Government announcement on matched funding scheme

03 April 2008

Director General of the Russell Group, Dr Wendy Piatt, said:

“The Russell Group welcomes the Government’s commitment to matched funding, which is helpful in encouraging more voluntary giving to higher education. We look forward to hearing further details of the scheme, particularly the level of the cap on different tiers, which has not yet been announced.

“Our institutions are working hard to bolster their endowments and alumni-giving, establishing important fundraising roles within the university as well as examining ways to increase returns on investments. However, there is a long way to go. In 2005, 207 universities in the United States had endowments worth at least £100 million, compared to only seven UK universities.  But it is encouraging that these large US university endowments have been accumulated only recently; Harvard University’s endowment is 30 times what it was 20 years ago. In the past three years alone, the gap between the 10 largest university endowments in the UK and the US widened by £12.5 billion.

“Other countries are also making impressive strides in assisting their universities with endowment building. In 2007, the Australian Parliament introduced a £2.04 billion Higher Education Endowment Fund, which will pay £123 million per year in dividends from 2008 to assist Australian universities in driving towards a US endowment system.

“Indeed, funding for higher education in the UK is significantly lower than most other OECD countries, and significantly lower than our primary competitors - in terms of GDP, expenditure per student and as a proportion of total educational funding. So encouraging voluntary giving is just one of the ways Russell Group universities are trying to raise much-needed funds which are crucial to sustaining our success in the global market place.”

Notes to Editors

1. Based on the most recent OECD data, the UK’s annual expenditure on HE is lower than most other OECD countries, in terms of GDP, expenditure per student and as a proportion of total educational funding.

• Annual expenditure on higher education (for all services including research activity) per student shows that the UK is spending less than all of its main competitors – US, Australia, Germany and most Nordic countries.
• The UK spends approximately $11,484 (USD), while the US spends double at $22,476 (Australia spends $13,959).
• On core educational services alone the US spends more than double per student.
• Relative to GDP per capita, Australia spends roughly 25% more per student and the US still spends 50% more per student.
• The UK spends below the OECD average on higher education as a percentage of GDP. The US spend 2.9% ($320 billion), Korea 2.3% ($20 billion), Australia 1.6% ($9 billion), while the UK spends 1.1% ($18 billion).
• This is below the percentage spending by Belgium and Mexico on HE.  On public spending alone on HE as a proportion of GDP, the UK spends 0.8% ($13 billion), less in percentage terms than Iceland, Hungary and the Slovak Republic
• When all public expenditure (for example public subsidies for living costs) are factored in, however: UK spends 1.0 percent ($16 billion), close to the US at 1.3%, OECD average ($143 billion) and Australia at 1.1% ($6 billion).
• Average funding spent on HE as a proportion of all educational spending is 24%. The US spends 36.4% on higher education, the UK spends 19%.
• The only country to give a lower proportion of educational funding to HEIs is Iceland.