Scottish Government Budget 2021-22

The Scottish Budget 2021-22, described as “the most important of our lifetimes” by industry leaders in Scotland, was delivered by Kate Forbes Cabinet Secretary for Finance, almost one year on from the first case of Covid-19 being notified in Scotland. It comes at a crucial time for Scottish higher education, following warnings that a large number of institutions are facing significant deficits, and large losses due to the impact of the pandemic and Brexit.

The full Budget document can be found at:https://www.gov.scot/binaries/content/documents/govscot/publications/corporate-report/2021/01/scottish-budget-2021-22/documents/scottish-budget-2021-22/scottish-budget-2021-22/govscot%3Adocument/scottish-budget-2021-22.pdf?forceDownload=true

At-a-glance:

• Tertiary education will play a “central role” in Scotland’s recovery from the pandemic and help support and grow the economy (p35)
• In 2021‑22, the Scottish Government will provide over £1.9 billion to the Scottish Funding Council to fund the university and college sector: £1.1 billion for universities and £700 billion for colleges (p36)
• The Budget maintains the Scottish government’s commitment to free education and the “lowest student debt levels in the UK” (p35)
• The Budget provides an enhanced care experienced bursary in both further and higher education and delivers “the most generous bursary support in the UK for college students”  (p35)
• In recognition of the added pressures on students during the pandemic,  £1.32 million of additional funding has been provided to support student welfare, building on £3.6 million to provide more counsellors in colleges and universities in Scotland (p29)
• The Budget document reiterates the widening access target of at least 20 per cent of university entrants coming from Scotland’s 20 per cent most deprived communities by 2030 (p35)
• More than £60 million of additional resource and capital funding will be invested in universities “to help secure world-class research and cutting edge innovation” (p92)
• Maintaining links with Europe following the UK’s exit from the EU is essential. Scottish learning and research internationally will be promoted through a Global Alumni Network and expansion of the Saltire Scholarship Programme (p93)
• The government will provide support for university research to allow HEIs to secure substantial additional funding from other research funders and strengthen international collaboration opportunities – including Covid research projects (p93)
• Funding to colleges will ensure they are a key delivery partner in the wider employability and skills agenda, particularly through the Young Persons’ Guarantee. A further £30 million will be invested to support the continuation of Foundation and Graduate Apprenticeships, and support colleges digital learning and mental health programmes for staff and students (p35)

Implications for Governance:

University leaders have described the January budget as “critical for Scottish HE”, with the Scottish Funding Council stating that the sector faces an overall deficit of £176 million this year.

Under these circumstances, an uplift of £29.6 million (amounting to a 2.7 per cent rise compared with last year) in the total net resource and capital budget for higher education, as flagged by the SFC and set out in the Budget document, appears to be a modest response to Scottish institutions’ financial challenges. Certainly, it falls far short of increases Universities Scotland said are needed in its submission to the Budget.

Somewhat hidden within the Budget document, with further details promised later in the year, is a commitment to provide more funding through tuition fees, student support and scholarships, amounting an additional increase of around £30 million. In its response to the Budget, Universities Scotland appears to have accepted this as enough to meet short term financial needs, commenting that it represents "a step forward in recognising the strategic importance of universities". However, it also urges the government to “use all additional in-year flexibilities to enhance funding for research and innovation”, and beyond 2021-22 to increase university funding “substantially”.

Governors will therefore wish to consider not only the impact of the budget changes for their own institution in the coming year, but what the implications are for longer-term financial planning.

World-class research is mentioned throughout the budget document and the Scottish Government makes a commitment to supporting international research links in the face of the UK’s exit from the EU. Governors will be aware of the implications this exit has for research funding. A pot of £60 million for additional capital funding will be welcome. It comes on the back of the announcement in May of a one-off £75 million increase in funding for Scotland’s universities to protect research programmes against the financial impact of Covid-19.

The Budget document reiterates a commitment to the widening access target for at least 20 per cent of university entrants coming from Scotland’s 20 per cent most deprived communities by 2030. The latest figures show that the sector is still on track to meet this goal. Governors may be interested to see what contribution their own institution is making, and its plans for the future in this area.