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How did universities fare in BIS’s grant letter to HEFCE?

Julie Tam

Julie Tam

Deputy Director of Policy
Universities UK
Department for Business, Innovation and Skills

Last week, we set out what to expect from BIS’s grant letter to HEFCE and what Universities UK (UUK) was hoping for. Did today’s letter match our expectations?

Research funding

We expected clarification on:

  • how much of the £4.7 billion science budget will go to quality-related (QR) funding in England, and how much to research councils.
  • how much of the government’s £6.9 billion commitment to research capital will be spent in 2016-17.

The outcomes:  

  • the proportion of the science budget allocated to HEFCE will rise over the spending review period, from the current 63p to 65p for every £1 allocated to research councils.
  • the amount of research capital allocated via HEFCE remains very similar in 2016-17 to 2015-16 levels. The government’s science budget allocations, published today, show that £1.1 billion will be spent on capital in 2016-17.

Did we get what we hoped for?

The government’s continued commitment to the dual support system of research funding is very welcome. In the context of wide-ranging changes to research governance, it will be important to protect the dual support system, and ensure the two streams of support are allocated separately. 

The stability in capital funding is very positive.  Detailed allocations also show that funding from the global challenges fund via HEFCE will support research infrastructure and capability in higher education. 


Teaching funding

We expected clarification on:

  • the impact on 2016–17 of a £120 million cut to teaching funding by 2019–20, whether cuts to student opportunity funding will commence and the amount of high cost subject funding available per student.
  • whether there is any money for teaching capital.

The outcomes:  

  • in 2016-17 HEFCE will protect in real terms the total amount of funding for high cost subjects, and as far as possible protect funding for widening participation and small and specialist institutions with world-leading teaching.
  • retargeting of student opportunity funding will commence in 2016-17, with further changes in 2017-18.
  • HEFCE will review its approach to allocating teaching funding. As well as student opportunity funding, the review will cover the catalyst fund and how the reforms to the health professions will impact on teaching funding.
  • as part of the changes to the funding of health professionals, additional teaching grant will be allocated to any science-based subjects, and the sustainability of smaller and more specialist health subjects will be recognised.
  • £140 million has been allocated to teaching capital, down from £300 million in 2015-16.

Did we get what we hoped for?

2016-17 looks a relative year of stability for teaching funding, with more significant changes to be considered in HEFCE’s review of teaching funding later this year.  This is good news, as it allows the higher education sector more time to plan for cuts, and to input on how cuts are best implemented. The amount of teaching capital allocated, while reduced, is a good outcome in a tough fiscal environment.

While the total amount of funding for high cost subjects is to be maintained in real terms until 2020, we do not yet know how this would translate into funding per student. To reflect changes to the funding of health professional students in 2017-18, additional teaching grant will be allocated for science-based subjects, which is positive. However, overall teaching funding is anticipated to fall in 2017-18. It will be important, as part of HEFCE’s review, to ensure that changes to teaching funding do not impact adversely on the financial sustainability of institutions. 

The letter indicates there is more to do on improving access to higher education for the most disadvantaged students, and asks HEFCE to target student opportunity funding more effectively, do further work on the links between universities and schools and to review grant funding for disabled students. Universities UK established a social mobility advisory group earlier this year, and the work of this group will be highly relevant in shaping policies going forward.

Innovation funding

We expected clarification on how much funding (if any) there was for the Higher Education Innovation Fund (HEIF), and how it might be allocated.

The grant letter announced that allocations for HEIF will be maintained from the teaching and research grant at current levels.

Did we get what we hoped for?

We are really pleased that the government has recognised the importance of HEIF, as it is such a crucial funding source for universities to maximise their impact in collaborating with businesses and the wider community. We will be feeding into HEFCE our views on how the funding approach can best demonstrate value for money and exploring options for further collaboration.   

Other items:

We expected directions for universities to strengthen their value for money reporting. The letter asks HEFCE to work with Universities UK and the sector to implement the recommendations of Professor Sir Ian Diamond’s efficiency reviews and to produce an annual report showing how the sector is driving efficiencies. We look forward to working with HEFCE, and recognise the importance of universities continuing to demonstrate value for money.

Overall, the grant letter has provided welcome reassurance to the higher education sector, with the continuation of HEIF and stability in funding across teaching, research and capital.  The letter itself goes beyond funding, with announcements on quality, information for students, and market entry. This indicates far-reaching implications of the letter for HEFCE’s future role, as a possible regulator of the higher education sector.

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