IV.

Funding

Most universities and colleges are publicly owned or funded. In most of Europe and in many individual states of the United States they are state institutions. However, either by convention or constitutional guarantee, leading universities in these countries enjoy considerable autonomy. Recent reforms in Sweden and the Netherlands have given universities greater operating freedom. Elsewhere, more emphasis has been placed on enabling higher education to respond more effectively to the market. In Britain, though all universities are incorporated bodies rather than state agencies, there is only one truly private university, the University of Buckingham. Even the universities of Oxford and Cambridge, although they have extensive private endowments, depend on the state for the bulk of their budgets. The total income of English universities and colleges of higher education was £13.5 billion in 2000-2001, of which £7.5 billion was provided by the State.

All British higher education institutions are now part of a single system, funded respectively by the Higher Education Funding Council for England, the Scottish Higher Education Council, and the Funding Council for Wales. These councils are responsible to their respective departments, the Department for Innovation, Universities and Skills (formerly the Department for Education and Skills) in England, the Scottish Executive’s Department for Lifelong Learning and Higher Education, and the National Assembly of Wales. However, in a Cabinet reshuffle in June 2003, the prime minister replaced the Scottish and Welsh offices with the new Department of Constitutional Affairs, and then in 2007 this was superseded by the Ministry of Justice, although effectively these offices still function, with their officials based in the new department. Higher education in Northern Ireland is directly funded by the Department of Education for Northern Ireland. Until 1989 the traditional universities enjoyed greater autonomy with the University Grants Committee acting as a buffer between them and the government, and the former polytechnics were run by local education authorities, which were also responsible for primary, secondary, and further education. The present funding councils allocate core grants to higher education institutions, in separate streams for teaching and research. Teaching funding is allocated according to a standard formula based on the cost of offering courses in different subjects, while research funding is allocated selectively following the five-yearly Research Assessment Exercises, which rank the quality of research in university departments.

Between 1962 and 1998 tuition was free. Since 1998 students based in the United Kingdom (and other European Union countries) have had to play a flat-rate fee if they attend English or Welsh institutions. Separate arrangements apply in Scotland. Grants to cover living expenses have also been replaced by loans that graduates repay out of future earnings.

In January 2003 a White Paper was published outlining new plans for funding higher education in England. A year later the Labour government narrowly won the controversial vote in the Commons and in July the bill was passed by the House of Lords. Universities and colleges are free to charge variable fees up to an initial maximum of £3,000 a year from 2006 (those students taking a gap year in 2005 will not be liable to pay the full charges). But, in order to ensure that poorer students are not disadvantaged, institutions will have to reach access agreements with the proposed Office for Fair Access. Although higher, fees will no longer be paid up-front by students but repaid after graduation—and only when a specified income level of £15,000 has been reached. The White Paper also recommended the limited reintroduction of maintenance grants of up to £1,000 a year for poorer students.