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Executive summary

Purpose

1.   We have a funding agreement with each institution that we fund, which specifies targets relating to student numbers. This document explains what action we will take if institutions do not meet their targets for 2009-10.

Key points

2.   Within our funding agreements with institutions, we specify three targets that apply to student numbers funded through our mainstream teaching funding, although these targets will not all apply to every institution. They are:

  1. The contract range. Under our funding method for teaching, we calculate a standard level of resource for each institution, and an assumed resource (actual HEFCE teaching grant plus an assumption of income from fees). The percentage difference between assumed and standard resource for the academic year 2009-10 must be within a given range – known as the contract range.
  2. Funding conditional upon delivery of growth. This applies to institutions that are expected to increase student numbers in 2009-10, as a result of being awarded mainstream additional funded places. Funding for those places is contingent upon institutions actually recruiting additional students to fill the places.
  3. The contract full-time equivalent (CFTE) number for students on undergraduate medical and dental courses to which a quota applies, setting minimum numbers.

3.   These measures are designed:

  1. To maintain broadly comparable resource levels per student so that the quality of the student experience is not put at risk.
  2. To ensure that funds allocated for expansion do indeed deliver additional places.
  3. To ensure that the intended number of medical and dental students required to meet national needs is delivered, in return for the exceptionally high level of funding provided for such students.

4.   To achieve these objectives we will withhold grant from an institution which:

  1. Is found to have a level of assumed resource which takes it above its contract range.
  2. Does not deliver the growth expected in 2009-10 – arising from an award of mainstream additional funded places.
  3. Under-recruits against its CFTEs for medicine and dentistry.

5.   Where an institution is found to be below its contract range, we will want to discuss the reasons with the institution, and to receive an action plan setting out how the institution will ensure it comes within the range in 2010-11. We expect that institutions will then take the necessary action to bring numbers into line with their targets.

6.   In addition to the targets and monitoring arrangements that apply to our mainstream teaching grant, we are also funding some student numbers outside our mainstream teaching allocations. These include allocations for some Lifelong Learning Networks and for co-funded employer engagement. These allocations are subject to separate arrangements for monitoring and grant adjustments.

7.   In relation to paragraphs 4-6, before taking any action we will give institutions an opportunity to tell us about any material changes in definitions or mitigating factors that may have influenced the calculated level of holdback.

8.   On 29 October 2008, the Secretary of State wrote to HEFCE asking us to allocate no more than 10,000 additional (fully-funded) student numbers for 2009-10. Our grant letter from the Secretary of State of 21 January 2009 provided further information on this and states that ‘any over-recruitment in the coming year could result in a transfer of HEFCE grant back to this Department in that or future years, in order to meet the consequent unanticipated student support costs’.

9.   On 20 July, the Secretary of State announced the availability of 10,000 new student places for 2009-10. The Minister of State for Higher Education and Intellectual Property provided further guidance on this in a letter to our Chair on 23 July 2009. The 10,000 new places for 2009-10 are for full-time undergraduates in certain subject areas that will support the Government's 'New Industry, New Jobs' policy.

10.   Our allocations for 2009-10 make provision for growth in the sector that is consistent with the Government’s plans. To help manage the risk of over-recruitment we ask institutions to avoid increases in full time undergraduate and PGCE entrants above the level of their actual admissions in 2008-09 plus any additional student numbers (ASNs) allocated to them for 2009 10 by HEFCE or the Training and Development Agency for Schools, unless such increases:

  • are of full-time undergraduates in the subjects specified in Annex A of HEFCE Circular letter 15/2009 and
  • do not exceed the numbers confirmed in Circular letter 17/2009.

We expect institutions to recruit responsibly in 2009-10, but have not introduced any new specific targets through the funding agreement this year. Nevertheless, we may take further action if individual institutions or the sector as a whole significantly over-recruit in 2009-10 and if the Department for Business, Innovation and Skills (BIS) were to reduce HEFCE grant in order to meet its additional student support costs.

11.   The Secretary of State's letter dated 6 May 2009 stated that efficiency savings of £180 million were required to be delivered by higher education as part of the additional efficiencies required in 2010-11 as set out in the 2008 Pre-Budget Report. In light of the Secretary of State's letter, the Board agreed that, as a contribution to the overall efficiency saving of £180 million required in the 2010-11 financial year, we will apply a £65 million saving to teaching grant in the 2009-10 academic year.

12.   This efficiency saving has been applied pro-rata to all elements of recurrent teaching grant, after incorporating other changes to the allocations since March. The adjustment is 1.36 per cent of total teaching funding. We will also apply the same efficiency saving to any grant adjustment (whether positive or negative) arising from institutions’ HESES09 and HEIFES09 data, or any other separate monitoring (such as of employer co-funded allocations, or following data audit or reconciliation). This is necessary to ensure the efficiency saving applies in equal measure to all institutions for the year, including where adjustments to teaching grant are subsequently necessary.

13.   If an institution does not recruit any students in 2009-10 then all funding for teaching allocated for 2009-10 will be held back.

Action required

14. No response is required.

Date: 1 August 2009

Ref: 2009/24

To: Heads of HEFCE-funded further education colleges, Heads of HEFCE-funded higher education institutions, Heads of universities in Northern Ireland

Of interest to those
responsible for:

Finance, Student data, Planning

Enquiries should be directed to:

By e-mail to recurrentgrant@hefce.ac.uk or to HEFCE higher education policy advisers