IFS report shows financial shortfalls in both higher and further education

Universities face significant funding shortfalls during this academic year, with the coronavirus pandemic and staff pensions being the largest sources of financial risk, according to the Institute for Fiscal Studies (IFS).

Over the summer, universities have gained around 15,000 extra UK students, resulting in a higher government contribution to higher education. However, there are concerns that no-shows and increased drop-out rates will result in sudden financial loss for universities.

Ben Waltmann, an IFS research economist and co-author of the thinktank report, said; “by far the biggest source of risk now appears to be the large deficit on the main university pension scheme, which has increased from £3.6bn in March 2018 to a monumental £21.5bn in August 2020, according to the latest preliminary estimate.” 

 

“The government urgently needs to address the continuing uncertainty about higher and further education funding, after years of underfunding and marketisation which have been exacerbated by the coronavirus pandemic and its economic consequences.”.

 

– The University and College Union general secretary, Jo Grady

University pension scheme disputes has already resulted in prolonged and widespread strike action.

Also highlighted in the report is financial problems in further education. The IFS analysis of state-school funding published in September showed schools in England suffered their worst decline in funding since the 1980s.

The University and College Union general secretary, Jo Grady, said: “The government urgently needs to address the continuing uncertainty about higher and further education funding, after years of underfunding and marketisation which have been exacerbated by the coronavirus pandemic and its economic consequences.”

A government spokesperson said: “We understand this has been a challenging time for the education sector which is why we introduced a range of support to help colleges and universities manage their finances and safeguard students.

“We have protected grant funding for further education, worth over £3bn for a full year, and increased education and training investment this year for 16-19 year-olds by an additional £400m.

“We also brought forward over £2bn worth of tuition fee payments for universities, and announced a major package of £280m to stabilise research funding.”