University Grants (Hansard, 21 May 1982)

§ Sir Keith Joseph

The University Grants Committee has announced universities' recurrent and equipment and furniture grants for the academic year 1982–83 as shown in columns 1 and 3 respectively in the following table

As an aid to planning, the UGC has also given universities a provisional grant figure for 1983–84 and an indication of what the grant might be for 1984–85 on the basis of the planned provision for higher education set out in the expenditure White Paper—Cmnd. 8494.

For 12 universities the UGC's grant distribution allows some increase in the grants and/or the student number targets which were set in July 1981. These modifications relate to various special factors at these institutions and follow discussions between the universities and the University Grants Committee in recent months. They include increases in science student number targets 193W providing a total of 350 additional places. Copies of the annexes relating to grants for individual universities will be placed in the Library of the House.

Following is the text of the general letter of guidance which the chairman of the UGC has sent to all universities. I am writing to let you know the Committee's decisions about the distribution of recurrent grant and of equipment and furniture grant for 1982/83. The figures, together with the provisional recurrent grant figure for 1983/84, are given for your own institution in the Annex to this letter. The main considerations which underlay the Committee's approach to distributing the two grants are set out in the rest of this letter.

Levels of grant for 1982/83 and 1983/84

2. Recurrent grant for 1982/83 was announced by the Secretary of State for Education and Science on 21 December 1981 as part of a general statement about education expenditure. The statement included the following points: The planned contraction of higher education in the period up to 1984 is to be maintained and the level of funding for each sector of higher education in (financial year) 1982/83 is broadly in line with that contraction … The universities' recurrent grant for the academic year 1982/83 will be £1137m, including over £100m to compensate them for reduced tuition fee income. From within the 1982/83 grant the UGC will make provision for the continuation of the bursary scheme for outstanding overseas postgraduate students … Over and above the recurrent grant, I am allocating £50m in the financial year 1982/83 to be used by the UGC specifically for restructuring including the cost of redundancies. A further additional amount for restructuring, and the recurrent grant for 1983/84, will be announced later.

3. The Secretary of State announced an equipment and furniture grant for 1982/83 of £83.6m on 8 April.

4. The Committee has also been told that the Government at present have in mind for the universities a recurrent grant in 1983/84 of around £1180 million. The announced recurrent and equipment and furniture grants for the 1982/83 academic year and the provisional figure for recurrent grant in the 1983/84 academic year are expressed in cash and are consistent with the provision for higher education set out in the 1982 Public Expenditure White Paper (Cmnd. 8494). The total recurrent grant fixed for 1982/83 and the provisional total grant for 1983/84 reflect the Government's stated intention to maintain the contraction of higher education planned in the 1981 Public Expenditure White Paper (Cmnd. 8175). The Government's assumptions are that pay and price increases will need to be accommodated within these figures. The Committee has been told that in setting these levels of grant, allowance has been made for pay increases of 4 per cent. from the due settlement date in the 1982/83 financial year and that account has been taken of the historic differences between price movements in universities' non-pay costs and in retail prices generally.

The Committee's approach to reduced funding, 1981–82 to 1983–84

5. The Committee's grant letter of July 1981 (Circular Letter 10/81) and the individual letters which went with it were intended to provide a planning framework for the three years 1981–82 to 1983–84. They set out the Committee's views on provision in the arts, science and medicine. The Committee later explained in some detail to the Select Committee on Education, Science and the Arts, both orally and in writing, how it reached these views and how it took its decisions on individual institutions. It has also held (or plans to hold) discussions with all those institutions which have asked for them and has received views from other bodies, from MPs, from the staff and students of universities and from members of the public. The Committee is therefore well aware of the problems which result from the requirement that the university system should adapt itself in a short period to a substantially reduced level of funding.

6. The financial constraints this year are no less stringent than in 1981. Although the Committee is sensitive to arguments which have been put forward on behalf of many subject areas, its responsibility is to maintain the best possible balance of provision over the whole range of disciplines and it has not felt able to make any material change in the balance adopted last year. Nor has it felt able to agree to any general relaxation of the student number targets which it set last year.

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7. In reaffirming its general approach to the problem of a lower level of funding, the Committee wishes to draw attention to the following points:—

(a) Many universities are seeking ways of attracting additional income from external sources. The Committee would wish to encourage this. Income so raised will not lead to a consequential reduction in grant.
(b) Preservation of the dual support system of research is a major concern of the Committee and one of the factors that will continue to be taken into account in determining recurrent grant is that income from research grants (as opposed to contracts, on which overheads may be recovered) can involve a university in additional expense.
(c) Some groups of staff are especially mobile. Either their early appointments represent a completion of their training, so that they tend to serve in a post for a shorter period than average—clinical medicine being the obvious example—or they leave the university system for other sectors such as industry and commerce. An across-the-board freeze on staff appointments can therefore cut provision disproportionately for the subjects affected. The Committee would not wish to see this happen.
(d) The Committee has not lost sight of the importance to the vitality of the university system of being able to initiate and sustain new developments in teaching and research. It has been impressed by the enterprise shown by universities in identifying such developments in their academic plans. In 1982–83 as in 1981–82 a sum of £20 million has been held centrally for restructuring purposes from the initial block grant distribution and the Committee has already decided to give support to selected universities for assisting the development of biotechnology. The share of restructuring monies that can be made available for this kind of action is limited, however, although the Committee will not be able to judge how limited until it has a better idea of the likely cost of reimbursing universities for redundancy compensation. This must clearly have first call on funds set aside for the purpose of assisting the system to adapt to the lower level of Government funding. I hope that I may be able to say more in the Autumn about support for new developments.
(e) The Committee is concerned at the vulnerability of expenditure on consumable and other materials, including library acquisitions, when urgent and substantial reductions in total expenditure have to be made. The Committee hopes that, where universities have felt obliged to make cuts in these valuable areas, their plans will include provision for restoring expenditure to a reasonable level.
(f) In determining the grant distribution and giving advice in 1981, the Committee was conscious that the capacity for teaching and research in many minority arts subjects could be endangered by pressure on resources. Indications are that not only minority arts are at risk but that similar problems are affecting some sub-divisions of science subjects. The Committee therefore extends the hope expressed in its 1981 grant letter that universities will enter into discussions among themselves and with the Committee about how provision for minority subjects generally might be sustained.

Recurrent grant: differences between Circular Letter 10/81 and this letter

8. In general the Committee's approach to the problem of adapting the university system to a lower level of funding remains unchanged. The main differences between the figures for 1982–83 and 1983–84 given in Circular Letter 10/81 and those which are set out in the Annex to this letter are to be explained as follows:—

(a) The Committee has reviewed the decisions it took last year in the light of universities' responses and academic plans. This review has resulted in a modification in a limited number of cases of the grants or of the student number targets.
(b)As announced in Circular Letter 14/81 of 9 September 1981, the Committee amended in one important respect its 195 recommendations contained in the July grant letter relating to tuition fees to be charged for part-time studies. This change required an increase in grant in 1981–82 to reflect the shortfall in fee income from part-time undergraduates. The adjustment has been carried through into 1982–83 and 1983–84.
(c) The grant distributions have been adjusted to take account of the loss of fee income resulting from the Government's decision to reduce the level of tuition fees for home students on designated advanced courses from the beginning of academic year 1982–83. The adjustments reflect the assumption, referred to in paragraph 10 of Circular Letter 10/81 as the basis of individual grant figures, of an evident progression towards the student number targets. The practical effects are that a university whose admissions in 1980 were significantly higher than those in 1979, or whose planned admissions for 1982 seem higher than might be expected if it is to achieve its student number targets for 1984–85, will receive only the new rate of fee for its "excess" students. Similarly a university which has fewer students than a steady progression towards the 1984–85 target might suggest will lose only the new rate of fee for the "shortfall".

9. These points apply to universities generally. Any other significant factors affecting the block recurrent grant to your own institution, such as the running costs of major building projects expected to come into use in 1982–83, are referred to in the Annex.

Recurrent grant: detailed points

10. As in recent years, the recurrent grants shown in the Annex do not include any element for local authority rates, or for sewerage rates where these are paid separately. (Water rates are covered by the recurrent grant.) In financial year 1981–82 and, as is clear from university estimates so far submitted, in financial year 1982–83, increases in local authority rates differed by unpredictable amounts, so that it is not possible either to assume that all universities are more or less equally affected or to forecast what the changes will be. I shall write to you before August about grant for rates once we have details from all universities of the actual demands for 1982–83.

11. The recurrent grant for 1982–83 announced by the Secretary of State includes provision for the cost of capital projects which come within the revised minor works limit. I shall write to you, probably in July, about a first distribution of this. As in 1981–82, it will be in the form of an earmarked grant.

12. No provision is made in the recurrent grant figures in the Annex for reimbursement of severance costs of staff leaving or of part-time re-engagement of teaching staff needed in order to conclude courses which will be phased out as a consequence of restructuring. This reimbursement is being dealt with separately

University or College	Recurrent Grant (cash)	Equipment and furniture grant 1982–83
	1982.83	1983.84 (provisional)
	£ million	£ million	£ million
Aston	13.22	12.95	1.48
Bath	10.85	11.49	1.24
Birmingham	31.95	33.02	2.58
Bradford	13.40	13.14	1.15
Bristol	24.50	25.35	1.83
Brunel	11.42	11.54	0.93
Cambridge	36.02	37.86	3.34
City	10.20	10.37	0.60
Durham	14.82	15.37	1.08
East Anglia	13.52	13.57	0.81
Essex	7.12	7.27	0.47
Exeter	13.20	13.62	1.08
Hull	12.59	12.81	0.69
Keele	7.85	7.62	0.45
Kent	9.07	9.20	0.64
Lancaster	11.44	11.79	0.74
Leeds	36.06	37.31	2.95
Leicester	14.94	15.70	1.02
Liverpool	32.17	33.25	2.19
London Graduate School of Business Studies	1.51	1.71	0.06
London University^*	173.76	178.32	13.20
Imperial College	25.34	26.33	3.01

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under arrangements which were announced in Circular Letters 5/82 and 8/82 of 1 March and 31 March respectively.

13. The implications of the 3.8 per cent. increase with effect from April 1983 in the institutional contribution to USS are being discussed with the Government.

14. No provision has been made analogous to the special grants in 1980–81 and 1981–82 "to help ensure that uncertainty about prospective income from overseas students does not adversely affect selected postgraduate work of particular importance to this country". It is assumed that universities will by now be well on the way to adjusting to the policy of full-cost fees for overseas students. The Committee has, however, made available to the CVCP a sum approaching £3 million for distribution in 1982–83 under the Overseas Research Students Awards Scheme.

15. The Committee will be considering the implications for universities' cash flow of the reduction in undergraduate fees referred to in paragraph 8c. and I shall be writing to you as soon as possible with details of the arrangements for paying instalments of grant in 1982–83.

Recurrent grant, 1984–85

16. On the basis of the Government's present expenditure plans, a reasonable estimate of provisional recurrent grant in cash terms for the universities for 1984–85 may be obtained by adding 5 per cent. to the provisional cash grant for 1983–84. The Committee will however be considering the grant distribution for that year particularly carefully because it is the first year following the period of run-down covered by the July 1981 letter.

Equipment and furniture grant, 1982–83

17. In determining the distribution of the general equipment and furniture grant for 1982–83, a factor taken into account by the Committee is the level of activity in research, one indicator of which is the external research income from Research Council and other sources.

18. The cost of furniture and of its initial provision for minor building projects may, as you know, be met either from recurrent grant or from the equipment and furniture grant. In the past the Committee has expressed the hope that universities would limit their expenditure from the equipment and furniture grant for these purposes to less than 7 per cent. of the grant. It now feels that the linkage that might be implied by this formulation could create inequity between universities, since those with a high proportion of arts students would be subject to a greater constraint than those with a high proportion of science students. The Committee has therefore recalculated the levels it would wish to indicate as upper limits and its recommendation for your university is given in the Annex.

Yours sincerely

EDWARD PARKES

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University or College	Recurrent Grant (cash)	Equipment and furniture grant 1982–83
	1982.83	1983.84 (provisional)
	£ million	£ million	£ million
Loughborough	15.18	16.01	1.43
Manchester Business School	0.97	0.96	0.03
Manchester	39.85	41.17	2.90
University of Manchester Institute of Science and Technology	14.17	14.03	1.61
Newcastle	26.13	27.18	3.08
Nottingham	23.16	24.06	2.08
Oxford	37.06	38.73	3.20
Reading	16.13	16.72	1.60
Salford	13.10	12.42	1.09
Sheffield	27.16	28.22	2.25
Southampton	20.66	21.61	1.90
Surrey	11.44	11.54	1.04
Sussex	11.94	12.29	1.04
Warwick	14.58	15.13	0.89
York	9.03	9.60	0.74
TOTAL ENGLAND	805.51	829.26	66.42
Aberystwyth UC	8.71	8.94	0.66
Bangor UC	9.53	9.85	0.74
Cardiff UC	14.79	15.32	1.18
St. David's Lampeter	1.58	1.65	0.05
Swansea UC	11.47	11.76	0.93
Welsh National School of Medicine	5.45	5.72	0.36
University of Wales Institute of Science and Technology	7.45	7.61	1.02
University of Wales, Registry	1.86	1.94	—
TOTAL WALES	60.84	62.79	4.94
Aberdeen	19.49	19.78	1.52
Dundee	12.85	13.26	0.83
Edinburgh	37.04	38.84	2.67
Glasgow	36.69	38.36	2.70
Heriot-Watt	8.98	9.29	0.90
St. Andrews	9.84	10.10	0.59
Stirling	7.06	7.11	0.30
Strathclyde	19.45	20.10	2.08
TOTAL SCOTLAND	151.40	156.84	11.59
TOTAL GREAT BRITAIN	1,017.75	1,048.89	82.95
^* Excluding Imperial College.

Note: Paragraph 16 of the UGC's general guidance letter contains a provisional indication of grant for 1984–85.