So why were student grants cut in Scotland in 2013-14?

It’s the simplest and most unanswered question.

In the summer of 2012, Ministers decided to reduce grant levels substantially for all low-income students – new and continuing – from the following autumn. And we still don’t know why.

It was inevitable this would have one of two effects on students from lower-income families: they would either have to borrow more than before to make up the gap, or make do with less. The extra debt/lost income was non-trivial: around £35m a year of cash support for people from low incomes would be lost, or around 40% of existing means-tested grant.

So this was an odd choice of a target for cuts, for a government which had repeatedly expressed concern that people from low-incomes are put off going to university  by debt, and emphasised its creation in 2013-14 of a “minimum income guarantee” and a much higher universal minimum loan, to meet NUS concerns about immediate hardship.

The decision to visit cuts on grants has never been explained (it’s also unclear why the SAAS budget took a much larger hit than the SG budget as a whole that year: see here). Instead, the SG’s discussion of the 2013-14 changes has concentrated entirely on the way these provided more money up-front (using extra loan). But topping up the package with more loan doesn’t logically imply cutting grant at the same time (see Footnote 1 for a red herring that sometimes turns up here).

At the same time as cutting grant, the SG continued to spend many more times its grant budget on fee subsidies, channelled partly through SAAS and partly direct to universities by the SFC. Within the SAAS budget alone, fee subsidies account for between two and three times the grant budget. All this spending has been sheltered from cuts.  It’s not a matter of opinion that spending on fee subsidies has risen, at the same time as spending on grants has been heavily reduced. It’s just a statement of fact: see Table A1 here.

What might explain these choices? It’s hard to see the policy  commitment to free tuition as irrelevant.  In a context where savings were being demanded from the SAAS cash budget, free tuition policy put a protective barrier round spending on fees. That left grants as the only available shock-absorber.

Recently, a comment in the annual SAAS statistical report was spotted by Patrick Harvie MSP, which made explicit the link between protecting fees and cutting grants (here: emphasis added below).

“The types and value of support students received changed substantially from 2012-13, within the aim of protecting free tuition. For example, the total amount of support provided in bursaries and grants reduced by over a third, offset by a substantial (61 per cent) increase in authorisations for student loans.”

That seemed like a straightforward admission.

However, when the SAAS wording was quoted in a PQ a couple of weeks later, the Scottish Government responded that it was, in fact, wrong and revealed that it had now asked SAAS to amend the report, to remove the words shown above in bold.

This got some press coverage (here), which then  attracted the attention of the UK Statistics Authority (here).  In response to this, the SG’s Chief Statistican has today released a statement (I don’t have a link, just a screenshot I was kindly sent).

This explains that the reference to a link between  free tuition policy and the 2013-14 changes, including – as seen above – explicitly the cuts to grants,  has been deemed inaccurate because it “was not consistent with previously published policy statements”. How well these policy statements themselves did or did not reflect the actual decision-making process is left to one side (interestingly, the original SAAS wording turns out to date from relatively soon after the change – it is not just a recent piece of revisionism: see footnote 2 below).

In any event, previous SG policy statements about the 2013 changes have carefully avoided acknowledging that the grant cuts even took place, let alone provided a rationale for them. On this particular point, therefore, there is no previous policy statement to be inconsistent with.  We have just lost the nearest thing we have ever had to an official explanation of why spending on student bursaries for the least well-off was selected to take a £35m hit in 2013.  It’s an odd thing for a government never to have to explain.

Footnote 1: a red herring

In the past, bits of the cash budget were sometimes sacrificed/traded with Whitehall  for additional student loan, to stretch resources (33p of cash used to “buy”£1 student loan). But with Scotland entitled to consequentials from the massive amounts of student loan being released in England from 2012-13 onwards, it’s hard to see how the Scottish Government can have needed to “buy” even more.  Even with the recent rise in the use of loans here, we still only use about half the amount of loan England does,  pro rata.  Also, even if the SG were trading cash for loan, it still doesn’t follow that the cash had to be swiped from the poorest students – not least given that quite a bit of the extra loan was for those further up the income scale.

Footnote 2: a curiosity

The Chief Statistician’s statement helpfully adds that the offending wording was also in the  two previous SAAS reports, issued in autumn 2014 and 2015.  I’m kicking myself I didn’t spot it in either of those, and it means that when I have said in the past that the fact of grant cuts hasn’t been admitted by the SG, I have been wrong. SAAS is  an SG agency and it has been stating  that the cuts happened for the past 2 years. The curiosity is that it took two years for anyone government to be moved to address what is now described as an  error substantial enough to be worth post-publication correction, in the government’s principal annual publication on student funding.

Footnote 3: a theory

Just looking at what was happening in the total post-school budget in 2013-14, it stands out that as SAAS took a large hit (budgeted as around £24m, though actual spending on grants fell by more), funding for universities rose by around £40m: Table 5.06 here. In the period after the 2011 election, the Scottish Government appeared especially keen to foster good relations with the universities,  to reduce the likelihood of criticism of its policies, and to reassure them that compared to universities south of the border they wouldn’t be disadvantaged by free tuition, as fees rose sharply in England in 2012. So if – let’s say – there was a political desire to use 2013-14 budget to show university funding getting a large boost, but an instruction from the centre that this had to be found within the portfolio, and given that the large amount devoted to fee subsidies was untouchable as a matter of policy, and – uniquely in the portfolio  – cuts to grants could be back-filled by loan, of which the SG probably had more than it knew what to do with …..  you can begin to see how student grants might become vulnerable – as long as you weren’t particularly concerned about the resulting extra debt/lost income for those from low incomes.  This may not be the explanation for what happened, but in the absence of any other being offered, it’s the most plausible I can construct.