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Ministers have to look at the first step on the ladder

In the first of a regular series by college principals, Peter Duncan argues for a new approach to tertiary sector funding

We may be temporarily relieved that Scotland has escaped "top-up" fees, but their potential introduction south of the border raises concerns about the resultant impact here. Debate has centred on the inevitable shortfall in Scottish universities' comparative income - up to pound;150 million a year, according to Universities Scotland.

Further education colleges also suffer from underfunding. However, public funds are always capped and topping up the cap does not address the wider issues. The Scottish Executive may be able to support initial shortfalls, but an assumption of commitment to match future increased shortfalls is both naive and limited. A more creative solution is required.

In Scotland, we have sound strengths upon which to build a funding solution, such as our rates of participation in higher education and the Scottish Credit and Qualifications Framework (SCQF). Currently, an explanation is required as to the different funding rates for both FE and universities in England and Scotland, particularly as HE is being delivered in Scotland by FE colleges, to a significant extent, through Higher National programmes.

Although direct entrance rates are about 35 per cent to universities both north and south of the border, total higher education participation in Scotland is 50 per cent - a difference which is attributable to FE. In fact, 60 per cent of people in Scotland who enter higher education do so initially in further education.

Meanwhile, universities in England consider the foundation degree as key to increasing participation rates but are unable to match the "2 + 2" model Scotland has provided for almost two decades through the Higher National system and articulation routes. This, coupled with the mobility and access enhanced through the credit framework, provides Scottish FE and HE with a sound basis for a creative funding solution which benefits all parties.

It is inevitable that a comparative analysis of unit costs for equivalent courses will be undertaken. In particular the costs of funding levels 78 within the SCQF which equate to HNCDs or years 12 at universities will be scrutinised.

Even if FE and HE courses were to be funded equally, crude overall levelling would not be feasible. To reduce all undergraduate university funding to FE levels would exacerbate an already difficult resource problem. Yet raising FE funding to university levels is limited by the public purse.

We have an opportunity to redistribute funds in a creative way within all these parameters. If unit pricing is based on SCQF levels, irrespective of the type of institution, the coherence and equity argument is addressed. If there were differential rates for each level, it would be possible to have lower rates for levels 78 and higher rates for levels 910.

A crude model illustrates my suggestion. For the basis of this argument, let us assume that the funding for each full-time student per year is pound;5,000 in university and pound;3,000 in FE. Students completing a four year honours degree course would cost the (joint) funding councils pound;20,000. If levels 78 attract pound;3,500 per student and levels 910 attract pound;6,500, the total cost is still pound;20,000. While the figures are not correct, the principle of the model is sound.

If the joint funding council moves in this direction, there would be consequent developments. Some universities would wish to retain level 78 work while others would seek to reduce it, strengthening articulation arrangements with FE colleges. Increased funding for levels 910 would allow universities the means with which to compete for the best staff.

There may be a danger that we would create a new binary divide, with universities concentrating on the upper levels of higher education. On balance, this is acceptable. With Scotland aspiring to greater social inclusion, the success of "the FE route" into university is key.

The resultant developments postulated here may take 10 years to come to fruition. But they will enhance SCQF developments, provide transparent and consistent funding and produce a coherent system, which would be the envy of the world. Both sectors should be arguing this case.

Peter Duncan is principal of Central College of Commerce, a specialist FE college which has one of the highest proportions of HE in the Scottish FE sector.

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