
For further information, please
contact:
Nicola Daley, Grant Thornton press office 020 7728 2244
nicola.daley@gtuk.com