Securing a Sustainable Funding Model

James O’Kane, Registrar and Chief Operating Officer at Queen’s University Belfast, discusses why securing a sustainable funding model for higher education in Northern Ireland must be a key priority for the new Northern Ireland Assembly. As we all deal with the challenges of change, AHUA members in England, Scotland and Wales will, hopefully, feel a little better on reading this blog.

Queen’s is going through a period of significant change. The past two years have seen the appointment of a new Vice-Chancellor and the approval of Vision 2020 – a vision “to develop a world class international university that supports outstanding students and staff, working in world class facilities, conducting leading-edge education and research, focused on the needs of society”. In delivering on the ambition underpinning this new Vision, one critical component remains outside our control – a sustainable funding model for higher education in Northern Ireland.

Our current funding model is broken and, in its current form, places the region at a significant economic disadvantage. Both the Scottish Parliament and the Welsh Assembly have maintained strong levels of public investment in higher education, recognising this as an investment in their economic and social future and not just an expenditure line. English universities can charge tuition fees of up to £9,000 and the evidence suggests that this has not deterred school leavers from accessing higher education.

The Northern Ireland Executive has adopted a different approach to higher education funding, with reducing levels of public investment, and tuition fees increasing only by inflation since the introduction of £3,000 fees in 2006-07. Fees for 2015-16 are £3,805. As a consequence, the teaching allocation for each undergraduate student in Northern Ireland is considerably lower than for all other regions of the UK.

The Northern Ireland Executive Programme for Government (PfG) 2011-2015 “Building a Better Future” prioritised economic development and job creation as its core policy. The PfG aspired to “up skill the working age population by delivering over 200,000 qualifications” and “increase uptake in economically relevant Science, Technology, Engineering and Mathematics (STEM) places.” The only firm objective relating to higher education in the PfG was, however, a commitment by the Executive not to increase student fees for Northern Irish students studying at home.

In the period 2009-10 to 2014-15, the funding provided to universities, by the Northern Ireland Executive, reduced from £214m to £185m – some 13% in cash terms and 24% in real terms. In addition, for the 2015-16 academic year, the higher education budget was cut by a further 8.6% (£16.1m). Within the regions of the UK, Northern Ireland has the lowest expenditure as a percentage of GDP on tertiary education, at 0.8% – this compares to 1.2% for the UK as a whole. International comparators include the United States at 2.7%; Belgium at 1.4%; Sweden at 1.7%; Canada at 2.8%; Slovenia at 1.3%; and Mexico at 1.3%.

In addressing the impact of the 2015-16 budget cut, Queen’s will reduce its undergraduate intake by over 1,000 places by 2018-19 – this involves a reduction of 290 places in 2015-16. Ulster University will be implementing similar reductions over the same period.

Regrettably, Northern Ireland is the only region of the United Kingdom that is a net exporter of school leavers, with some 35% of school leavers accessing higher education in other parts of the UK. The evidence shows that about two-thirds of those who leave do not subsequently return to seek employment here. While some of these students can be identified as ‘determined’ to leave, by pursuing their first choice destination of study, there is already evidence that the number of ‘reluctant’ leavers has increased in 2015-16 as the number of places, available locally, has reduced.

Recent figures from the Higher Education Statistics Agency (HESA) illustrate that school leavers from the most deprived areas of Northern Ireland have not been deterred from accessing higher education in English institutions, despite an increase in tuition fee levels. In fact, in 2014-15, 27% more Northern Irish domiciled school leavers, from the most deprived areas, accessed higher education in English institutions than in 2010-11, when fee levels were capped at £3,000.

In December 2015, the political parties in The Executive concluded a series of talks with the new “Fresh Start” agreement [PDF], which made a determination that the rate of Corporation Tax in Northern Ireland would be reduced to 12.5% from April 2018. This important economic strategy urgently reinforces the need for a sustainable funding model for higher education and skills in Northern Ireland, to increase the capacity and skills base of the local workforce.

The most recent skills forecasting exercise, carried out by Ulster University, considered the additional skills demands accruing from a lower corporation tax environment within Northern Ireland. The findings reveal significant annual shortages in higher level skills from level four upwards. The shortages at level six (undergraduate degree equivalent) and above, are most acute in subject areas like Mathematics and Computer Science, Engineering and Technology, and Physical and Environmental Sciences. It is, therefore, clear that our economic growth will be dependent on an increased supply of higher level skills as we move into a lower corporation tax environment.

All political parties in Northern Ireland recognise that there is an urgent requirement to increase our skills base and the capacity of our workforce, to ensure that we have the right formula in place to attract foreign direct investment and grow indigenous companies. Creating a dynamic knowledge-based economy must be a priority within the emerging PfG. Securing a sustainable funding model for higher education will be essential in this regard and, not surprisingly, this is a current priority of the Senior Management Team, here at Queen’s, as the new Executive, appointed on 25 May 2016, takes up office.