Skills spending review announced

Over the course of the Spending Review period, the Department for Business, Innovation and Skills (BIS) will reduce its resource budget by 25 per cent. Taking into account anticipated receipts, the cut to capital spending by 2014-15 will be 44 per cent. The Department’s Administration budget will be reduced by 40 per cent, including savings from abolition of the RDAs.

 

Department for Business, Innovation and Skills Spending Review Settlement:

 

The Department will manage the reductions in resource spending by reforming Higher and Further Education funding which will deliver broadly 65 per cent of BIS resource savings; driving efficiencies will deliver around a further 25 per cent and the remainder of resource savings, around 10 per cent, are from cancelling lower priority activities.

 

In line with the Browne recommendations, the Government is changing the way that Higher Education is funded, moving away from the current model to one where those who benefit make a greater contribution to the cost.

 

This means the overall resource budget for Higher Education, excluding research funding, will reduce from £7.1 billion to £4.2 billion, a 40%, or £2.9 billion, reduction by 2014-15. The Department will continue to fund teaching for Science, Technology, Engineering and Mathematics (S.T.E.M) subjects.

 

The Government will, by 2014-15, establish a new £150m National Scholarship Fund to support students from disadvantaged backgrounds

 

The Government will ensure the UK remains a world leader in science and research. To do this it will continue support for the highest value scientific research, maintaining the science budget in cash terms over the Spending Review period with resource spending of £4.6 billion a year by 2014-15. A ring fence will be maintained by the Department for Business to ensure continuity of investment in Science and Research

 

Key capital projects going ahead include £220 million in funding to ensure that the UK Centre for Medical Research Innovation goes ahead as planned. Funding will be provided for the Diamond Synchrotron worth £69 million.

 

The Further Education resource budget will be reduced by 25%, or £1.1billion, from £4.3 billion to £3.2 billion by 2014-15. We will continue to support basic skills provision so that those left behind first time around can continue to gain basic numeracy and literacy skills. We will continue to support Adult and Community Learning and reduce the complexity and bureaucracy that hampers providers from responding to community needs.

 

To ensure that businesses have the highly skilled workforce needed to drive growth the Government will boost spending on adult apprenticeships by £250m a year, providing up to an additional 75,000 apprenticeship places every year by the end of the Spending Review period.

 

Business Secretary, Vince Cable, said:

“I called BIS the Department for Growth as soon as I joined the coalition government. I have been clear that growth must also be sustainable. The threat to our national economy is the large financial deficit which if left unchecked will damage our capacity to grow and rebalance our economy. I am not going to say that any of these cuts are going to be easy and many people are going to feel the consequences, but without action all of us, for years to come, would pay the price. These decisions have been hard but they are necessary”

 

Reductions to key BIS activities include the ending of Train to Gain and replacing it with an SME focused training programme, English for Speakers of Other Languages (ESOL) funding for people not in settled communities, and the Regional Development Agencies will also be abolished in 2012.

 

The administration budget of BIS will reduce by 40 per cent over the spending review, including a saving of up to £228m in admin costs as a result of the abolition of the RDAs. BIS is also undertaking an ambitious programme of arms length bodies reform bringing the total number down from 57 to 33, with 9 continuing under review and back office reform across the entire BIS network, which will cover estates, ICT, HR, finance and procurement functions in many BIS partner organisations.

 

In order to promote economic growth the Department will, in addition to its FE, HE and science activities:

 

• lead the creation of a UK-wide Green Investment Bank that will be capitalised initially with a £1 billion spending allocation with additional significant proceeds from the sale of Government-owned assets, to catalyse additional investment in green infrastructure;
• play a key role in the operation of the new £1.4bn Regional Growth Fund, that will support projects with significant potential for private sector economic growth and employment, particularly in areas dependent on the public sector ; and invest up to £200 million by 2014-15 to support manufacturing and business development – with a focus on high growth businesses.

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