Our response to the Office for Students’ call for evidence on its approach to public grant funding

OfS wants feedback on its approach to distributing approximately £1.5 billion of public grant funding each year.

It has sought views on the activities it funds, how it determines funding allocations and the factors it prioritises in its decision making.

The purpose of the call for evidence is to help OfS develop its early policy thinking for its next organisational strategy. OfS also wants to improve the quality of the evidence that it provides ministers ahead of the next comprehensive spending review.

We welcome the opportunity to engage with OfS as it reviews its funding approach.

In our response, we set out that in a constrained funding environment, it is vital that OfS prioritises continuing to support funding for the highest-cost subjects and student support. 

We also support continued funding for specialist providers. OfS must also protect the principle of non-hypothecation so that universities can effectively allocate resources to support their missions.

• We believe that OfS should continue to prioritise high-cost subject allocations. This funding is extremely important for enabling universities to continue providing the most expensive subjects, especially when universities are already under significant financial pressure and are having to make difficult choices about course provision.
• OfS should continue to prioritise student-based funding allocation as a key pillar of its grant funding. These funds are crucial to support positive student outcomes in a constrained funding environment. The main purpose of student-based funding should be to assist institutions with the additional costs associated with supporting students from disadvantaged backgrounds and with other additional needs to succeed in their studies.
• OfS should consider whether to allocate a greater proportion of its capital funding through a formulaic approach, given the relative costs and burdens of a bidding approach compared with the benefits generated by the funding. Whilst there are some merits to competitive bidding, the current bidding process requires significant modification given the associated burden on universities , especially at a time when institutions are facing large increases in capital costs. OfS should review the competitive bidding process to  reduce bureaucracy, widen the criteria for eligible bids and enable long-term planning cycles. 
• OfS should retain non-hypothecation for the majority of its public grant funding. Universities must have flexibility in directing funds to meet essential costs that are in support of the UK’s economic and societal goals, which they would otherwise be unable to afford.  Specifying narrow criteria for the use of OfS’ non-hypothecated public grant funding would defeat the very purpose of providing it, limit its impact in being targeted to areas that are underfunded, and not achieve value for money for taxpayers.