CBI calls for university and higher education spending cuts
Students could face a triple blow of higher fees, bigger loan repayments and fewer grants under plans outlined by business leaders today.
Cuts to "generous" levels of student support are necessary to preserve the quality of teaching and research at universities, according to a CBI report on higher education.
The National Union of Students (NUS) said it was "astonished" at the report, and branded its recommendations offensive.
The CBI Higher Education Task Force's year-long study, which examined how business and universities can work together in the future in the face of a global recession, warns that "tough choices" must be made to ensure that the UK's higher education system remains world class.
The expansion of higher education, coupled with the current state of public finances, is putting an increasing strain on resources, with the Government already asking English universities to make £180 million in savings between 2009 and 2011, it says.
The Task Force looked at, and rejected, three options where future savings could be made, arguing they would be damaging for the sector. The options were cutting funding for research, cutting funding for teaching, and cutting student numbers.
Instead, the Task Force advocates making savings by reforming student funding, with the money used to support teaching and research in the face of public spending cuts.
The report notes that 25% of public funding going to higher education is spent on student support, and the UK has one of the most generous levels of support in the world. Under current rules, students are eligible for tuition fee loans, which are paid back at a low rate of interest, as well as grants, depending on their household income.
The Task Force says:
* The Government should provide tuition fee loans at its own cost of borrowing, and remove the interest rate subsidy on all loans. It claims this could be phased in over three years to avoid impacting on current students and would provide yearly savings of £1.4 billion.
* Maintenance grants should be reviewed so that only those who need it the most receive them.
* An increase in tuition fees appears "inevitable." A review of the fee cap, which currently stands at around £3,000, is due to begin later this year and the Government will face a "stark choice" between finding new money to put into the system, or a decline in students. It adds: "To maintain standards of higher education, the Government and the devolved administrations have little choice but to plan to raise the cap on tuition fees in England, Northern Ireland and Wales."
The report quotes figures from a recent study by umbrella group Universities UK which suggested raising fees to £5,000 per year in England would not lead to a decline in students.
The CBI report also suggests that the Government's target for 50% of 18-30-year-olds to go on to higher education should be dropped.
"Given the financial pressures, the focus must be on quality rather than quantity," it says.
CBI director general Richard Lambert said: ""The world is changing. What seemed possible and affordable three years ago now has to be questioned."
Task Force chairman and CEO of Centrica Sam Laidlaw said no one was enthusiastic about the choices.
