The 2015 Comprehensive Spending Review (CSR) saw a fundamental change to health higher education funding. It was announced that the NHS nursing bursaries were going to be replaced with the normal student loan system, effective from the 1st August 2017. Last week London Economics published an independent analysis of the impact of the removal of NHS bursaries on prospective students. This in-depth report provides a strong rebuke to the Government’s case for replacing nursing bursaries with the student loan system. This blog will attempt to review both sides of the debate.
An ageing population means that their is a huge need for high quality care in later life. By 2037 it is expected that the number of people aged 65 and over will account for nearly 1 in 4 of our population. The ILC’s report ‘Avoiding the demographic crunch: Labour supply and the ageing workforce’ reveals that the health and social care sector is one of the most vulnerable to skill shortages. Therefore it is crucial to get NHS workforce planning right.
The Government’s case for replacing nursing bursaries with the student loan system:
- Creating 10,000 new training places: The Government have argued that under the bursary system, total nursing places are limited by NHS workforce planning requirements and the financial constraints on the system which follow. By making students contribute to the cost of their education the Government is removing the ‘artificial cap’ placed on the number of nursing in training by Health Education England.
- Reducing costs: On face value the treasury will save £554 million by not paying the nursing bursaries. Furthermore the Government argue that by creating 10,000 new places they will reduce reliance on expensive agency staff. These savings can be put towards the 10 billion worth of additional investment for front line care they have promised by the end of the Parliament.
- Widening opportunity: The Government has highlighted that currently 2 out of 3 nursing applicants are turned down for a place. The reforms are therefore meant to allow more students to study nursing degrees.
- Based on best practice: After increasing maximum student loans from £3,000 p.a. to £9,000 in 2011 the Government argues that: a record number of students from disadvantaged backgrounds are pursuing higher education, universities income has risen in real terms and finally the OECD has said the English higher education system is one of the few that is financed sustainably. [i] The Government will therefore expect that nursing students from disadvantaged backgrounds will not be deterred.
- Nursing students will be significantly worse off: Replacing bursaries with normal student loans this will leave students £15,194 a year worse off over a three year degree. Overall students could leave the course with £49,000 worth of debts.
- The demand for nursing courses will decrease: London Economics argue that education has a low elasticity of demand which they estimate to be -0.09%. Elasticity of demand is a way of measuring how responsive demand for a good is to a change in price. In this case a 71% price increase will result in a 6.2% reduction in expected demand.
- The reforms fail to take account of RAB charges: RAB is the proportion of the nominal loan which Government ends up writing off. Currently the RAB charge for nursing students is around 25%. However with the huge increase in debt the RAB charge could rise to 68-86%. This means that in the long term savings to the treasury would fall to around £88 Million.
- The 10,000 new places is meaningless: If there isn’t enough demand for nursing courses then adding new places doesn’t achieve anything. Moreover Higher education institutions will be an estimated £57 million worse off. This could lead to a permanent reduction of supply
- There will be a significant overall negative impact on the NHS: If there is a reduction in the number and quality of domestically trained nurses there will be a long term over reliance on agency and overseas staff putting economic sustainability and even patient safety at risk.
Whilst the Government has advanced some powerful arguments to defend its position on balance the London Economics report demonstrates that the nursing bursaries exist for a good reason. Nursing students are different from other students. There average age of graduation is 31, they have often amassed significant financial and familial commitments in their 20’s and they are expected to earn £7,000 less p.a. on average. Furthermore 50% of their degree is spent in clinical placements doing nonsalaried work. [ii]
If the findings from the London Economics report are correct, this proposed reform would be seeking short-term gain. The NHS is scrabbling for resources from the rest of the Department for Health budget, and whilst initial savings will be made, the RAB charge and the increased reliance on agency staff would mean that this reform will be cost neutral at best.
In Australia degrees are ranked by national importance, with nursing made a priority. This means the courses are heavily subsidized. This could be a viable option for the UK. Nursing has recently been added to the list of jobs that aren’t included in the non-EU migration cap which shows that the Government is willing to listen to the sector and change its course around nursing.
It may also be a good solution to have a system where loyalty for working for the NHS is rewarded. It is a problem if the Government pays to train nurses who will soon drop out of the labour force or join agencies. Perhaps the loan could be written off if the trained nurses work for the NHS for 5 or 10 years.