There’s another, rather intricate, gloss to the way the Comprehensive Spending Review will affect higher education (further to the discussion of the implications of the Browne review BELOW). The logical expectation is that cuts in the teaching grant for higher education will feed through into the devolved block grants, through the Barnett formula. That’s right, but not quite in the way or to the extent one might expect. The extent to which a change in English spending triggers changes in devolved block grants is calculated at departmental level. The key document here is the Statement of Funding Policy, issued at each spending review, which serves as the operating manual for the Barnett formula arrangements. In 2007, when it was last issued, higher education was a function of the short-lived Department for Innovation, Universities and Skills. DIUS brought together vocational education and training, along with science and research and higher education, into a department resoinsible for all post-18 (as well as some post-16) education. Because science was a reserved/non-devolved matter, by no means all of that Department’s spending was treated as comparable. The comparability percentage for all three devolved governments was 79.3 per cent – so if DIUS’s overall budget were increased by £100 million, Scotland would get 79.3 per cent of its population share of that. (The 2007 edition seems to have vanished from the Treasury’s website, but can be downloaded here.)
Of course, this is ancient history, in the sense that DIUS is long gone, absorbed into the Department for Business, Innovation and Skills. The other half of that department was the former Business, Energy and Regulatory Reform department, and most of BERR’s business was reserved/non-devolved: it varied a bit, but was around 31 per cent for each devolved administration. However, the vast bulk of the spending was by DIUS – £18.2 billion, compared with £3.5 billion for BERR (figures for 2007-08, from the 2007 Statement of Funding Policy).
As part of the CSR, the Statement of Funding Policy will be rewritten, to address not just the changes in public spending but also changes in the departmental architecture of Whitehall. So key to the impact of the proposed higher education funding changes will be the departmental comparability percentages for BIS, as well as the form in which the Browne changes are introduced. Using the 2007-08 figures, spending on DIUS functions was 84 per cent of that of BIS. On that basis, one would expect the comparability proportion for the new department to be about 71.5 per cent of spending. Altering that percentage would be one way to limit the impact of the new financial settlement on the devolved governments. If’ it’s appreciably lower than that figure, it will cushion the impact of the cuts on the devolved administrations (though would also grant them a smaller share of increases if or when public spending increases). It will be interesting to see if that’s where it comes out when the new Statement is published after the spending review