In Defence of Liberty

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BIS Overspends

The Department of Business, Investment and Skills (BIS) is feared to have a shortfall of £80m, after no controls were placed on student numbers enrolling for higher education qualifications at private colleges. 23 private higher education colleges have been told to halt rises in their student numbers, with a BIS spokesperson saying certain providers were expanding ‘at unaffordable levels’.

The number of students enrolling for higher national diplomas (HNDs) and certificates (HNCs) has drastically inflated. During 2011-12, there were 13,000 students studying these qualifications at 46 private colleges, surging to 30,000 in the last academic year. The Guardian newspaper has seen internal forecasts for BIS’s shortfall, which has been caused by financial support of loans and grants to the expanding number of HND and HNC students, as these students may benefit from subsidies above £10,000 over their typically two-year courses, including up to £3,400 in maintenance support.

About 40% of grant recipients for HNDs and HNCs are overseas students, above the sector’s average of 5%. The business department has concerns of potential fraudulence: it has stopped loans and grants reaching 5,000 students from Romania and Bulgaria pending further residency checks, and stopped funding payments to one college, in addition to their requests to 23 colleges.

BIS is mostly responsible for government spending on further and higher education, science and research. The budgetary pressure from HND and HNC students is expected to swell in future years, creating a £330m funding gap in 2015-16. These upward burdens on spending at BIS come along with deep incisions to the department’s budget.

Pushing against Limits

According to the Institute for Fiscal Studies, the 2013 Spending Round announcements means the total real cut between 2010-11 and 2015-16 in the department’s Treasury-set resource expenditure limits is 30.7%. Direct spending on higher education will be severed by 50% over this parliament, as universities now draw greater funds from reformed tuition fees. This overspend has led to proposals to hew other areas of their £13.6bn budget, such as reductions to the Access to Learning hardship fund of £24m, and a further £20m erosion in higher education teaching. The abolition of the National Studentship Programme may be brought forward one year to save £75m. Science and research funding, which has been broadly stable in real terms over this parliament, may also be affected.

State subventions for science has stayed roughly constant in real terms throughout this parliament. (Photo: IFS)

State subventions for science has stayed roughly constant in real terms throughout this parliament. (Photo: IFS)

Universities Minister David Willetts said that HNDs and HNCs were ‘well-respected’ qualifications, but restraints on student numbers have become necessary. Mr Willetts added: “We have written to some of the colleges that have got the highest rate of growth of students, asking them not to increase the number of students from the number they have had in the previous year.”

A BIS spokesperson said:

Our goal has always been to create a higher education sector that responds to student demand and has the ability to expand and create more competition. But we’ve always been clear that we have a responsibility to keep control of public finances and minimise the risk of unsustainable growth and budget, which is why confirmed our intention to introduce student number controls from 2014-15.

Liam Byrne, the Shadow Higher Education Minister, said: “We need some big answers fast for how this government has let spending balloon out of control – and students now need assurances that they won’t be paying the price for this government’s incompetence.”

Note: This article was the news section of the University of Bath student newspaper bathimpact, of which Helen Edworthy is the editor.

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This entry was posted on December 3, 2013 by in Student Politics and tagged , .
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