§ Mr. Anthony CoombsTo ask the Secretary of State for Education if he will make a statement about his Department's expenditure plans for the financial years 1994–95 to 1996–97.
§ Mr. PattenAs my right hon. and learned Friend the Chancellor of the Exchequer announced in his statement today, the Department for Education and OFSTED's spending programme in 1994–95 will total £10,487 million. That total is £670 million or 6.8 per cent. higher than equivalent expenditure in 1993–94.
Total expenditure in 1995–96 is planned to be £11,059 million and in 1996–97 £11,392 million.
Within these totals the Government have given priority to improving standards in schools through the self-governing—grant-maintained—schools programme. The planned growth in further education student numbers announced last year, to take the 16 to 18-year-old participation rate to record levels, will be sustained. Participation by young people in higher education will be stabilised at its present record level while higher education capital spending will be enhanced to meet the needs created by the recent rapid expansion in HE student numbers. In one of the most stringent public expenditure surveys for many years, the Government are reinforcing their commitment to education with 4.9 per cent. real terms growth in their expenditure on education over the next three years.
Self-governing schools
More than 1,000 schools have voted yes to self-governing status in ballots. The Government's expenditure plans provide for continuing growth in the sector in line with the forecast in the White Paper "Choice and Diversity" (Cm 2021) that, by 1996, most maintained secondary schools, as well as a significant proportion of maintained primary schools, would be self-governing.
The great bulk of recurrent funding for self-governing schools is found within the totals for local authority expenditure. Central Government will increase their recurrent and capital grants to self-governing schools substantially over the next three years as their numbers grow. Central Government expenditure on self-governing schools is planned to total £157 million in 1993–94 and £244 million, £446 million and £595 million in 1994–95, 1995–96 and 1996–97. The plans also allow for the Funding Agency for Schools, which will be established from 1 April 1994.
Capital Expenditure on Schools
Total central Government provision for capital expenditure on self-governing, voluntary-aided and LEA-maintained schools is £600 million, £606 million and £643 million in 1995–95, 1994–96 and 1996–97. Further 484W details of annual capital guidelines and allocations to voluntary-aided and self-governing schools will be announced later.
Further Education
Total recurrent spending is planned to rise from £2.549 million in 1993–94 to £2,679 million, £2,872 million and £2,920 million in 1994–95, 1995–96 and 1996–97.
Last year I announced that the Government were giving a high priority to the launch of the new sector of further education. We set ourselves to increase the number of students in FE by 25 per cent. between 1992–93 and 1995–96, taking the United Kingdom to the top of the international league for participation in education among 16 to 18-year-olds, and representing a substantial step towards the achievement of the national targets for education and training. We are on target to meet that projection.
In a demanding public spending round the Government must look to the further education sector for some increase in efficiency in this period of dramatic growth. The plans announced today allow for the forecast increase in student numbers up to 1995–96 to be met in full, with an additional increase of 3 per cent. between 1995–96 and 1996–97 to maintain the 16 to 18-year-old participation rate.
Capital expenditure is planned to be £157 million, £159 million and £159 million in 1994–95, 1995–96 and 1996–97. This will enable the Further Education Funding Council to continue to improve the state of accomodation and the stock of equipment.
The Chancellor of the Exchequer's statement of 14 September 1993 set out the Government's approach to public sector pay in the year now beginning. I shall set as a condition of my grant to the FEFC that it requires the institutions it funds to take account of the principles set out in the Chancellor's statement, and in particular of the need to cover higher pay costs from within efficiency improvements, in 1994–95. I shall in addition hold back £50 million of grant from the FEFC, to be released when there has been satisfactory progress within colleges towards more flexible contracts of employment.
Higher Education
Student Numbers
The number of students in higher education has grown even faster than expected in the Government's spending plans last year. The proportion of young people entering higher education is now around 30 per cent.—close to the projection of one in three for the year 2000 set out in the Government's Higher Education White Paper in May 1991.
This represents a remarkable achievement. But there is a limit to the burden of funding for higher education which the taxpayer can bear. The student numbers underlying the Government's spending plans announced today accordingly assume that the proportion of young people entering higher education will remain at the current record level for the next three years before rising to one in three by the end of the decade.
Because of demographic trends, this means reductions of nearly 3.5 per cent. in the number of new entrants to higher education next year, with a smaller reduction the year after, followed by increases from 1996–97 onwards. If trends in A-levels and equivalent qualifications are maintained, there is likely to be a further small tightening in standards of entry to higher education.
485WIn order to allow for the rising number of entrants enrolled in recent years, the expenditure plans provide for total full-time equivalent student numbers in higher education in England to rise by 90,000 or 10 per cent. between 1993–94 and 1996–97.
The rapid growth in student numbers has imposed a large extra burden on the taxpayer. The Government believe that a fairer distribution of this burden is needed between the taxpayer and those who benefit from higher education. They have therefore carried out a review of the funding of higher education, as have the university vice-chancellors. The expenditure plans announced today reflect the outcome of that review. There will be changes in funding to remove the incentive to expand and in student support, as described below.
Tuition Fees
The Government will continue to reimburse the tuition fees charged to students up to the maxima specified through the mandatory awards system. In order to stay within the expenditure plans, it is essential that student numbers are now maintained at the planned level. To that end, the maximum tuition fees reimbursed through the mandatory awards system in 1994–95 will be reduced by 45 per cent. for each fee band. The new maxima for each band are as follows:
£ Classroom-based courses 750 Laboratory and workshop-based courses 1,600 Clinical courses 2,800 In addition, I have stressed to the Higher Education Funding Council for England the importance of delivering through its funding methodology for universities and colleges the planned numbers of students.
The reduction in tuition fees will have no effect on the planned level of funding per student in higher education. Some £474 million will be transferred in 1994–95 from mandatory awards to Funding Council grant to compensate for the lower yield from tuition fees. If universities and colleges recruit the numbers of students assumed in the Government's plans, they will suffer no loss of income as a result of the reduction in fees.
Funding Council Grant
Recurrent grant for the HEFCE—including compensation for the reduction in tuition fees—is planned at £3,096 million, £3,350 million and £3,342 million in 1994–95, 1995–96 and 1996–97 respectively. The increase next year in the recurrent funds available to universities and colleges, including both grant and tuition fees, will be 6.7 per cent.
Capital grant will be £322 million, £381 million and £424 million in 1994–95, 1995–96 and 1996–97 respectively. This is a rise in real terms of 20 per cent. between 1993–94 and 1996–97. This substantial increase reflects the need for capital investment to help with the growth of student numbers in recent years and later in the decade, together with the reorganisation of medical education and research in London following the Tomlinson report.
As with the FEFC, I shall set as a condition of my grant to the HEFCE that it requires the institutions it funds to take account of the principles set out in the Chancellor's 486W statement of 14 September, and in particular of the need to cover higher pay costs from within efficiency improvements.
Student Support
For 1994–95, the Government will continue to maintain the real value of the funds offered to students through the main rates of grant and loan and supplementary grants, which together will increase by 4 per cent. in cash. Reductions in the main rates of grant of 10 per cent. against their 1993–94 levels will be offset by increases in loan entitlements. Similar adjustments will be made over the next two years; on present estimates they will bring the grant and loan into broad balance in 1996–97. This shift from grant to loan represents an acceleration of the Government's existing plans.
The contribution of parents whose income rises at the same rate as average income will continue to fall in real terms. Loan rates for final year students will increase in proportion to the full year rates of loan. As now, students will not have to begin to repay their loans until they leave their courses and their incomes are higher than 85 per cent of national average earnings: that is nearly £14,000 in 1993 prices. The Government will keep the level of loan repayments under review.
Following a review of the access funds which help students who might otherwise have difficulty in completing their courses, we have increased the funds to £27 million in each year.