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Autumn Statement and Spending Review: What will it mean for students?

Wednesday 25 November 2015 NUS News

Chancellor George Osborne today made his Autumn Statement and published the Comprehensive Spending Review. But what’s outlined within it and how will it affect students?

Each year, an Autumn Statement is delivered to update the country on the government’s plans for taxes and spending, and to update the UKs economic forecast.

This year, it has been combined with the Spending Review, which is a longer-term plan based on a review of all government department budgets. The Spending Review sets spending limits for each department for the next five years, which will mean significant budget cuts for most government departments, unless they are classed as ‘protected’ (like health, education and international aid). 

Spending Reviews only happen every three to five years (this one sets out spending for the next four years, until 2019/ 20). It will be up to each department to decide what their own budget is spent on, and therefore where the cuts will fall – but the Spending Review decides who is allocated what.

A large number of proposals have been set out, and we will continue to go through the papers in full detail and release a full analysis for what this means for students.


Headlines
 

  1. The Chancellor reaffirmed his commitment to scrap maintenance grants
     
  2. These changes have been extended so that student nurses will also see grants, formally from the National Health Service also converted into loans whilst the cap on the number of student nurses will also be removed
     
  3. The government has announced it will extend loans to postgraduate taught courses and raise the proposed age cap for these to 60 years old
     
  4. The core adult skills budget is protected in real terms and loans are to be extended for students for higher level skills in further education and the apprenticeship levy will raise £3bn a year to fund 3 million apprentices
  5. There is a real terms reduction of funding for Scotland, Wales and Northern Ireland although capital spending increases in each of the nations.

 


A summary of further and higher education-specific changes:

Further education

  • Will protect the core adult skills budget in real terms and will protect the 16-19 base funding in real terms

“We will not, as many predicted, cut core adult skills funding for FE colleges – we will instead protect it in cash terms”

However, in the CSR document itself, the Treasury announces £360m savings from the ‘supporting budgets’

  • Will extend loans for students for higher level skills in further education

“We’ll also, for the first time, provide tuition fee loans for those studying higher skills in FE – and extend loans to all postgraduates too.” 

  • Will open 500 new free schools and university technical colleges
  • Allow sixth-form colleges to become academies, so they no longer have to pay VAT
  • Five national colleges will be created specialising in digital skills, high speed rail, nuclear power, on shore oil and gas and creative industries.
  • Consult on maintenance loans for high level specialist providers


Apprenticeships

  • 3 million apprenticeships to be created by 2019/ 20– will spend twice as much on apprenticeships by 2020 than in 2010. Osborne argues that further education colleges will benefit from this funding
  • Apprenticeship levy – will be set at 0.5 per cent for large businesses. This will raise £3bn a year


Higher education

  • Reaffirmed their proposals to scrap maintenance grants for the poorest students in higher education, which will save £2bn a year
  • The student opportunities fund is set to be cut

“In this context, the government will reduce the teaching grant by £120 million in cash terms by 2019-20, but allow funding for high cost subjects to be protected in real terms. The government will work with the Director of Fair Access to ensure universities take more responsibility for widening access and social mobility, and ask the Higher Education Funding Council for England to retarget and reduce the student opportunity fund, focusing funding on institutions with the most effective outcomes. The government will also make savings in other areas of the teaching grant.” 

  • Will provide student maintenance loans for part-time HE students

“Following a sharp decline in part-time students since 2008, the government will introduce new part-time maintenance loans from 2018-19 to support the cost of living while studying. The government expects 150,000 part-time students could benefit each year by the end of the Parliament. For all STEM subjects, tuition loans will be extended to students wishing to do a second degree from 2017-18.”

  • Will introduce student loans for postgraduate taught (PGT) loans for 2016/ 17, and raising the proposed age cap for the loans to 60

We’ll also, for the first time, provide tuition fee loans for those studying higher skills in FE – and extend loans to all postgraduates too.”

“In addition, the government is continuing to pursue the sale of the pre-2012 income contingent repayment student loan book, with a first sale expected to commence in 2016-17.”

  •  Some relaxation of the restrictions on the funding of equivalent and lower qualifications (‘second degrees’) in STEM subjects is planned 
     
  •  The freeze of the student loan repayment threshold at £21,000 for the remainder of the Parliament is confirmed 
     
  •  The Student Opportunity Fund will be “retargeted” and cut by an unspecified amount. 
  • A sale of at least part of the pre-2012 student loan book is confirmed 

 

Nursing students

  • The government will be scrapping direct funding for nursing student places, and replacing this with loans for all new students. They say that this will allow the creation of 10,000 new training places by the end of this parliament

“Today there is a cap on student nurses; over half of all applicants are turned away, and it leaves hospitals relying on agencies and overseas staff. So we’ll replace direct funding with loans for new students – so we can abolish this self-defeating cap and create up to 10,000 new training places in this Parliament”

 

Departmental spending  

  • The department for Business, Innovation and Skills will have day-to-day spending cut by 17 per cent



A summary of the general spending plans:


Tax credits

  • George Osborne announced a dramatic u-turn, scrapping entirely his earlier proposals to cut tax credits  
     

Council funding

  • Local councils will by the end of this parliament receive all local business rates, and have the power to set their own rates


Scotland, Wales and Northern Ireland

  • The block grant for Scotland will have an average real-terms reduction of 1.3 per cent per year for the next four years. The Scottish grant for capital spend will increase by 14 per cent
  • The block grant for Wales will have an average real-terms reduction of 1.1 per cent per year for the next four years. The Welsh grant for capital spend will increase by 16 per cent
  • The block grant for Northern Ireland will have an average real-terms reduction of 1.3 per cent per year for the next four years. The Northern Irish grant for capital spend will increase by 12 per cent


Climate change and sustainability

  • Increasing support for climate finance will be double over the next five years
  • Introducing a cheaper energy efficiency scheme


Tampon tax

  • Now to be used to fund women’s health charities (which is worth £15m)

 

The cuts announced today add to the government’s continued assault to education and spell out bad news - both for students and the landscape of FE and HE as a whole - leaving vital questions around funding for the sector unanswered.

The burden of debt being piled onto students’ shoulders is creating a crisis – not just in education, but for the economy. This raises the significance of our #CutTheCosts Westminster Lobby even further – join us on Tuesday 8 December and demand that politicians #CutTheCosts of student debt.

NUS will be informing the public of the full impact on students and students’ unions in the coming days. In the meantime, our initial press release is available here.