National Government

The strength and stability of the UK economy can have a number of effects on Sheffield Hallam including levels of government funding, student numbers and prospects for graduates. The UK economy is currently in a stable position with the Labour party claiming the country to have its lowest level of inflation since the 1960's, raising by just 1. 3% in 2003, Lower unemployment in Britain than at any time for the last 25 years – lower than Japan, America and the Euro area. As well as the lowest interest rates since the 1950's.

Growth for 2003 was stronger than expected in view of the global downturn. GDP increased by 2. 1% in 2003 and an increase of 2. 7% is predicted for 2004. However business reinvestment remains hesitant with companies not yet fully confident about the global economic recovery. Public sector debt is predicted to be 35. 5% of GDP by the end of the projection period. A stable economy with low levels of unemployment means that the government will have good levels of funds, received through taxation, to spend on public sector services such as the higher education sector.

Any instability or decline in the economy could affect the level of funds the government would have available to spend on the Higher Education sector, as during periods of economic decline unemployment is generally high and organisations profits low, resulting in the government receiving lower levels of revenue from taxation. They would be then faced with the choice of either lowering funds to the various public sector services or borrow in order to continue current funding levels.

A declining economy may cause a slowdown in the yearly increase of students applying to university as with a shortage of cash, their parents may struggle to offer them financial support if they continue into Higher Education. A declining economy could also affect the job prospects and wage levels of graduates, as during periods of economic downturn the number of business reinvestments and start ups is normally low. Also companies are often forced out of business during periods of economic downturn further reducing the number of job opportunities available to graduates but increasing the competition for the vacancies.

Financial Health of Higher Education Sector An audit by HSBC bank of the Higher Education sector found the sector to be under growing financial pressure, as a result of higher levels of competition for students and a shortfall in government funding. Government funding has been cut by a third since 1990, during which time the number of students has risen by 75%. The audit found that a number of universities were borrowing at dangerous levels to compensate for deficits in their accounts.

This information supported the results of an audit commissioned by the government in 2002 which found that UK Universities were 1 billion pounds a year short of money needed to keep equipment in working order. The effect of the poor economic situation of the Higher Education sector for Sheffield Hallam may include them struggling to maintain vital equipment, which may cause greater difficulty for Sheffield Hallam than other universities as it is highly focused on e-learning.

Sheffield Hallam may have lower levels of funds to spend on research activities, although this will be an affect felt across the whole Higher Education sector, This could result in a General drop in the Standard of UK universities compared with foreign counterparts, which could result in a decrease in the number of foreign students attracted to study at universities in the UK.

UK universities may also have lower funds to attract lecturers and researchers which could result in lecturers and researchers being forced to accept rates of pay which could result in discontentment and de-motivation, or they may choose to look abroad where rates of pay are higher.

To attempt to compensate for shortages in funds Sheffield Hallam will need to attract increasing numbers of students, although to keep costs low they may not higher more lecturers which could result in higher classroom sizes, which could affect the quality of education students receive at Sheffield Hallam. A government solution to the Higher Education finance crisis, has been the proposed introduction of top up fees of up toi?? 3000 a year for students to pay after graduation, when they are earning at least  15,000 per annum.

The activities of the national government can have a direct effect on Sheffield Hallam with regards to their policies on Higher Education. On the 22nd Jan 2003 the Secretary of State for Education announced the publication of the White Paper "The Future of Higher Education. " The paper set out the government's plans for radical reforms in universities and Higher Education colleges. The paper included the proposed introduction of variable rate top up fees and changes in the conducting and funding of research.

The introduction of variable rate top up fees caused great national debate with student unions and a number of political parties strongly opposed. There was also division within the Labour party itself which caused great embarrassment for the government. The proposed top up fees bill was voted on by all MP's on the 27th of January, the government won the vote by a majority of only 5. MP's and student unions were concerned that the levels of debt that students could face after completion of their degree may discourage them from attending university, particularly those from poorer backgrounds.

Sheffield Hallam as a 'new' university is not planning on charging the full i?? 3000 fee, it is only those in the Russell Group who are planning to do this. This may result in an initial increase for Sheffield Hallam's student numbers when top up fees are introduced in 2006, with students wanting to avoid paying the full i?? 3000 fee. However the introduction will also have a detrimental effect on new universities including Sheffield Hallam.

New universities will have significantly less funds than universities in the Russell group to spend on equipment, facilities, researchers and attracting lecturers, all of which could affect the quality of education that new universities can offer students, and may create a two tier system in the UK's Higher Education system. Also, courses not viewed to be economically viable due to lack of students may be stopped, limiting the choice of courses available to students. It could also result in an increase in classroom sizes with more pressure on universities to make money.

The proposed change of the funding of research also raised concern around the Higher Education community. The proposals included the collaboration of different universities to produce larger research units and plans to heavily invest in leading research units and universities to enable them compete with the worlds best. Sheffield Hallam, which ranks lower than the median figure for research in the Times University top 100 table, would be unlikely that they would benefit from any heavy investment. Though they may benefit through collaboration with other universities and research institutions.