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Funding increased student numbers: a bit of creative accounting in the higher education budget

April 16, 2015

This post shows that by adopting an unconventional method of budgeting for additional student numbers since 2013-14, the Scottish government has been able to make the change  in funding for universities look slightly better than would otherwise have been the the case.   It also discusses the extent of the Scottish government’s reluctance to make this clear to parliament.

Funding expansion

Conventially, when the government has funded additional students in higher education, it has given some extra cash to the Scottish Funding Council, for its part of the funding (teaching grant), and some to SAAS, for its share of the extra costs (student grant and per capita tuition fee payments).

From 2013-14, by contrast, all the funding for increased student numbers has instead been funneled through the SFC budget to start with, with some later being transferred to SAAS by the SFC.  Full relevant extracts from SFC documents explaining this are in the footnote below.

Normally,  as soon as it becomes clear something is a permanent shift of funding responsibility, there would be  “baseline transfer”. In this case, however, there has been no baseline transfer and a larger and larger amount of cash is being transferred as a one-off each year from the SFC to SAAS.

 Is this a legitimate approach?

There is  a perfectly sound argument that the tuition fee payment through SAAS is really institutional funding and needs to be considered with the SFC numbers,  to give a full picture of  how much extra cash the SG is giving to institutions.  There’s nothing wrong with identifying all the cash supplied in that form as cash for the sector.


  • not all the cash being transferred to SAAS is for HEIs.  Some is for student bursaries (by the SFC’s own admission: that’s to be expected – these are after all meant to be  “widening access” students in the main), while some of it may be used to cover fee payments for higher education in FE colleges and in that case would belong in the college funding line of the SFC numbers; and
  • perhaps more significantly, under the SG’s new approach tuition fee funding  for a few students ends up in the SFC line, but most of it remains in the SAAS line: that means you get a muddled effect in the figures.

Specifically, this has the practical effect of creating an artificially high percentage increase in  the headline SFC funding figures for the years from 2013-14 onwards – it’s as though a bit of the SAAS budget has been borrowed to boost the appearance of the SFC line.  None of the relevant budget documents explain this or refer to these transfers taking place.

The effect on the numbers

As this table shows, compared to the conventional approach, the SG’s new method of counting adds about 0.5% a year to percentage increase, cumulatively each year, adding up to around 1.5% over the three years affected.  The difference is particularly apparent in the final year, when the budgeted figures suggest a small cash increase, but after the transfer to SAAS, the actual position is a cash decrease.

2012-13 2013-14 +/- 2014-15 +/- 2015-16 +/- 3 yr +/-
Budget 1,002.2 1,041.6 3.9% 1,060.9 1.9% 1,062.5 0.2% 6.0%
Transfer to SAAS 0.0 4.8 8.7 14.2
Net of SAAS transfer 1,002.2 1,036.8 3.5% 1,052.2 1.5% 1,048.3 -0.4% 4.6%

The government publishes its budget in financial years, but the SFC works in academic years. The figures above may therefore need adjusting further: but until the government  clarifies whether the figures for academic and financial years are different, any calculations can only be on the basis above.

Alternatively, you might prefer instead  to look at the change over time in all the funding provided to universities, whether as SAAS tuition fees paid to universities or SFC funding.  That would be fair enough: to do that, you would need to add around £180m to the published SFC figures for each year (roughly SAAS’s spend on fees in HEIs before the funding for new students was added) and knock a bit off for the bursary/FEC element of the transfer to SAAS (has to be a guess, which is why the table above is potentially better).  As it happens, that gives much the same percentages as the bottom line of the table below.

Unless the government intends to make these annual transfers a permanent feature of the system (or is planning to reduce numbers anytime soon – but as this author’s experience with last Cabinet Secretary shows, you would suggest that to the Scottish government in even the most hypothetical terms at your peril: see here), at some point the money will need to be consolidated in the SAAS budget through a baseline transfer from the SFC.

Accident or design?

That the Scottish Government was not keen for this presentational device to be well-known is suggested by its elusive responses to a series of parliamentary questions it was asked during 2013 and 2014 by the then Labour Education spokesperson, Kezia Dugdale MSP, which were clearly seeking to make sense of how the cash-flat SAAS budget could be squared with the announcement of increased student numbers.  The most relevant of these questions and their answers are here: student number pqs.  The then Cabinet Secretary repeatedly omitted to refer to the fact that the cost of additional students was being met by an SFC to SAAS transfer – when it was clearly relevant, particularly but not only to S4W-20193.

Other planned SFC transfers

The figures above do not include the impact of the £21m which the funding council has been instructed not to distribute to universities in 2015-16.  If that is included, then the combined effect of post-budget transfers out of the SFC budget are a net cash fall of 2.4% in SFC funding for universities next year

2014-15 2015-16 Change
Budget (Financial year) 1,060.9 1,062.5 0.2%
Transfer to SAAS 8.7 14.2
Net of SAAS transfer 1,052.2 1,048.3 -0.4%
Moved into “post-16 flexibility” in 2015-16 21
Net of all post-budget transfers 1,027.3 -2.4%

Parliamentary accountability

All these transfers were known to government by time of the Parliament’s most recent budget vote, in March, at which point some £35 million was included in the published SFC budget for HE revenue costs for 2015-16 which the Scottish Government was aware  would not be available for the Funding Council to spend on HEIs.

The lack of information to the Parliament about this, in the budget documents or by other means, including answers to directly relevant PQs,  does not show the Scottish government’s attitude to parliament in a very flattering light.

The sort of Scottish Parliament originally envisaged by the Constitutional Convention might have been expected to kick up at least a small fuss about this.  However, on recent experience that seems unlikely.  The relevant Committee is not independent-minded – its government majority includes two ministerial parliamentary aides, including the aide to the relevant Minister (see here), as well as the convenor, a government backbencher more given to discussing English tuition fee levels than issues affecting Scottish student funding .

Accountability to the Scottish Parliament looks increasingly to mean whatever the Scottish Government wants it to mean: in Patrick Harvie MSP’s words, it is “marking its own homework” –  top marks, in this case, for creative accounting.

SFC circulars: relevant extracts


  1. We have fully costed these additional places schemes from AY 2013-14 on, and this will require a transfer of around £4.8 million from SFC to SAAS to cover tuition fees and bursary support


  1. SFC was only able to introduce additional funded places schemes that started in 2013-14 by also compensating SAAS for the tuition fees and bursaries for the students supported by these places. There is a transfer of funding to SAAS of around £8.7 million and universities will receive the tuition fee income in respect of these students from SAAS


  1. As tuition fees are paid to universities for eligible students from SAAS, we will transfer resource to SAAS to cover the cost of our additional places for widening access, articulation and skills. The cost of the transfer and fee compensation is £14.2 million.

[Note: There is no reference to any transfers to SAAS in the 2012-13 document]


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