Archive for the Finance Category

STFC Consolidated Grants Review

Posted in Finance, Science Politics with tags , , , , , , , , on October 28, 2014 by telescoper

It’s been quite a while since I last put my community service hat on while writing a blog post, but here’s an opportunity. Last week the Science and Technology Facilities Council (STFC) published a Review of the Implementation of Consolidated Grants, which can be found in its entirety here (PDF). I encourage all concerned to read it.

Once upon a time I served on the Astronomy Grants Panel whose job it was to make recommendations on funding for Astronomy through the Consolidated Grant Scheme, though this review covers the implementation across the entire STFC remit, including Nuclear Physics, Particle Physics (Theory), Particle Physics (Experiment) and Astronomy (which includes solar-terrestrial physics and space science). It’s quite interesting to see differences in how the scheme has been implemented across these various disciplines, but I’ll just include here a couple of comments on the Astronomy side of things.

First, here is a table showing the number of academic staff for whom support was requested over the three years for which the consolidated grant system has been in existence (2011, 2012 and 2013 for rounds 1, 2 and 3 respectively).  You can see that the overall success rate was slightly better in round 3, possibly due to applicants learning more about the process over the cycle, but otherwise the outcomes seem reasonably consistent:

STFC_Con1

The last three rows of this table  on the other hand show quite clearly the impact of the “flat cash” settlement for STFC science funding on Postdoctoral Research Assistant (PDRA) support:
STFC_Con

Constant cash means ongoing cuts in real terms; there were 11.6% fewer Astronomy PDRAs supported in 2013 than in 2011. Job prospects for the next generation of astronomers continue to dwindle…

Any other comments, either on these tables or on the report as a whole, are welcome through the comments box.

 

Higher Education Funding: A Modest Proposal

Posted in Education, Finance, Politics with tags , , , , , on August 8, 2014 by telescoper

With next year’s general election already looming there are signs that the higher education funding system is likely to be a hot topic. The Conservatives, for example, are reportedly considering removing the cap on tuition fees (currently set at £9K per annum) while Labour is talking about reducing the figure to £6K. Labour’s idea is likely to prove popular among potential students, it will result in a reduction of fee income to English universities of a third, potentially leading to wholesale redundancies and closures unless it is offset by an increased contribution from the taxpayer to offset this cut. Responsibility for higher education funding in Wales, Scotland and Northern Ireland is devolved, so Westminster policy does not apply directly there although the knock-on effect of changes in England would be considerable given the number of students who choose to study away from home.

The backdrop to these suggested policy changes is the obvious fact that the current system is unsustainable. Although there has not been a marked reduction in numbers of students applying to university since the introduction of tuition fees, it has become increasingly clear that the system of loans and deferred fees is actually costing the Exchequer more in terms of short-term borrowing than the old system. Moreover, there is a growing realization that the fraction of this cost that will actually be recouped in future is going to be much smaller than its advocates would like to admit. Recent estimates, likely to be revised upwards, suggest that 45% of student loans will never be repaid.

On top of this there is the problem that the so-called “elite” universities have not succeeded in “widening participation” (as the phrase goes). Oxford and Cambridge both continue to take about 40% of their pupils from private schools; many other institutions. My own institution, the University of Sussex, takes about 86% of its intake from state schools, which is about the average across the sector.

Although only a small fraction of pupils (about 7%) attend (private) independent schools, about 65% of those go on to University; only 24% from the state sector do. In my opinion, not all universities take widening participation seriously but even if they do (like we do at Sussex) it is difficult for higher education institutions to repair the divisions that arise much earlier in the education system.

The average fee per term for a day pupil at a private school in the UK is about £3400; this rises to about £7800 per term for boarding schools. Since there are three school terms per year this means that the average cost per year for day pupils is £10,200, well above the £9000 per year maximum fee for university tuition. That says a lot for how poorly funded UK universities really are, even with increased tuition fees, especially in STEM subjects which require expensive laboratories and other facilities. Moreover, private school fees are payable upfront while tuition fees for students in higher education are funded by heavily subsidized loans which do not need to be repaid until the student is earning more than a certain minimum salary (currently £21K pa).

When funding is tight it is particularly important that it should be targetted where it is needed most. For me that means to encourage more students from state schools to go to university. The principle I’d adopt here (and indeed in many other contexts) is encapsulated in the phrase “to each according to their need, from each according to their ability”.

Parents who have decided to send their offspring to private schools have, in my view, already demonstrated that they can afford to contribute to their education at a level considerably higher than the current tuition fee for university students. In such cases there is no need for a means test to determine whether they need support from the taxpayer; they have already done that calculation for themselves.

My proposal, therefore, is that students whose parents have decided to take their children out of the state school system should be deemed to be ineligible for state support for higher education. They should therefore pay the full fees upfront. I think there’s a case even for making such students pay for the full cost of their education which is not the £9K fee payable by Home/EU but the much higher fee charged to students from outside the EU, which is currently £17K at the University of Sussex. The money saved in this way should be used to provide better fee waivers and and maintenance grants for students from the state school system (on a means-tested basis). This could be accomplished by, e.g., a system of vouchers available to students from state schools in England; the rest of the UK could adopt a similar system if they wish. This would also be a step towards reducing the incentive for families to increase social divisions by taking their children out of the state system.

As well as driving greater equality and stimulating social mobility, my suggestion would also correct a number of anomalies in the existing system. One is that students attending English universities who went to Schools elsewhere in Europe (including Wales, Scotland and Northern Ireland) are entitled to the same financial support as English students. However, most students from outside the UK will return home after graduation and there is no effective means of making them pay back their fees and loans because these are currently recovered through the UK tax system. In effect, therefore, the taxpayer is providing free higher education for these students and it is one of the reason why the default rate on student loans is likely to be very high. In my proposal this loophole would be sealed; unless a student went to an English state school they would not have the means to access HEFCE support.

I have heard it said that this idea would remove choice. I don’t agree. Parents will still have the choice of sending their sons and daughters to private school if they wish. What it will do is remove part of the incentive for them to do that.

Across the UK over 80% of university students are from state schools, so the measure I suggest will not on its own solve the University funding crisis. On the other hand, I think it would at least be fairer than the current system. On the other hand, I’m not sure fairness counts for very much these days…

Changing the framework for industrial policy

Posted in Finance, Science Politics with tags , , , on June 11, 2014 by telescoper

Here’s another one of the showcases of research from Sussex University. This one features Professor Mariana Mazzucato who debunks the myth of the state as a bureaucratic nanny that stifles creativity in industry, and instead recognizes the vital role of state-led investment in driving innovation and shaping and creating new markets from the internet to biotech to clean tech.

For what it’s worth this gives me an excuse to a view that I’ve expressed before that “commercially useful” research should not be funded by the taxpayer through research grants. If it’s going to pay off in the short term it should be funded by private investors or venture capitalists of some sort. Dragon’s Den, even. When the public purse is so heavily constrained, it should only be asked to fund those things that can’t in practice be funded any other way. That means long-term, speculative, curiosity driven research. You know, things like science…

This is pretty much the opposite of what the Treasury thinks. It wants to concentrate public funds in projects that can demonstrate immediate commercial potential. Taxpayer’s money used in this way ends up in the pockets of entrepreneurs if the research succeeds and, if it doesn’t, the grant will have been wasted if the research does not have any long-term fundamental significance. My proposal, therefore, is to phase out research grants for groups that want to concentrate on commercially motivated research and replace them with research loans. If the claims they make to secure the advance are justified they should have no problem repaying it from the profits they make from patent income or other forms of exploitation. If not, then they will have to pay back the loan from their own funds (as well as being exposed as bullshit merchants). In the current economic situation the loans could be made at very low interest rates and still save a huge amount of the current research budget for higher education. Indeed after a few years – suggest the loans should be repayable in 3-5 years, it would be self-financing. I think a large fraction of research in the Applied Sciences and Engineering should be funded in this way.

The money saved by replacing grants to commercially driven research groups with loans could be re-invested in those areas where public investment is really needed, such as pure science and medicine. Here grants are needed because the motivation for the research is different. Much of it does, in fact, lead to commercial spin-offs, but that is accidental and likely to appear only in the very long term. The real motivation of doing this kind of research is to enrich the knowledge base of the UK and the world in general. In other words, it’s for the public good. Remember that?

If it’s fair to ask students to contribute to their teaching, it’s fair to ask commercial companies to pay for the research that they exploit. Just as student grants should be re-introduced for certain disciplines, so should research loans be introduced for others. You know it makes sense.

However, if you want to tell me why it doesn’t, via the comments box, please feel free!

Your Chance to Influence UK Government Investment in Science

Posted in Education, Finance, Politics, Science Politics with tags , , , , on May 4, 2014 by telescoper

A recent piece of bloggery by esteemed Professor Jon Butterworth 0f the Grauniad reminded me that an important government consultation has just opened. In fact it opened on 25th April, but I neglected to post about it then as I was on my Easter break. I’m now passing it on to you via this blog, by way of a sort of community service.

Anyway, the consultation, which is being adminstered through the Department of Business Innovation and Skills, can be found here; there’s a large (110 page) document as well as information on how to respond. Basically about £5.8 billion in capital expenditure has been set aside for science research, and the government is asking how it should be divvied up. Such funds could be used to build big ticket items such as new telescopes, particle accelerators, lasers or other infrastructure including new laboratory buildings. It has to be capital, though, which means it can’t be used on staffing for such facilities that are funded. You might argue that this is a weakness (because ultimately science is done by people not by facilities) but, on the other hand if the government stumps up additional money for capital that might free up funds for more people to be employed.

Anyway, do read the consultation document and submit your responses. You could do a lot worse than reading Jon Butterworth’s commentary on it too. The deadline is some way off, July 4th to be exact, but this is very important so you should all get your thinking caps on right away.

One thing I’ll be including in my response concerns funding for university laboratories. The funding body responsible for English universities, the Higher Education Funding Council for England (HEFCE), is currently underfunding STEM subjects across the country. I’ve blogged about this before so I won’t repeat the argument in detail, but severe reductions in the unit of resource applied to laboratory-based subjects have meant that the new tuition fee regime does not provide anything like sufficient income to cover the costs of, say, physics undergraduate teaching. All students pay a flat-rate fee of £9K across all disciplines (including arts, humanities and science subjects) but science subjects only get £1.4K per student on top of this. The withdrawal of capital allowances has also made it very difficult for universities to invest in teaching laboratory space.

The cost of educating a physics student is actually about twice that of educating a student of, say, English, so this differential acts as a deterrent for universities to expand  STEM disciplines. Shortage of teaching laboratory space is a major factor limiting the intake of students in these areas, whereas other disciplines are able to grow without restriction.

So my vote will go for a sizeable chunk of the £5.8 billion capital  to be allocated to improving, refurbishing, expanding and building new teaching laboratories across all STEM disciplines to train the next generation of scientists and engineers that will be vital to sustain the UK’s economic recovery.

I’d be interested in people’s views about other aspects of the consultation (e.g. what big new facilities should be prioritized). Please therefore feel free to use the comment box, but not as a substitute for participating in the actual consultation.

Over to you!

 

A Note to the Physics REF Panel

Posted in Education, Finance, Science Politics with tags , , , on April 23, 2014 by telescoper

I’ve just been skimming through an interesting report about the strength of UK physics research. One of the conclusions of said document is that UK physics research is the best in the world in terms of quality.

I couldn’t resist a brief post to point this out to any members of the Physics panel involved in the 2014 Research Excellence Framework. My motivation for doing this is that the Physics panel of the 2008 Research Assessment Exercise evidently came to the conclusion that UK physics research wasn’t very good at all, awarding a very much lower fraction of 4* (world-leading) grades than many other disciplines, including chemistry. I’ve never understood why the Panel arrived at such a low opinion of its own discipline, but there you go..

Physics departments across the country have fought very hard to recover from the financial and reputational damage inflicted by the 2008 RAE panel’s judgement. Let’s just hope there isn’t another unwarranted slap in the face in store when the 2014 results are announced later this year…

 

UPDATE: I’m grateful to Paul Crowther for pointing out a surprising fact based on a talk given by the Chairman of the Physics RAE Panel in 2008, Sir John Pendry. Here are the slides in full, but the pertinent fact is the distribution of 4*, 3* and 2* grades across disciplines shown in this table:

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You can see that they are in fact broadly, similar across disciplines. However, what is clear is that the highest scoring departments in Chemistry did much better than the highest-scoring in Physics; for example top of the table for Physics was Lancaster with 25% of its outputs graded 4* while top in Chemistry was Cambridge with 40%. Is it really justifiable that the top physics departments were so much worse than the top chemistry departments? Suspicion remains that the Physics scores were downgraded systematically to produce the uncannily similar profiles shown in the table. Since all the RAE documents have been shredded, we’ll never know whether that happened or not…

Tuition Fees, Ponzi Schemes and University Funding

Posted in Education, Finance, Politics with tags , , on March 30, 2014 by telescoper

Last week the Higher Education Funding Council for England (HEFCE) finally released information on allocations for 2014/15. As expected, there are large cuts in recurrent grants pretty much across the board (a full table can be found here).  These cuts reflect the fact that government funding for teaching in many subjects is being progressively replaced by tuition fee income in most disciplines, the prominent exception being STEM subjects, which continue to attract a (small) element of grant support in addition to the £9K fees.  Grants for research are largely unchanged for the time being; the big upheaval there will happen when the outcome of the Research Excellence Framework is applied, from 2015/16 onwards.

If you look at the table you will see that some big research universities have relatively small cuts, especially if they focus on STEM disciplines; the obviously example is Imperial College which has a cut of only 3%. Typical Russell Group universities seem to be getting cuts of around 15%. My own institution, the University of Sussex, has been handed a cut of 24%, which reflects the fact that a large majority (greater than 75%) of students here are doing non-science subjects. Universities with less research income and a higher concentration on Arts & Humanities subjects are having to bear cuts of up to 60%.  These reductions are larger than anticipated as a result of the government’s decision to increase the total number of places by about 30,000 this year.

These numbers look alarming, but in most cases, including Sussex, the net income (FEES+GRANT) will actually go up next year, as long as the institution manages to recruit a sufficient number of students. The ability of a university to generate sufficient income to cover its costs has always depended on its ability to attract students, but this has previously been managed using a student number control, effectively applying a cap on recruitment to institutions that might otherwise corner the market.   This year some institutions who failed to recruit strongly have had their cap lowered, but worse is in store from 2015/16 as the cap will be lifted entirely, so that there will effectively be a free market in student recruitment. I sure I’m not the only person who thinks the likely outcome of this change will be a period of chaos during which a relatively small number of institutions will experience a bonanza while many others will struggle to survive.

As if this weren’t bad enough, there is also the growing consensus that the current fee regime is unsustainable. Revised estimates now suggest that about 45% of graduates will never pay back their tuition fees anyway. If this percentage grows to about 50% – and I am very confident that it will – then the new tuition fee system will end up costing the Treasury (i.e. the taxpayer) even more than the old regime, while also saddling generations of graduates with huge debts and also effectively removing the sector from public control.

Apparently, the response of the government to the level of default on repayments is to consider increasing fees to a level even higher than the current £9K per annum. It seems to me that the likely consequence of this would simply be to increase the default rate still further, largely by driving UK graduates abroad to avoid liability for paying back their loans, and thus drive the system into runaway instability.

The more one looks at the fees and loans debacle the more it resembles  a Ponzi scheme that’s destined to unravel with potentially catastrophic consequences for England’s universities; note that Wales, Northern Ireland and Scotland are not covered by HEFCE arrangements.

So what can be done?

I’ll assume at the outset that the only really sensible plan – taking the entire system back under public control – is, by the very nature of the British political system, unthinkable.

My first suggestion reflects the fact that I am a scientist and that I think  science education and research properly should be a very high priority for any system of university funding. Whatever is done therefore must address the point I made a post about the threat to STEM subjects presented by HEFCE’s policies the essence of which is that the £9K flat-rate fee across all disciplines does not reflect the true difference in cost of teaching between, say, English and Physics. Differential fees would have a disastrous effect on recruitment into science subjects while the current system underfunds STEM disciplines so severely that it offers a perverse incentive for universities to focus on non-science areas. Under the current system, fees from Arts disciplines are effectively subsidizing science subjects rather than providing education to those paying the fees; in other words, Arts students are being ripped off.

Second, if the taxpayer is going to foot a significant part of the bill for higher education then HEFCE (or whatever organization replaces it in future) must have sufficient clout to manage the sector for the public interest, rather than allow it to be pulled apart by the unfettered application of market forces.

Third, any new system must be designed to reduce the level of graduate debt which, as I’ve mentioned already, simply encourages our brightest graduates to emigrate once they’ve obtained their degree.

I’ve actually never really been opposed to the principle that students who can afford to should contribute at some level to the cost of their education; I have, on the other hand, always been opposed to fees being set at the level of £9K per year. The Labour Party’s suggestion that fees should be cut to £6K would go some of the way to satisfying the third requirement, but would be disastrous unless the cut were offset by increased state funding through recurrent grants. I think a better suggestion would be to cut fees by a greater amount than that if possible, but to have a much bigger differentiation in the unit of resource paid to different subjects. I’d say that the net income per student should be about £15K per annum in STEM subjects, whereas for Arts and Social Sciences £6K probably covers the full cost of tuition.  So if the fee is set at £X across the board, STEM disciplines should receive £(15-X) from HEFCE while Arts subjects get a subsidy of £(6-X).

 

 

 

 

 

Quantum Technology – a Sussex Strength

Posted in Finance, Politics, Science Politics, The Universe and Stuff with tags , , on December 9, 2013 by telescoper

Amid all the doom and gloom in the Chancellor’s Autumn Statement delivered last week there’s a ray of sunshine for research in Physics in the form of an injection of around £270 million in Quantum Technology. According to the Financial Times,

The money will support a national network of five research centres, covering quantum computing, secure communications, sensors, measurement and simulation.

Details of the scheme are yet to be released, but it seems the network will consist of “regional centres” although how evenly it will be spread across the regions remains to be seen. How many will be in the Midlands, for example?

We’re very happy here with this announcement here in the School of Physics & Astronomy at the University of Sussex as we have a well-established and expanding major research activity in Quantum Technology and an MSc Course called Frontiers of Quantum Technology. Moreover, as members of the South East Physics Network (SEPNet) we seem to be in a good position to be for funds as a truly regional centre. Assuming, that is, that the scheme hasn’t already been divvied up behind closed doors before it was even announced!

The investment announced by the government mirrors a growing realization of the potential for economic exploitation of, e.g., quantum computing which is bound to lead to a new range of career opportunities for budding physics graduates.

I’d welcome any comments from people who know any more information about the details of the new investment, as I’m too lazy to search for it myself…

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