The financial health of higher education institutions in England : report / by the Comptroller and Auditor General.

  • National Audit Office
Date:
1994
Catalogue details

Licence: Open Government Licence

Credit: The financial health of higher education institutions in England : report / by the Comptroller and Auditor General. Source: Wellcome Collection.

    19/88 page 13
    THE FINANCIAL HEALTH OF HIGHER EDUCATION etc) is estimated to amount to about £2.7 billion in 1994-95. The main sources of Government funding of higher education as at paragraph 1.15 above are therefore expected to provide about two thirds (65 per cent) of higher education's total income (£7.8 billion) in 1994-95 and have been around that level since 1989-90 (Figure 1). Figure 1: Comparison of sources of higher education income in England between 1989-90 and 1994-95 ay Research Council grants Research Council grants funded tuition . ; i! fees Publicly funded tuition fees ——~ rh Recurrent grant Y Other sources 1989-90 1994-95 Other sources Recurrent grant Source: The Higher Education Funding Council for England In 1994-95, Government will provide two thirds of higher education income through recurrent grant, tuition fees and Research Council grants. This fraction has not changed significantly since 1989-90. The most significant change is the shift in the balance of funding from recurrent grant to tuition fees. education which have necessitated changes in funding methodology. For example, in 1990-91 to encourage growth in student numbers the balance in public funding was shifted from recurrent grant which is cash limited to tuition fees which are not. In effect, this gave institutions the financial incentive to recruit fees only students, that is, students not funded from recurrent grant, because the higher tuition fee levels were often sufficient to cover the marginal costs of expansion. The incentive was reinforced by the policy of awarding places funded from recurrent grant partly on the basis of the previous year’s recruitment of fees only students. Figure 1 illustrates how between 1989-90 and 1994-95 the overall balance in public recurrent funding has shifted from recurrent grant to tuition fees. In 1993-94 and 1994-95, with the need to consolidate student numbers, there was some shift back to the cash limited recurrent grant compared with earlier years. The shift in the balance of funding from tuition fees to recurrent grant in any one year is financially neutral for the same number of students but the effect is to curb the recruitment of fees only students and hence the additional income available to institutions from this source.
    digitised image 1
    digitised image 2
    digitised image 3