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Dear Vice-Chancellor or Principal

1.   This letter sets out the allocation of capital funding for learning and teaching infrastructure in further education colleges (FECs) funded directly by HEFCE for the financial year 2008-09. Allocations for colleges that are members of HEFCE-recognised consortia led by an FEC are included within the lead colleges' allocations.

2.   We will not be allocating funding for 2009-10 and 2010-11 until we have a clearer picture about future requirements. These will be informed by: the ongoing discussions with the Learning and Skills Council around alignment of the two Councils approaches to capital funding across higher education (HE) and further education (FE); the development of HE strategies by FECs; and how we address remaining areas of under-provision of higher education.

3.   Funding for 2009-10 and 2010-11 will, therefore, be advised at a later date.

4.   A total of £15 million is available through these allocations for 2008-09, for activity undertaken from now until March 2009. These funds will be paid automatically in four equal instalments in June 2008, August 2008, November 2008 and February 2009.

5.   Capital funding for indirectly funded FECs for 2008-2011, including colleges that are members of HEFCE-recognised consortia led by a higher education institution, was announced in HEFCE 2008/04. Overall our aim is to ensure that directly and indirectly funded FECs receive comparable benefit from relevant funding programmes, albeit through different routes, so that there are no perverse financial incentives for FECs to switch between funding routes.

Purpose of the funds

6.   The allocations for 2008-09 are to help raise the quality of HE learning and teaching facilities in FECs, in order to enhance the learning experience of their HE students. We expect colleges to use the funds in ways that will support their strategy for HE most effectively. The funds may be used to contribute to:

  • investment in equipment, particularly IT-related equipment, used in learning and teaching, and in e-learning
  • replacement of premises for learning and teaching
  • refurbishment of existing teaching spaces, particularly with regard to IT-related enhancements, including improvements to internal IT networks or supporting infrastructure.

7.   The funds should be used for HE provision and may be subject to audit in the normal way. We recognise, however, that it may be neither feasible nor desirable to construct ring-fenced boundaries between HE and FE. For example, equipment may be used by both HE and FE students. So we look to colleges to adopt a pragmatic approach, whereby the primary focus of the projects is on HE even if there are links with, and spin-off benefits at the margin for, FE.

Eligibility and allocation method

8.   This is not a competitive bidding process. All directly funded FECs that meet the conditions in paragraphs 10 and 11 will receive an allocation.

9.   Previously, in allocating capital funds to colleges, we have adopted a formula method for distributing funds that was consistent with our wider policies for funding FECs. These aim to encourage collaboration between institutions, while supporting diversity of provision. We want to discourage small, isolated pockets of HE, and to help develop stronger HE portfolios in the larger HE providers and where there are networks between HE providers. We have decided to continue to use the same method for distributing these capital funds.

Allocations and payment of funds

10.   The allocations for each directly funded FEC are at Annex A. They are based on the 2007-08 HEFCE standard teaching resource and widening participation allocations, and, where applicable, the Training and Development Agency for Schools' teacher training resource for 2007-08 and resource for any 2007-08 non-mainstream allocations.

11.   The total resource has been weighted according to the size of the college, based on 2007-08 full-time equivalent (FTE) students. Thus FECs with 800 or more directly funded HE FTE students will receive twice the rate of funds per FTE allocated to colleges with fewer than 800 FTEs. Colleges with fewer than 100 directly funded HE FTE students can access the funds, provided that they are developing their HE activity in collaboration with other FECs and/or higher education institutions so that the aggregate HE provision is at least 100 FTE places. We have set a threshold of £1,000 per annum as the minimum allocation for any college.

12.   We shall request a monitoring return from colleges in March 2009, reporting on the use of these funds. In the event that we are not satisfied that the funds have been used for the purposes described in paragraph 6 above we may seek to reclaim some or all of the funding provided.

13.   We expect colleges to take account of the need to reduce carbon emissions - as well as securing value for money - in making decisions about how these funds are spent.

Yours sincerely

Professor David Eastwood
Chief Executive

Date: 13 May 2008

Ref: Circular letter 12/2008

To: Heads of HEFCE-funded further education colleges

Enquiries should be directed to:

David Hill, tel 0117 931 7482, e-mail