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How much is just enough?

One feature of the top-up fees debate is the apparent consensus that universities need pound;9 billion. The figure has been quoted regularly on TV, radio and in the press.

This consensus means that argument has been less about whether the money is needed as how to pay for it. Should it be government, graduates or high-earning taxpayers? pound;9bn is one of those large numbers that makes eyes glaze over, but it is a lot in anyone's currency.

You could buy the Learning and Skills Council with it and have cash to spare to buy all the tea in England. All 135 million cups a day. pound;9bn is also the total income that universities currently get from funding councils and research grants. If universities have a pound;9bn shortfall, then current funding levels are out by 100 per cent.

The source of the pound;9bn figure is the Universities UK spending review submission from 2002. This made the case for the last spending review by adding up the needs across the university sector.

Two years before that, Universities UK commissioned a report from Sir William Taylor on funding options. This said that universities needed pound;900 million from 2003-4 to maintain and improve teaching, and set out four ways in which the money could be raised.

It is a big step up from pound;900m to pound;9bn. The difference is in the detail. The Taylor review in 2000 concerned itself only with teaching.

The spending bid two years later covered teaching, research and the entire financial position of universities.

The bid added the pound;1.2bn needed to fund inflation over a three-year period to the pound;500m costed for expansion and the pound;1.2bn sought for staff. This brought the total to just under pound;3bn, which is a lot of money but not quite nine.

The really big numbers came next in the form of a bid to invest in infrastructure. The universities asked for pound;5.5bn to develop their buildings, IT and libraries to world-class standards.

The bid is costed on the basis of insurance values. Work out how much it would take to replace every building and piece of equipment and then set a 20-year timetable for a programme to do it. That would cost pound;5.5bn; needless to say, it would be an ambitious task. Rome wasn't built in a day.

Rebuilding Oxford, Cambridge and 100 other universities might take more than 20 years.

Taking capital out of the equation, a good share of the university funding needs for teaching set out in the Universities UK 2002 bid have been addressed in the HE bill, albeit with a delay to 2006.

Universities UK will, no doubt, calculate the difference in the current spending review round, as will every other publicly-funded organisation.

The Association of Colleges did so last month in a bid that costs the spending need in colleges at pound;1.9bn.

The bid puts a pound;760m price on improving opportunities and choices for young people at a time when the population is growing and staying-on rates are due to increase. The same amount is needed (pound;760m) to equip colleges to deliver government policy.

The money is needed for staff pay, training and buildings. And pound;442m on top of current budgets is the modest price of improving skills for adults.

The spending review is the Government's forward budget for the period to 2008. It is the point where choices get made between health, defence and education and schools, colleges and universities.

The budgets are large and difficult to comprehend but there are practical choices. Should the Department for Education and Skills prioritise early years to benefit 1 million parents ?

Should it spend on universities to benefit a million full-time students? Or should 14-19 education and training come first to benefit 2 million young people? The Government makes the choice in the spending review and will justify itself in the election. This should make for an interesting year.

The 2004 spending review concerns medium-term financial issues, but some more immediate ones will present themselves this September. Nationally, the Government has anticipated growth in 16-19 numbers in education as a result of education maintenance allowances, population growth and other changes.

The work put in by colleges to recruit school leavers does pay off.

National funding growth should translate into budgets at a local level for 2004-5. But there is a long financial chain from the Treasury to the college.

The new systems introduced by the LSC to plan funding and student numbers are an attempt to address this, but how easy is it to plan the choices of 16-year-olds? If the predicted growth in numbers happens in an unplanned way, this could put a lot of pressure on college budgets.

University budgets may have caught the attention of MPs, ministers and the media. The real financial pressures in post-16 education are, as ever, in colleges.

Julian Gravatt is director of funding and development at the Association of Colleges

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