The Government and Scottish Funding Council (SFC) are coming under increasing pressure from colleges and universities to allow them to set their budgets for more than one year.
Finance Secretary John Swinney will announce his financial settlement next Wednesday, and it will provide details of what the public sector can expect for just the one financial year, 2011-12.
That will be "incredibly problematic," according to Liam Burns, president of the National Union of Students in Scotland. The funding council fixes its grants for further and higher education on the basis of the academic year from August, rather than the financial year which starts in April.
Mr Burns told the parliamentary education committee inquiry into further and higher education last week that this "overhang" at the start and end of the year meant the SFC would not be able to tell institutions how much money to expect in full. This would introduce even further uncertainty into bursary and hardship payments for students.
Linda McTavish, convener of the principals' convention of Scotland's Colleges, said they could not wait until April to find out the full picture. "If that happens, we could not deal with students in a responsible manner, because they are applying to us from January; so we need to know what our budget is early doors," she said.
"Otherwise, it would be catastrophic for good long-term manpower planning, human resources and industrial relations."
Alarm bells on funding for FE and HE have begun to toll even more loudly since Mark Batho, the SFC chief executive, told a conference recently that universities should expect a 16 per cent spending cut over one year, rather than having a 25 per cent reduction spread over four years as they had been expecting (TESS, November 5).
SFC calculations show that, with a funding package for the universities this year of pound;1,040 million, a 16 per cent reduction would remove pound;166.4 million. The funding council's grant for colleges is pound;552.7 million and a similar size of cut would leave them with pound;88.4 million less to spend.
Ms McTavish, who is principal of Anniesland College in Glasgow, told the MSPs bluntly: "If there are cuts of 16 per cent, there will be colleges across Scotland that will fail. Given their budgets, that is too big a cut." She said efficiencies had already been explored and sharing services brought with it increased VAT bills.
Ms McTavish also pointed out that colleges held less in reserves than universities did, so that raiding them to make good the shortfall was not an option for many.
The Anniesland principal added a further warning about the "huge impact" which the current Westminster Government review of the benefits system would have on FE students, particularly the proposed changes in housing benefit and family credits.
College students were already more "debt averse" than those who end up in university, she said, citing research. "We know of people who you would think would be better going full-time, but they do not want to go full- time because they would need to take out a loan," Ms McTavish added. "Instead, they hold things together with benefits."
Mind the funding gap
The education committee was cautioned against making any assumptions about the size of the funding gap which may open up between universities north and south of the border, as a result of HE institutions in England being allowed to charge their students up to pound;9,000 in tuition fees.
Tony Axon, of the University and College Union Scotland, said the change in the fees structure in England "will take a long time to work through (and) we might not see a gap at this stage".
NUS Scotland president Liam Burns preferred to use the term "potential gap" since "it will take a number of months for the gap to become clear".
Mr Burns and Mr Axon said other ways of funding higher education could be considered, particularly involving businesses which benefited significantly from a flow of good graduates. Mr Burns suggested tax breaks to incentivise employers to support students, while Mr Axon's union is looking at increasing corporation tax so that "business contributes from the gains it gets from higher education".
The committee also heard that other countries were doing the reverse of the UK and ploughing significant sums into education, and higher education in particular, as part of their economic recovery strategies.
Alastair Sim, director of Universities Scotland, pointed to the US, which was investing pound;25 billion of its stimulus package in education, with a particular focus on colleges and universities, while another pound;11 billion was going on scholarships to allow undergraduate students to get to university.
Other examples were Canada, which was investing pound;2.5 billion over two years; France, whose overall package included pound;9 billion for education, with another pound;7 billion going to particular research institutes; and Germany, where pound;14 billion was being allocated to universities.
"It seems to us odd, when you look at the way that the rest of the world is valuing investment in universities as a motor of economic resilience and growth, that the dialogue in the United Kingdom is focused on cuts and retrenchment," Mr Sim commented.