Spend per student down 9% in real terms – IFS

Analysis of cuts to education spending over past decade shows erosion of tuition fees’ real value

The real value of higher education spending per student has dropped by 9% over the last decade, according to a new report from the Institute for Fiscal Studies (IFS).

The report on changes to education spending – ‘2021 annual report on education spending in England’, by Christine Farquharson, Luke Sibieta, Imran Tahir and Ben Waltmann – also looks at the effects of rumoured potential changes to higher education spending, including fee reductions and the graduate repayment threshold, concluding these would not benefit middle or lower earners.

Taken with cuts in other parts of the education sector, this real-term decline in spending will hamper the government’s ‘levelling-up’ ambitions, say the report’s authors.

The real value of tuition fees has eroded over time, the report finds. Upfront higher education spending per undergraduate student in 2020 was about 9% lower in real terms than in 2012, because fees have mostly remained unchanged since the 2012 increase to £9,000. A further challenge for universities is the expected 13% growth in student numbers between 2019 and 2025.

The cuts to education spending over the past decade are effectively without precedent in post-war history – Luke Sibieta, IFS

The IFS also refers to the absence of higher education funding from the Treasury’s Spending Review in October, adding that rumoured potential changes – such as reductions in fees to £8,500, and in the threshold at which graduates begin to repay their loans to £22,000 – would only benefit the highest earning graduates.

“The cuts to education spending over the past decade are effectively without precedent in post-war history,” said Luke Sibieta, IFS Research Fellow and one of the report’s authors.

“Extra funding in the Spending Review will reverse cuts to school spending per pupil, but will mean 15 years without any overall growth, and college spending per student will still be lower than in 2024. Recent funding changes have also worked against schools serving disadvantaged communities. This will make it that much harder to achieve ambitious goals to level up poorer areas of the country and narrow educational inequalities, which were gaping even before the pandemic.

“Fast growth in student numbers in colleges and universities will add to the challenges facing the education sector.”

Earlier this year, the IFS warned that student finance reform was now inevitable in the wake of Covid financial pressures, with graduates all but certain to encounter high levels of contributions.

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