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The current decade is one of significant fiscal austerity for government spending. The coalition government that came to power in 2010 has embarked on a path of fiscal consolidation that is now expected to last at least seven years (up to 2017–18), with tax increases and spending cuts that are together forecast to bring government borrowing back down to sustainable levels. It is not yet clear how some of these cuts to public spending are to be allocated, however, either between departments (beyond 2015–16) or within departments (beyond 2014–15). In this report, funded by Universities UK, we attempt to assess the outlook for government non-investment spending on higher education through to 2017–18.

To do this, we first project how total government non-investment spending will evolve through to 2017–18 in the absence of further policy change and then illustrate how this might be allocated between departments, focusing on what the outlook for the Department for Business, Innovation and Skills (BIS) might be. We then investigate the feasibility of different scenarios for spending on higher education by illustrating the implications that such spending would have for other areas of BIS spending.