Higher education funding reforms in England: the distributional effects and the shifting balance of costs

through deferred fees (subsidised by taxpayers). Students become net recipients,
receiving around £1.1bn in total from new grants and subsidies.

Table . Circular flows of payments: old and new systems, £billions

Notes: Totals may not sum due to rounding. For simplicity, student gains calculated here include gains from the
introduction of maintenance grants compared to the 2003-04 system (transfers from taxpayers), but do not include
changes to maintenance loans (which might be thought of as transfers from graduates to students). Bursaries
assumed to be minimum mandated (£300).

Source: Authors’ calculations outlined in Dearden et.al. (2005), and updated based on best information available
as of 21^st May 2007, using official public expenditure projections from 2005, Hansard Written Ministerial
Statements for 10th November, 2005 (Column 22WS) and information on cost of extending student grants from
2008-09, estimated by DIUS at £182 million. Note, cost of graduate repayment holiday, estimated by DIUS at £40
million, not included.

http://www.publications.parliament.uk/pa/cm200506/cmhansrd/vo051110/wmstext/51110m01.htm#column_22,
DfES Departmental Expenditure Report for 2007, and HEFCE grant letter from DfES 2007.

The final column of Table shows the net impact of all these changes. First,
universities’ net position improves by around £1.3 billion, from £5.5 billion under the
old system to around £6.7 billion under the new system. On aggregate, this should
make a significant inroad into the well-documented shortfalls of the university
sector.²⁹ Second, the overall taxpayer contribution to the costs of HE rises by around
£1.1 billion compared with an unchanged 2003-04 system for tuition and student
support. Third, students are better off under the new system due to grants and fee
deferral, by around £1.6 billion (note that voluntary bursaries from universities, likely
to amount to £300 million in total, improve students’ positions further). Finally,
graduates contribute around £1.7 billion more, through increases in fees, offset by
new loan subsidies from the taxpayer.

•

This analysis also highlights the changing balance of funding between the public and
private sector as a whole as a result of the new reforms. Taking students and graduates
together, we see that the net increase in contributions from these two groups

29 See for example, the submission from Universities UK to the 2004 Spending Review
(http://bookshop.universitiesuk.ac.uk/downloads/SR2004.pdf)

29

<<   <   26   27   28   29   30   31   32   >   >>