Treating Students Fairly: The Economics of Post-School Education Contents

Appendix 4: System of post school education finance in Scotland and Wales

Education is a devolved area of policy, meaning that there are distinct differences between the HE and FE systems in England, Scotland and Wales. However, there is some overlap in the regulation of Higher Education across the UK, Scotland and Wales. Scotland and Wales work on a UK wide basis in the TEF, UCAS, QAA, HEA, HESA and the various UK Research Councils. It is currently unclear how the new Office for Students will work with the devolved administrations.369


Further Education

The FE budget is fully devolved and funded by the Scottish Government through the Scottish Further Education Funding Council. Scotland has 46 colleges offering mainly vocational courses (including apprenticeships), Levels 3-8, Scottish Highers, Higher National Certificates (HNC) and Higher National Diplomas (HND). Like in England, there is some overlap in provision with HE, as a significant number of HE courses are taught in FE colleges. HM Inspectorate of Education is responsible for the inspection of FE and is an Executive Agency of the Scottish Government (similar to Ofsted). Scottish FE students can get a non-repayable bursary of up to £97.33 a week (means tested) as well as the Education Maintenance Allowance.370

Higher Education

Scotland has 19 universities, which are funded by the Scottish Government through the Scottish Higher Education Funding Council.371

Scottish domiciled students studying in Scotland do not pay tuition fees. Students apply to the Student Awards Agency who pay a tuition fee of £1820 directly to the university. Tuition fees are currently linked to inflation. Scottish domiciled students studying elsewhere in the UK can apply for a student loan (non-income assessed) to pay for all or part of the tuition fees.

The majority of funding for Scottish universities is made up of the Teaching Grant. Universities decide how to spend their teaching grant, of which the total is calculated based on a formula comprising the number of students and the costs attached to different subjects.372 Additionally universities receive public funding for research, of which the largest is the Main Quality Research Grant distributed based upon the outcomes of the peer assessed Research Assessment Exercise. There are a number of smaller funds also available.

Prospective Scottish domiciled students that receive an offer can apply for a maintenance bursary or loan, which is means tested. The maximum amount of bursary available is £1,875 with a maximum loan amount of £5,750.373 Thus the maximum total amount available through a bursary and loan is £7,625 compared to £8,430 under the English system. The amount of maintenance loan available is the same whether a student studies in Scotland or elsewhere in the UK. The amount of bursary available for students studying elsewhere in the UK is slightly higher, worth £2,150.

In Scotland there is an unofficial cap on the number of Scottish student places. As universities receive a teaching grant calculated on the basis of the assumed number of places being provided to eligible students, any additional places will only be funded via the tuition fee from the Scottish Awards Agency.374 However, Audit Scotland (responsible for auditing the devolved parliament and associated public bodies) has found that it was getting harder for Scottish domiciled students to secure a place at university due to number of applications increasing faster than the number of places, which is capped by the government to control the cost to the taxpayer.375 The report said that the fee of £6,999 received for each Scottish and EU-domiciled student does not reflect the actual cost of teaching, resulting in Scottish universities becoming increasingly reliant on students from the rest of the UK and from outside the EU who pay upwards of £9,250 in tuition fees.


Further Education

FE has been devolved and funded by the Welsh Government since 2006. Wales provides an Education Maintenance Allowance of £30 a week to FE students, which is means tested. The post-16 (excluding HE) budget allocation for 2017/18 was £407.686 million.376 An extra £2.5m was allocated for 2018/19 and £4.2m for 2019/20 in support of programmes and interventions aimed at improving skills.377

Welsh FE institutions offer the same range of qualifications offered in England as well as the Welsh Baccalaureate. Like in Scotland and England, there is some overlap in provision with HE, as a significant number of HE courses are taught in FE colleges. Inspections of providers of FE, work-based learning and adult and community education is carried out by HM inspectors from Estyn, an independent body funded by the Welsh Government (similar to Ofsted).

Higher Education

The Higher Education system in Wales comprises of nine universities including the Open University, which is funded through the Higher Education Funding Council for Wales (HEFCW). The Council also funds HE courses at FE institutions. For the 2017/18 academic year HEFCW’s budget was £99.3m.378 The Cabinet Secretary for Education in Wales announced an additional £10m of revenue funding for HEFCW to deal with issues arising from tuition fee rises (£5m for 2018/19 and £5m for 2019/20).379

Welsh domiciled students studying in Wales can be charged up to £9,000 a year in tuition fees and receive tuition fee loans on the same terms as English students. Welsh domiciled students studying elsewhere in the UK can receive tuition fee loans up to £9,250 to cover the cost of tuition at those institutions.

Whilst tuition fee arrangements are identical for Welsh and English students, the system for maintenance support differs. From 2018/19 all full-time undergraduate Welsh students living away from home but studying at a Welsh university will be entitled to £9,000 towards their maintenance costs (or £7,650 for students living at home). This is made up of a means tested grant which is topped up with a loan. Welsh students studying elsewhere in the UK receive the equivalent support (or £11,250 if they study in London).380 The equivalent maintenance support is provided to part-time and postgraduate students. Part-time undergraduates will receive support for maintenance (pro-rata).

369 The Higher Education and Research Act 2017 empowers the OfS to work with the devolved administrations and their funding bodies. Whilst, the OfS has reported that they, “will seek active and constructive engagement” with the devolved bodies, it is currently unclear how this will be organised. The OfS has stated that for a higher education provider to remain on their register, the institution must comply with various conditions, including participating in the TEF. However, in the devolved parts of the UK, participation in the TEF will require the consent of the devolved government.

370 Scottish Government, Guide to learner funding 2017 to 2018 (July 2017) p 11: [accessed 6 April 2018]

371 With the exception of the Scottish Agricultural College which is funded by the Agriculture Department of the Scottish Government.

372 Universities Scotland, Briefing: How is higher education funded?: [accessed 24 May 2018]

373 Student Awards Agency Scotland, ‘Funding Available’: [accessed 27 March 2018]

374 Scottish Parliament Information Centre, Higher Education Institutions: Subject Profile (September 2016) p 10: [accessed 6 April 2018]

375 Audit Scotland, Audit of higher education in Scottish universities (July 2016): [accessed 14 May 2018]

376 Welsh Government, Main expenditure group (MEG) allocations (20 December 2016) p 11: [accessed 27 March 2018]

377 Welsh Government, Final Budget 2018–2019: A new budget for Wales (December 2016) p 8: [accessed 27 March 2018]

378 Higher Education Funding Council for Wales, HEFCW’s Funding Allocations 2017/18 (9 June 2017) p 1: [accessed 27 March 2018]

379 Welsh Government, Final Budget 2018–2019: A new budget for Wales (December 2016) p 6: [accessed 27 March 2018]

380 Welsh Government, Welsh students applying for university will benefit from most generous student support package in the UK’: [accessed 27 March 2018]

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