Higher education and independence

Higher education is already largely devolved. However, there are many uncertainties for higher education in the independence debate, not least what impact it will have on funding. Universities are a very important part of the Scottish economy and they operate in a global marketplace.

I was speaking today at the ESRC seminar on Higher Education and Independence. I outlined UNISON’s approach to the constitutional debate as set out in our publications, Fairer Scotland and Fairer Scotland – Devolution.

I focused on a number of issues that concern staff working the the sector. In the main they revolve around funding for universities. Important sources of income for Scottish universities come from students from the rest of the UK who at present pay tuition fees at similar levels to those in the other parts of the UK. The Scottish Government claims they will be able to continue to levy these fees, despite EU rules that forbid direct discrimination against other EU countries. This of course assumes that Scotland will be a member of the EU. I don’t doubt that Scotland will be an accession country, the issue is on what terms. The rebate would certainly be lost and that would have an impact on public spending that funds free education.

Not surprisingly this was one of the hot topics at today’s seminar. Mike Russell was not convincing on this point, but he fairly pointed out that Scotland is only in this difficulty because of the marketisation of education in England. On the other hand speakers did point out that marketisation is not absent from Scottish universities in terms of overseas students and loans.

UNISON is a strong supporter of free tuition. However, we have to recognise that it has not improved access to higher education for those from disadvantaged areas. When student support is taken into account, students from disadvantaged backgrounds face similar levels of debt to students in England when they graduate. Universities can do more here, but it is also a reflection of our unequal society.

The other income concern relates to research funding. At present Scotland does proportionately well from the UK research spending allocation. Scotland has 8% of UK GDP, but get 13% of research funding pot. There is also a question mark over UK charities research funding that is equally important to Scottish universities. We should also remember that pressure on research funding globally is not limited to constitutional change. Alastair Carmichael also made some strong points on the benefits of the integrated UK research framework. It is national government’s that fund research, international funding collaborations are not funded on the scale of the UK system.

A plus for Scottish universities from independence may be an immigration policy that reflects Scotland’s needs, rather than the south-east of England. That may enable Scotland to attract even more overseas students on top of the 40,000 who already come here. Alastair Carmichael attempted to rain on that claim at today’s seminar, but in my view not very convincingly. Scottish universities have already suffered from UK policy changes. For example, there has been a halving of students from India.

There are over 21,000 non-academic staff in Scottish universities and large numbers of atypical workers. At present the core pay and conditions are negotiated at UK level, so independence may require a new bargaining structure in Scotland. Nothing new in that for us, but we would be opposed to local bargaining as a replacement. Any view of pay is of course coloured by the current dispute. The 1% offer contrasts unfavourably with the big pay increases senior staff in universities are awarding themselves. If Scottish universities want to be taken seriously about inequality, they should start by addressing pay inequality in their own institutions.

Other workforce issues of concern to our members include the use of zero hours contracts and casualisation; the 14% gender pay gap; and low pay including the Scottish Living Wage. The funding issues above clearly have an impact on how these issues will be addressed if Scotland votes for independence, although there are currently significant reserves and the workforce costs are falling as a percentage of income. Funding hasn’t been a barrier to top staff pay!

University governance has rightly been a focus of recent reports and legislation in Scotland. University leaders try to posit a conflict between good governance and accountability with institutional autonomy. Scottish universities should not be captured by a managerial elite and stronger governance is needed to stop the drift in that direction.

That leaves the issue of pensions. Our members are covered by several pension schemes at present. For those in the LGPS, independence will have little impact as it is already a separate Scottish scheme. For those in the USS there is a concern about having to split the scheme or tackle the deficit immediately due to EU rules. Bigger pension schemes are generally more effective so this would be an issue for a separate scheme even if transitional arrangements could be agreed with the EU over the deficit. Obviously, this is only an issue if Scotland and the UK is in the EU!

This series of seminars funded by ESRC are hugely important to the constitutional debate. They offer one of the few opportunities for objective analysis in the current debate. I would particularly recommend the film the project has made that captures the views of young people. It is very powerful.

HE may be devolved, but that doesn’t mean constitutional change won’t impact on the sector. However, learning is delivered by people not robots. So don’t forget the workers!

The challenges of reducing inequality

One of the Scottish Government’s strategic aims and claims for independence in the White Paper is to reduce inequality. New research from University of Stirling indicates that Scotland faces significant challenges in closing its “inequality gap”.

Scotland and the UK currently have much higher income inequality than comparable Nordic countries such as Norway and Denmark, with Scotland having a gap against these Nordic countries of 4.7 points on the Gini Coefficient – the recognised measure of the equality of a nation’s income distribution.

The research found the Scottish Government’s current fiscal powers – including council tax and the new Scottish Rate of Income Tax – are relatively ineffective at tackling inequality because they cannot be targeted at specific income groups. While an independent Scottish government would have access to the full range of fiscal powers, the research found the impact on inequality of exercising these additional powers would in fact be relatively small.

The authors argue that because the UK will remain highly integrated, any change in tax on income would trigger migration between countries. In addition, the small numbers of top rate tax payers means that tax changes have limited impact. Income support at the bottom is more effective in reducing inequality.

Co-author David Eiser added: “The Nordic countries have lower levels of inequality than Scotland not only because they have more progressive tax and benefit policies, but also because the level of inequality in income before taxes and benefits is much lower than in Scotland.

“Our report shows once the effect of tax rises on migration and labour supply are considered, the revenue raised from a one pence increase in the basic rate of income tax in Scotland could fall from £320 million to £210 million, and the revenue raised from a one pence increase in the upper rate of income tax could fall from £40 million to only £2 million.”

He added: “given the scale of labour mobility between Scotland and the rest of the UK, a fiscal solution to inequality could be detrimental to government finances because raising taxes will increase incentives for high earners to relocate, and likewise raising benefits could harm work incentives. Achieving Nordic levels of inequality in Scotland will likely have to involve some equalisation of incomes before taxes and benefits, rather than a large increase in redistribution.”

I am personally pretty sceptical about claims of tax flight because there are many other constraints on geographic mobility. However, we do have to recognise that the scope for significant redistribution is limited and involves difficult political choices that Scotland’s political parties have been unwilling to make. The research does strengthen the case for pre-distribution policies such as the living wage and tackling low pay generally. That is potentially a better route to reducing inequality.