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Office for Students asks for views on £96m savings plan


The regulator has to make large cuts to the teaching grant by March 2021

Universities are being asked for their views on how the Office for Students should cut the teaching grant to try to save £70 million in the next academic year and a total of £96m from higher education budgets.

The regulator has proposed cutting the recurring teaching grant for universities by 6 per cent in the next academic year to help make the savings, although higher-cost subjects would be shielded with only a 3 per cent reduction. The OfS could also reduce contributions to IT giant Jisc to make the savings.

It comes after education secretary Gavin Williams announced a £58 million cut to the teaching grant in the 2020-21 financial year. The OfS will receive £1.48 billion in teaching grant money in 2020-21, down from £1.49 billion in 2019-20 and £1.54 billion in 2018-19. This was despite an increase in overall funding to the Department for Education following the chancellor’s one-year funding review of Whitehall departments.

At the same time as cutting the teaching grant, an increase in student numbers for healthcare and nursing courses bring the underlying funding cut to £70 million. It means the OfS has less funding available to give to universities in this academic year and the next.

The overall reduction of £70 million is being split into £26 million of savings between April and July, and the remaining £44 million between August and March 2021. However, assuming the £70 million reduction continues for the next financial year, a further £26 million of savings would need to be made between April and July 2021—bringing the total savings needed in the 2020-21 academic year to £96 million.

“Although we do not know what funding may be available to us for financial year 2021-22, we believe it would be prudent to assume that the £70 million funding reduction will not be restored in that year. This means that savings for the full sum need to be made in academic year 2020-21,” the OfS wrote.

While the OfS is simultaneously receiving a £50 million cash boost to its capital funding, this cannot be used to plug the teaching grant. To save £26 million in this academic year, the OfS is considering withdrawing unallocated money, pushing some projects back until the next academic year and potentially reducing the 2019-20 recurrent grant allocations.

In the 2020-21 academic year, the regulator could make the rest of the savings by cutting its budget for challenge funding and holding back contributions towards Jisc, and by shrinking universities’ grants by an average of 6 per cent.

Williamson has instructed the OfS to protect specialist institutions as they rely most on the recurring grant, and higher cost subjects would be cut by only 3 per cent.

Universities have until 17 February to respond to the consultation.