Students and Universities - Innovation, Universities, Science and Skills Committee Contents

Memorandum 118

Letter from the Rt Hon Lord Mandelson, Secretary of State for Business, Innovation and Skills to Phil Willis MP, Chairman of the Innovation, Universities, Science and Skills Committee, 20 July 2009

  Thank you for your letter of 17 June about the funding of Higher Education about the allocation of additional student numbers (ASNs) for 2009-10 which was discussed again today at the Liaison Committee.

I must apologise for the delay in responding but as you know we have been considering how best to respond to the very real demand for higher education in the current climate. We have now announced that we will provide financial support to around 10,000 additional students who want to go into higher education this summer. This is a measured and positive response to a real demand from both institutions and students.

  As John Denham explained when he came before the Committee on 11 May, we have provided significant funding for Higher Education over the last ten years—an increase of around 25% in real terms. Higher Education student numbers will now be at a historical high. There will be a significant increase in the overall student population this year due to previous years' entrant growth and the announcement we have just made.

  Through HEFCE, we provide a teaching grant as a payment towards the costs of teaching students. The amount of grant that Government pays for each student fell sharply in the 1990s as universities were asked to expand on an unsustainable basis. Since the introduction of variable fees, we have kept the unit of funding per student relatively constant, whilst expecting appropriate back office efficiency savings. The students we have announced funding for today are fees-only, they do not attract teaching grant, and of course it will be entirely a matter for universities to judge whether they want to offer places to students on a fees-only basis: not all will choose to do so. But we know from discussions with the sector that there are institutions who will be able to recruit such students without compromising the quality of their offer.

  Of course, as we look to the future, we need to ensure that increases in student numbers are managed in the interests of students, the economy and the universities themselves. In recent years, there has been faster growth in the student population than planned. Unplanned growth places extra pressures on student support budgets. The balance that we must strike is not allowing so much unplanned expansion that student support costs to the public purse exceed expectations.

  I recognise the points you have made about achieving the Leitch targets. We remain committed to increasing the skill levels of the nation in order to help us compete internationally and to be ready for the upturn. But I hope you will also agree that it is right that as the nation tightens its belt in the face of real pressures, that we manage public finances responsibly.

July 2009

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