You are in :
  • FAQ
    • > Teaching funding method FAQs

Review of the teaching funding method: second consultation on changes to the method

Frequently asked questions

In January 2007 we published our second consultation on proposed changes to the funding method for teaching (HEFCE 2007/02). Here we explore some of the issues in more detail and provide answers to frequently asked questions. This section will be added to as the consultation progresses. Please send any queries or comments to Chris Taylor, e-mail c.taylor@hefce.ac.uk, tel 0117 931 7264.

Last updated 30 March 2007

Contents

Assumptions about income

Allocations

Recognising flexible study patterns

TRAC for teaching

Assumptions about income

Does maintaining all fee assumptions at existing levels mean that HEFCE plans to stop taking account of income altogether in calculating allocations of grant in the future?

No. We believe that it is in the public interest to take other sources of income into account when we distribute our funds. With a fixed amount of money, we must ensure that we target our funding effectively and efficiently. Ignoring the contributions made by other substantial sources of income would prevent us from making best use of public funds. However, how we take account of other income will be a key area of discussion as we go forward into the second cycle of the review of funding for teaching.

In the last consultation, HEFCE raised concerns about the effects on part-time provision and on science and engineering if it did not increase the assumptions about income from full-time undergraduate fees. What are you now doing to support these areas of provision?

We will provide £75 million in additional funding to support very high cost science subjects, which are strategically important to the economy and society but vulnerable because of relatively low student demand.

The funding over three years from 2007-08 will support chemistry, physics, chemical engineering, and mineral, metallurgy and materials engineering - to help maintain provision in these subjects in HEIs while demand from students grows.

This funding brings the support that HEFCE is giving to strategically important and vulnerable subjects to nearly a quarter of a billion pounds by 2010. As we reported to the Secretary of State, we are already implementing a £160 million programme of work. Much of this is designed to raise the aspirations of young people to study subjects which are of fundamental importance to the prosperity and knowledge base of the country.

We believe it is far more cost-effective to adopt a time-limited approach to sustain capacity while this demand-raising activity produces results. It would be much more expensive to rebuild capacity from scratch to meet increased demand in the future.

In conjunction with the DfES we provided an additional £40 million for 2006-07 and 2007-08 to encourage participation and improve provision for part-time students from the most under-represented groups. This money will allow institutions to extend their work with employers and communities to encourage people from under-represented groups to enter part-time HE. The funds will also enable institutions to provide more academic support to ensure these students succeed in their studies.

Allocations

Why are you changing your treatment of the part-time postgraduate premium and fee assumption?

Currently, the funding method explicitly recognises that there are higher costs for part-time postgraduates relative to full-time. It also assumes that those higher costs are met through the higher fees that institutions tend to charge for part-time postgraduate study compared to full-time, rather than being met through HEFCE grant. By changing our treatment of the premium and fee assumption we ensure that we maintain this position. For further technical explanation of how we will achieve this see Appendix A.

What is the basis for the fee assumptions for postgraduate taught students?

Fee assumptions for postgraduate taught students were informed by a 'Survey of fees for postgraduate taught and part-time undergraduate students', published in August 2003. The decisions that followed that review were announced in paragraphs 33-35 of HEFCE 2004/24, 'Funding method for teaching from 2004-05: Outcomes of consultation'.

Recognising flexible study patterns

Why are you not changing to credit-based funding now?

Under a credit-based funding system, students would be counted on the basis of the credits they are awarded, regardless of their initial study intentions. We are aware of the advantages of credit-based funding, and we are considering moving towards such a system in the longer term. However, we would not wish to make such a change to our funding method until the recommendations of the Burgess report have been implemented by most institutions. ('Measuring and recording student achievement' [Adobe PDF 1.3Mb], a report of the scoping group chaired by Professor Robert Burgess). In addition, we are aware that some institutions believe that credit-based funding will introduce an undesirable link between funding and academic success, which could put pressure on academic standards. For these reasons, we have decided not to adopt a credit-based funding methodology without further consultation with the sector.

In the meantime, our proposal to count the volume completed by students who complete less than their initial study intentions will be a significant step in ensuring that our funding method does not discourage flexible learning.

Suppose that a student who initially intends to study for 1 FTE only completes 0.5 FTE. Will they then attract the part-time premium/allocation?

We currently provide a premium to recognise the additional costs associated with teaching part-time students. In 2008-09, we plan for this premium to become a targeted allocation outside the tolerance band. We believe that many of the factors that increase the costs of teaching part-time students are related to recruiting students, supporting them through the enrolment process and providing tailored provision. It therefore would not be appropriate to attach the part-time premium to full-time students who achieve something less than their initial study intentions.

Will students who complete something other than their initial study intentions attract premiums/targeted allocations?

We wish, as far as possible, to avoid additional complications to our funding method. We therefore do not propose to take into account the new volume recorded as a result of this proposal when calculating premiums or targeted allocations.

Will your proposal to count students who complete something other than their initial study intentions affect the widening participation allocations?

One of our current allocations for widening participation is intended to support institutions in improving retention (IR). This allocation has sometimes been regarded by the sector as a partial compensation for the costs associated with teaching students who do not complete their initial study intentions. As a result, it might be argued that our proposal to fund on the basis of FTE completed will render the IR allocation redundant.

We believe, however, that the IR allocation and the new proposal to support flexible learning have distinct purposes. The IR allocation is intended to contribute towards the costs of extra support needed by students who enter HE with lower entry qualifications. Our new proposal is intended to ensure that students are not discouraged from learning at a pace that suits their needs. The two funding streams should therefore complement, rather than duplicate, each other. We will, however, keep the relation between the widening participation allocations and the funding for flexible learning under review.

Will the new volume count towards our targets for additional student numbers (ASNs)?

ASN targets for 2006-07 and 2007-08 have been set without taking into account the volume of activity completed by students who complete something other than their initial study intentions. We therefore cannot allow the FTE completed by these students to count towards these targets. We will review the situation if we set further ASN targets.

Does the threshold of 20 credits (0.16 FTE) apply to students who complete their initial study intentions?

No. Our method for funding students who complete their initial study intentions will remain unchanged. The threshold of 20 credits (0.16 FTE) referred to in paragraph 65 of HEFCE 2007/02, will only apply to students who complete something other than their initial study intentions. Students who complete what they set out to achieve typically can be counted for funding purposes provided that their FTE for the year of programme of study is at least 0.03.

Could the flexible study proposal encourage institutions to restructure their curriculum?

During the consultation events held in March 2007, a number of delegates suggested that our proposal to support flexible learning could have unintended consequences. In particular, it was suggested that some institutions might 'salami-slice' their provision, in order to ensure that any student who completes less than their initial study intentions will complete some module - however small - and therefore be counted for funding purposes.

We have confidence in the integrity of universities and colleges, and believe that few institutions would consider restructuring their curriculum purely for funding purposes. However, we have taken precautionary steps to address this concern. In particular, we propose only to count students who complete something less than their initial study intentions on the condition that they complete at least 20 credits (0.16 FTE). This will ensure that institutions are not encouraged to preface every course with a very small module, to make sure that all students attract some funding.

Some have argued that institutions might nonetheless divide their provision into small units in order to ensure that all students that complete more than 20 credits before withdrawing attract the maximum amount of funding. As noted above, we think that this scenario is unlikely. If, however, this became a problem we may consider counting credits completed by students who complete less than their initial study intentions in 'chunks' (of, say, 20 credits) in order remove any such incentive.

Could this proposal remove incentives for improving retention?

Some delegates argued during the consultation events held in March 2007 that the flexible study proposal could lead institutions to focus less efforts on retaining their students. Again, we believe that this is unlikely - we believe that most institutions invest effort in retaining their students not simply for financial reasons, but because of their genuine wish to see all students succeed to their full potential.

However, it should also be noted that the flexible study proposal does not remove financial incentives for encouraging retention. Students who complete their initial study intentions will typically attract more funding than those who withdraw (especially since students who withdraw will not attract premiums/allocations). In addition, we will continue to support and recognise efforts to improve retention through widening participation funding streams, and through the performance indicators.

TRAC for teaching

What is 'TRAC for teaching', also known as TRAC(T), and where can I find information about it?

TRAC for teaching is a national framework for costing teaching, which is being developed in consultation with the HE sector.

The subject price group weightings are urgently in need of revision. Why cannot this be done immediately?

We are aware of the need to review HEFCE's subject price group weightings. However, we cannot do this until we have a better understanding of the relative costs of teaching different subjects. TRAC(T) should give us these data by summer 2008. We will therefore be able to implement any changes to the subject price group weightings from 2009-10 onwards, following consultation with the sector. In the interim, the additional £75 million for high cost, vulnerable science subjects, announced in December 2006, will go some way towards meeting concerns about the funding of subjects in price group B.

Institutions' expenditure on teaching is likely to change, due to the introduction of variable fees. So why choose now to collect data on the costs of teaching?

We are aware that many institutions want to have a better understanding of the costs of teaching in order to manage their own resources. In addition, we need TRAC(T) data to inform the review of our method of funding teaching. We have therefore worked with the sector to ensure that TRAC(T) is developed and implemented as quickly as possible.

We are aware, however, that the sector is currently going through a period of change and that the costs of teaching may fluctuate in the coming years. We will therefore benchmark the data submitted by institutions to ensure that any anomalies do not distort our review of the teaching funding method. We will also continue to collect data on subject-related costs beyond 2008 and will use them to ensure that the subject price group weightings continue to reflect the relative costs of teaching.

Will TRAC(T) win extra resources for teaching?

TRAC(T) should enable us to understand the total costs of sustainable teaching. We will use this information in our conversations with the Government about the funding needs of higher education. In some cases, we may wish to argue for extra resources for teaching. In other cases, we will use TRAC(T) information to make the case for retaining the current level of funding - this will be particularly important in the context of variable fees.

Will TRAC(T) simply reflect institutions' spending patterns?

At the consultation events held in March 2007, some delegates argued that since TRAC(T) is based on expenditure data, it will not help us understand the 'real costs' of HE. Instead, TRAC(T) data will simply reflect institutions' spending patterns. We take these concerns seriously, and wish to make two points in response.

First, it is true that TRAC(T) relies on expenditure data (subject to cost adjustments.) We are aware that, as a result, it will not provide a complete picture of the costs of teaching. However, this does not mean that TRAC(T) data will not be useful. The exercise to understand subject-related costs will present us, for the first time, with a picture of the relative costs of teaching in each HESA academic cost centre. In addition, our proposal to benchmark the data submitted by institutions to remove outliers will get us one step closer to a representative picture of the costs of teaching. This information may not be perfect - but it is much better than anything that has previously been available.

Second, the alternative to TRAC(T) would be to engage in some form of zero-based costing exercise. This would involve working with the sector to specify what is necessary to teach each subject in a high-quality and sustainable manner. While such an exercise would be valuable, it would also be both burdensome and challenging - and our conversations with institutions suggest that few currently have the appetite to take on this task. TRAC(T) is therefore the most practical option available at this point in time.