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The University of Southampton
Economic, Social and Political Sciences

2013 Spending Review – implications for the Higher Education Sector

Published: 25 June 2013 Origin:  Economics

On the eve of the 2013 Spending Review, Dr Alessandro Mennuni and Dr Roman Sustek, both lecturers of economics at the University of Southampton, blog potential cuts, spending plans and consider if tomorrow’s announcement really will reveal spending allocations for the Higher Education sector or whether we will we have to wait for the weeks that follow?

On June 26, the Chancellor will announce the results of the Spending Round which will set departmental budgets for the years 2015/2016. Earlier hopes by the government that economic activity would pick up by 2014 have yet to be realised. Various Departments that are possibly in line to share further spending cuts will anxiously assess this Review. The prolonged recession has made this Review particularly difficult with many key Departments already fighting to offload cuts onto other Departments to the point of being labelled as ‘Hunter Games’.

What numbers should we expect? Since the government’s commitment to on-going spending cuts will remain firm, in this Spending Round the government is expected to earmark another £11.5bn in savings while Capital spending plans are being increased by £3 billion.

The Higher Education sector’s budget is expected to move from £4.4bn in 2013/2014 to £3.6bn in 2014/2015. Overall, the sector is seen as being in a " good financial state " but with significant uncertainty due to the impact of the newly introduced fees and the consequences of the forthcoming research assessment exercise which may further polarise the sector.

Overall, while the government remains committed to its fiscal consolidation plan, there is significant disagreement both between and within parties about the allocation of the spending cuts. Although attention will focus on tomorrow’s speech by the Chancellor who will announce the 2015/2016 departmental spending allocations , the most important negotiations and important decisions on how the funds will be allocated within Departments will take place in the weeks that follow.

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