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2020 Spending Review: The Good, the Bad and the Ugly

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Published on 26 October 2020

Sir David Bell
Sir David Bell

A shortened spending review could still have profound effects on universities, says Sir David Bell, Vice-Chancellor of the University of Sunderland.


"The comprehensive spending review is a great Whitehall ritual, so the announcement that it will only cover the next year is something of an anticlimax.

Introduced in 1998 to much fanfare by chancellor Gordon Brown, the comprehensive spending review became the process for setting out recurrent and capital spending for the following two to three years.

It is one of the few times in the life of a parliament that a government can lay out its whole spending and policy programme. As a result, planning and writing a departmental spending review submission takes place over many months.

To be fair to chancellor Rishi Sunak, his spending review ‘commissioning’ letter in July made it very clear that economic recovery from Covid-19 was his top priority. That sobering backdrop is a far cry from the optimistic Schools ‘n’ Hospitals mantra of the New Labour era, although, ironically, these areas can be expected to feature strongly again this year, alongside other infrastructure commitments.


Room for manoeuvre

Spending reviews can be brutal as some areas of activity find their expenditure curtailed—most notoriously, and until very recently, local government and policing. Whether that happens this time remains to be seen; the chancellor’s decisions about spending depend on what approach he takes to taxation and borrowing, and over what period.

Of course, no spending review takes place in a vacuum and the wider environment always intrudes. As the financial crisis was starting to bite, the constraints of the 2007 spending review meant that it felt very different from those held over the preceding decade.

The pandemic is not the only issue that might have influenced the chancellor’s decision to ‘go short’ this time round. Brexit uncertainties persist and, depending on what happens with a deal—or not—the chancellor may want to retain his room for manoeuvre.

After three general elections in five years, it looked as if this might have been the first spending review for a while capable of lasting for most of the parliament. The fact that it is only for a year may derail, temporarily at least, the government’s desire to ‘level up’ economic opportunity across all parts of the UK. Yet the necessity of levelling up feels more acute than ever as the regional impact of the pandemic is being felt disproportionally in the midlands and north of England—areas where the Conservative Party made significant gains in the December 2019 election.

So where will higher education fit in the shortened spending review mix? There will almost certainly be an even sharper debate within the Department for Education about the balance of spending across its different responsibilities. And as history shows, universities are not always the top priority.


Research funding

Spending reviews usually fold in existing commitments. In this case, there’s the much-heralded commitment to growing R&D funding to 2.4 per cent of GDP by 2027, not all of which will come from the public purse. Will that be quietly dropped or delayed? And how does it sit alongside one of the chancellor’s original aims for this spending review—to make the UK a scientific superpower?

It will be interesting to see whether the spending review either offers some short-term ‘goodies’ or sets out a direction of travel. Could there be a requirement for funders to cover more of the cost of research, or might there be a further boost to the size of the quality-related funding pot—in other words, the flexible, excellence-driven research funding for universities?

It could be tempting in this spending review to target more funding towards the smaller research-active universities that often play a crucial role in knowledge exchange and business-focused activity. That would be a practical and quick way of supporting post-pandemic recovery, particularly if done in concert with local employers, councils, the NHS and other partners.



Further and higher

The big imponderable is whether the spending review is finally the moment in which the government responds to the Augar review. If a further education white paper emerges soon, expect spending commitments there to be reflected in the Department for Education’s bid. And here’s the rub for universities: might funding be directed more towards further education and away from higher education?

Of course, both could be winners if financial support is expanded to allow greater access to shorter courses, from levels 4 and 5 up to postgraduate study—another way of focusing on skills for the future.

Another win for both would be the creation of a transformation fund to allow universities and colleges to collaborate to aid economic recovery and meet local and regional economic needs. This would be a far more enlightened approach than the Department for Education’s current restructuring fund, which is only designed to assist institutions in dire straits.

One area of expenditure could be enhanced support for students through targeted maintenance grants for those that need them the most, including those who wish to study more flexibly.


The bad news

But no spending review is unalloyed good news and not everything will be to universities’ liking.

Performance management is a staple of spending reviews, so the government might go public with its plans for addressing what it sees as low-quality and low-value courses. There could be a significantly amended Teaching Excellence Framework that becomes a lever for exerting pressure on specific courses in particular institutions.

In the light of recent rhetoric, watch out too for eye-catching initiatives in areas such as protecting free speech and efficiency, particularly those tied to new funding streams.

But when the spending review is published later in the autumn, could it mark a turning point for higher education? Taking a cue from recent ministerial speeches, will this be the moment when the government decides to overthrow the Robbins-era settlement from the early 1960s that has led to the size of the higher education sector as we know it today? Or, conversely, will the spending review restate a continuing and unequivocal commitment to access to university, with no artificial number constraints imposed?

Depending on the choice the government makes, this could turn out to be the story of the 2020 spending review."

The Original article from Sir David Bell appeared here