Departmental Expenditure (Hansard, 15 November 1989)

§ Mr. John MacGregor

As my right hon. Friend the Chancellor of the Exchequer announced in his statement today, within the redefined public expenditure planning total the provision for the Department of Education and Science's programme in 1990–91 will be £6,589 million. This total is £876 million or 15.3 per cent. higher than the corresponding provision for 1989–90.

My Department's spending plans include: an increase of over £750 million over the next three years in resources available for higher education—excluding provision for student maintenance awards and the new top-up loans scheme—enabling a substantial increase in student numbers to be funded; 273W the addition of over £175 million over the next three years to the science budget, which will reach £897 million in 1990–91—an increase of 27 per cent. over the figure for 1988–89; and annual capital guidelines for local authority capital expenditure in 1990–91 of £485 million; capital allocations for schools and colleges for 1989–90 totalled £352 million.

Higher Education

The Government's plans allow for a significant increase in participation in higher education. The number of full-time and sandwich course students is now expected to increase by over 50,000 or just under 10 per cent., between 1988–89 and 1992–93, reflecting mainly the welcome increase in the numbers staying on in school after 16. Despite the declining trend in the number of 18-year-olds, the number of students in higher education is expected to rise throughout the next three years. This means that about one in five 18-year-olds will be entering higher education in 1992–93, compared with one in eight at the end of 1970s. The table sets out the projections of student numbers on which the new expenditure plans are based.

To fund this expansion, the resources available for higher education will increase by over £750 million over the next three years, compared with previous plans. That addition will include:

(a) increased provision for recurrent and capital expenditure. Compared with previous plans, the Government are providing some £330 million more over three years for recurrent and capital funding for higher education;
(b) savings on rates expenditure: higher education institutions will benefit by over £230 million over the next three years from the change in the law on rates payments by charities;
(c) provision for fees, at the full rate of £1,675 from the academic year 1990–91, for the higher number of full-time students now projected. The increase in fees provision for these extra students is some £190 million over three years.

Taking these components together, there will be an increase in available recurrent funds for higher education of 10 per cent. between 1989–90 and 1990–91.

Within the total of funds available, the balance between recurrent funding through the funding councils and payments made through tuition fees has been shifted, in accordance with the policy announced on 6 July. That adjustment relates only to previously planned student numbers and is financially neutral; it simply switches resources from recurrent funding to fees.

Universities

The plans allow for an increase, excluding the fees for extra students, of over £135 million in recurrent and capital funding for the universities over the three years from 1990–91 to 1992–93. In addition, the universities will benefit from a saving on their rates bill estimated to total over £200 million for these three years and from extra income from tuition fees of £1,675 for every additional student enrolled beyond the Government's earlier plans.

After taking account of the shift of resources from recurrent funding to higher tuition fees in respect of students allowed for in the Government's earlier plans, the total available in 1990–91 to the Universities Funding Council for recurrent funding will be £1,685 million. As envisaged in earlier plans, this includes £52 million which will be earmarked for the restructuring programme. The 274W plans also allow for other committed items such as the continuation of the extra funds made available this year for the 1989 clinical academic pay settlement.

The plans should ensure the financial viability of the universities as student numbers increase, and should enable them to make significant progress in dealing with maintenance costs and to reach satisfactory pay settlements with their staffs. The Government intend, however, to hold back £20 million of the provision being made available to the Universities Funding Council in 1990–91 for release only in the event of a satisfactory pay settlement for academic staff which incorporates greater flexibility and differentiation.

Capital funding for the universities has been increased by some £30 million over three years, mainly to allow for new equipment. In addition, the plans allow for an increase in grant to the Open university of £7 million in 1990–91 for capital and recurrent purposes.

Polytechnics and Colleges

The plans allow an increase, excluding the fees for extra students, of £195 million in recurrent and capital funding for the polytechnics and colleges over three years. Polytechnics and colleges will also benefit from a saving on their rates bill over three years of some £35 million and from tuition fee income at the level of £1,675 per student for every additional student enrolled beyond the Government's earlier plans.

After taking account of the shift of resources to higher tuition fees in respect of students allowed for in the Government's earlier plans, recurrent funding available to the PCFC in 1990–91 will be £1,014 million. As envisaged in last year's plans, £7 million of this will be earmarked for further restructuring in 1990–91 and £22 million will be available for contingencies, including maintenance and repairs for buildings. The plans also allow for other commitments including the cost of the additional institutions and courses to be transferred to the PCFC sector from April 1990.

The plans should enable polytechnics and colleges to maintain financial viability as student numbers increase, and also to reach satisfactory pay settlements with their staffs. The Government intend, however, to hold back £12 million from the provision for the Polytechnics and Colleges Funding Council to be released only in the event of satisfactory pay settlements for academic staff which incorporates measures designed to achieve further improvements in efficiency.

Capital funding for polytechnics and colleges has been increased by £60 million over three years mainly to meet priority building improvement needs.

In both sectors, the money available allows for costs associated with the move of the funding councils to Bristol. It also takes into account developments in teacher training, in particular the need to enhance school experience for relevant academic staff.

Student Support

Planned expenditure on student support takes account of the increased numbers of students projected in the table and of the higher fee level of £1,675 from the academic year 1990–91. After allowing for the switch of funds to fees, total provision for student maintenance and the cost of fees in 1990–91 is £1,210 million. The details of the new rates of award and revised contribution scales will be announced in due course.

275W

The Government's spending plans also include £109 million in 1990–91, £179 million in 1991–92 and £204 million in 1992–93 for the introduction of the top-up loans scheme from September 1990, subject to the passage of the necessary legislation. Provision for the administration costs of the loans scheme will be added when final figures are available. The loan rates will be as set out in the White Paper "Top-up Loans for Students" (Cm. 520).

The plans include, in addition, provision for the access funds for students in further and higher education, including postgraduate students: £5.6 million and £3.5 million will be made available to the Universities Funding Council and Polytechnics and Colleges Funding Council respectively to distribute to institutions within their sectors; £4.1 million will be made available to colleges of further education, and to institutions receiving grant from the Department.

Science

The science budget will increase by £178 million over the next three years, compared with previous plans. This reflects the importance which the Government continue to attach to funding basic and strategic science and follows the substantial additional sums made available last year.

The cash limit for the science budget will he £897 milion in 1990–91, with provision of £912 million in 1991–92 and £935 million in 1992–93—increases over previous plans of £61 million and £58 million and £59 million respectively. At £897 million the science budget in 1990–91 is £189 million higher than expenditure in 1988–89—an increase of 27 per cent. over two years.

I am inviting the Advisory Board for the Research Councils (the ABRC) to provide me with its advice on the distribution of the resources which the Government are making available, and how they can best be spent to further the Government's aims for civil science in the interests of the nation as a whole.

Within the totals available I am providing an additional £8.7 million in 1990–91 to sustain scientific research programmes while meeting the construction costs of the Antarctic research and logistics vessel RRS James Clark Ross, and a further £8.5 million to meet the slippage in expenditure on that ship between 1989–90 and 1990–91. The James Clark Ross, which is due to be launched in December 1990, will play a key role in support of environmental research programmes in the Antarctic.

The Government also intend to put the British Geological Survey on a sound long-term footing through a once-for-all investment in the national geological information service. I am providing a total of £6 million over the three years 1990–91, 1991–92 and 1992–93 to stimulate the generation of outside income which can be reinvested in core surveying activity.

We have also undertaken to provide a minimum allocation of £2 million in each year for a remote sensing instrument associated with the proposed earth remote sensing satellite (ERS-2) which is planned to be launched in 1993 by the European Space Agency. I shall be seeking the ABRC's advice on what further allocation is appropriate for earth observation instruments, particularly on polar platforms.

City Technology Colleges and grant-maintained schools

The Department's plans allow for the addition of £28 million over the next three years to secure progress towards the target of 20 city technology colleges. Our plans also allow for expenditure on grant-maintained 276W schools. The great bulk of this is funded by transfer from local authority current expenditure, but the Department pays grant for transitional, capital and some other costs.

Local Authority and Voluntary Aided School Capital Expenditure

In 1990–91 annual capital guidelines for local authority capital expenditure on schools and colleges in England will total £485 million; the capital allocations total was £352 million for schools and colleges in 1989–90. Building grants to voluntary aided and grant-maintained schools will total £118 million, an increase of £30 million over the corresponding vote provision in 1989–90. This extra provision will allow continued progress on improvement programmes in the schools, including building work associated with the introduction of the national curriculum, together with additional investment in further education colleges. Local authorities will also be able to finance capital expenditure from capital receipts and other sources: the actual level of total expenditure is for local authorities to determine in the light of local policies and their assessed requirements.