Remaining in the UK is a threat to Scottish universities and students

English students face extortionate interest rates of 12% on their loans

Students in Scotland do not pay fees to attend university. They can borrow money for living expenses if they live away from home, but are charged much lower interest rates for repayment. Most Scottish students currently pay 1.5% interest on their loans. English-based students borrow both fees and living costs. Repayment of their much-higher debts are charged at 3 percent plus inflation, and interest rates are likely to hit 12% for many this summer. English students say they are “being punished” for studying. 

Scottish universities are, however, undergoing a funding squeeze. The UK Government has not increased Scotland’s budget allowance in line with inflation - and Scotland’s Finance Secretary Kate Forbes’s spending review offers a flat rate settlement for the next four years, which amounts to a real-terms cut. Brexit is set to suck a billion Euros from the sector. 

Scottish Unis to lose 1 billion Euros from Brexit fall-out 

Scotland’s universities are also facing the loss of EU funding  - they won three-quarters of a billion Euros in the last six-year-round of the world’s biggest science research fund,  Horizon. That included almost 20% of the “Excellent Science” funding stream, more than any other country in Europe. The coming round is significantly bigger and Scotland could have expected at least a billion Euros. 

But Scottish unis are debarred from applying - they had hoped they would still be eligible as "associate members" and when Scotland is independent they will get that status immediately.

Currently, along with the rest of the UK, in the first retaliation for the UK Government’s posturing over the Northern Ireland protocol and Brexit, they are barred.  

University of the Highlands and Islands a massive loser from Brexit

The University of the Highlands and Islands will be particularly hard hit by Brexit - it received more than £250 million from the EU in the last 25 years, because of its “peripherality” - its situation far from markets, serving fragile rural communities. There is very little replacement funding in view from the UK government.  

Below, we examine some of these issues in more depth. 

The UK Government’s student loan ‘reforms’ hit low-income graduates hardest

Earlier this year, the UK Government put in place major 'reforms' - the effect will be that lower-income graduates will pay more than they currently do - while higher earners pay less. A cap will come in on interest rates next year - but they will still sit around 7%.   England’s Institute for Fiscal Studies said

"There is no good economic reason for this. Interest rates on student loans should be low and stable, reflecting the government's own cost of borrowing."

An unfair tax that affects lower-income graduates worst

While those from the wealthiest backgrounds can pay fees and living expenses upfront, many graduates in England are already struggling.  The Observer quoted Emma Rhymer, 29, an early-years practitioner at a day nursery in London, who said that her £50,000 debt was increasing faster than she could pay it back. 

“Although I apply my degree in early childhood studies every day to my work, I find myself questioning whether it was worth it. It feels like the repayments are going to come out of my wages every month forever.  I’m very lucky to be doing a job I love, a job I trained and qualified for. But it’s like I’m being punished for going to university. I’m worried I will never be able to afford to buy a house and have the financial security I will need to start a family. It’s affecting my ability to have a future.”

Scottish students are not burdened with debt and high-interest rates

Scottish students taking vocational qualifications such as teaching or childhood studies will face a very different future. If they continue to live at home, they have a real possibility of graduating with no debt at all. Those who take out the full living-expenses loan for four years will owe in the region of £20,000. They face much lower interest rates and currently their debt will be written off after 30 years, compared to 40 in England. 

Remaining in the UK presents a real threat to the prestige of Scotland's great universities

Scotland pays University fees through general taxation. The downside of this is that universities are funded at a lower level. Despite this, they have managed to maintain a high ranking internationally. Edinburgh is consistently in the world top 20 in the QS ranking system. Glasgow and St Andrews are also in the world top 100 and several other Scottish Universities feature in the top 500. The Royal Conservatoire of Scotland is fifth in the world, according to this widely-respected ranking. 

The UK Government is now creating additional challenges for Scottish universities with its hard Brexit. In the past, they have been able to attract funding from the EU -  but now they look set to lose millions and many prestigious research opportunities through Brexit. 

The UK Government keeps the windfall tax - and fails to increase Scotland’s allowance in line with inflation

The UK Is also creating challenges because although inflation is running at 9%, the allowance they pay to the Scottish Government is only increasing by 2%. So Scotland faces a huge real term cut. That’s despite the fact that the taxes paid by the energy sector, 90% of which comes from Scotland, will amount to £17 billion this year, including the windfall tax. The UK Government will keep almost all of that money. An independent Scotland would have the levers to run the country in line with the priorities of its elected Government - rather than waiting for Barnett consequentials of Conservative policies designed for the south of England. 

Brexit damage - loss of structural funds

Scottish universities received about £3 million a year through EU structural funds. About a third of all of this went to the University of Highlands and Islands (UHI).  Over the past 25 years, UHI has received more than £250 million in various EU funding streams. The outcomes of this funding include more people staying in the Highlands as well as development of the research capacity, skills and the labour market in the region, by working closely with industry and employers in the region.

EU structural funds recognise the principle of peripherality - areas at the fringe of the EU, are considered to be disadvantaged due to their distance from markets. Rural areas also attract extra support. The UK Government does not recognise peripherality and tends to measure support in per head amounts. That disadvantages rural Scotland. 

The replacement Shared Prosperity Fund is far short of the EU’s main structural funds, and it does not even attempt to replace the other EU funding streams that contributed to UHI.

UK Government posturing over the Northern Ireland protocol will cost Scotland dear

The EU is now blocking British scientists from joining the €95bn Horizon Europe research programme — the world’s biggest — because of the row over post-Brexit trade in Northern Ireland. 

Horizon Europe is the EU’s flagship funding programme for research and innovation with a budget of €95.5 billion. It tackles climate change, helps to achieve the UN’s Sustainable Development Goals and boosts the EU’s competitiveness and growth.

Scotland won around €755 million in the €80bn Horizon 2020 round over 2014-2020.  This made Scotland the most successful nation per head. Scotland received 19.9% of funding delivered through the ‘excellent science’ pillar.  

At the same time, it has become difficult and expensive to bring faculty members to the UK - they need to pay a health supplement.  It is also no longer possible to exchange students and teachers through Erasmus. 

The UK Government is out of step with most European countries

The UK Government is pursuing its own ideological priorities down south, burdening graduates in lower income professions with a greater load of debt. Scotland is in tune with most EU countries, which fund university education through general taxation and do not throw the burden on individuals. 

In an independent Scotland, the elected government would be able to manage the university sector in a more stable and financially responsible way, without the hiccups due to waiting on Barnett consequentials of policies deigned in another country with different priorities. It could immediately access EU funding which rewards excellence in research, and also offers support for rural areas such as the Highlands and Islands.

By Jackie Kemp