The UK’s Institute for Fiscal Studies (IFS) has said the Scottish Government’s “generous” provision of free university tuition and non-repayable bursaries will soon become “increasingly difficult” to preserve.
In a comment post, the IFS said Shona Robison, the Scottish Finance Minister, will deliver her 2024–25 Budget next week “in one of the most financially challenging environments the Scottish Government has faced since devolution.”
The IFS said that earlier this year, the Scottish Government’s Medium-Term Financial Strategy (MTFS) projected a gap between funding and what would be needed to maintain services of £1 billion in the coming year.
“And while better-than-expected tax revenue collections, a revised Fiscal Framework and additional funding from the UK government have boosted the funding the Scottish Government is set to receive next year, larger-than-planned increases in public sector pay and still-elevated inflation mean the funding gap next year is likely to be even larger than projected in the MTFS,” said the IFS.
“Moreover, financial pressures are only set to intensify in the second half of the 2020s and beyond.”
The IFS added: “One area where Scotland’s public service provision has long appeared more generous than that in England and Wales is higher education, with students who choose to stay in Scotland for university not required to pay any tuition fees.
“Instead, the costs of their teaching are all met by the Scottish Government, at a cost of around £900 million in 2022–23. In addition, Scotland still provides the poorest students with non-repayable bursaries of up to £2,000 per year towards their living costs, alongside loans.
“Preserving this model will be increasingly difficult given the financial pressures facing the Scottish Government as well as Scottish universities and students …”
The IFS calls itself a “non-profit and non-political” organization that “receives funding from a range of sources, including the Economic and Social Research Council, UK Government departments, foundations, the European Research Council, international organisations, companies and other non-profit organisations.”
The comment on the Scottish budget continued: “The costs of providing student loans to Scottish students – for their living costs, as well as their tuition fees if they study elsewhere in the UK – are met by the UK government, and fall outside of the Scottish Government’s main budget.
“But under the current system, it does cover the full costs of tuition for Scottish undergraduates who study in Scotland. The Scottish Government controls these tuition costs in two ways: through control of per-student funding and by restricting the number of funded places.
“The majority of funding is provided through the ‘main teaching grant’, which was worth around £5,790 per student in 2023–24. Universities also charge Scottish students a notional ‘tuition fee’, which is paid by the Scottish Government on their behalf. This has been frozen in cash terms at £1,820 per year since 2009–10.
“Together, this means Scottish universities received direct public funding of £7,610 for each Scottish student this academic year. This is around 19% less in real terms than in 2013–14, as a result of the freeze in the ‘tuition fee’ and below-inflation rises in per-student teaching grants.
“This is also around £2,020 (21%) lower than the resources available for an English university teaching an England-domiciled undergraduate in 2023–24.
” … resources for undergraduate teaching were very similar north and south of the border in 2009–10, before the increase in tuition fees charged by English universities from 2012–13 injected additional funding for English students.
“Since then, the trends – a gradual erosion of resources, with fees frozen and below-inflation increases in grants – have been very similar …”