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Dear Vice-Chancellor or Principal

1.   We wish to invite applications for employer co-funded additional student numbers (ASNs) for the academic year 2010-11.

2.   Higher education institutions (HEIs) and further education colleges (FECs) with over 100 full-time equivalent (FTE) directly funded students are eligible to apply (in line with the criteria at paragraphs 9-11).

3.   We invite applications from HEIs and FECs that are already in receipt of a co-funding allocation, and new bids from HEIs and FECs that have not yet been allocated co-funding.

4.   An application form is provided for HEIs and FECs to complete.

5.   The deadline for responses is noon on Friday 5 March 2010.


6.   In our grant letter from the Government in 2008See note 2 we were allocated funding to deliver growth in employer co-funded provision of 5,000 additional entrants in 2008-09, 10,000 in 2009-10 and 20,000 in 2011-12.

7.   In 2008, we were also allocated funding to help develop higher education (HE) operations directed towards employers, specifically to support staffing and infrastructure needed to increase the scale of workforce development activity and leverage additional investment in HE from employers. We have now allocated all development funding across a diverse range of projects: the list of projects funded is available.

8.   Over 70 HEIs and FECs have been allocated co-funding. Based on existing recruitment patterns, we need to allocate more co-funded growth to meet the Government’s target of 20,000 additional entrants for 2010-11.


9.   As with our existing co-funded allocations, bids for additional co-funded ASNs should support activity that focuses on responding to the workforce development needs of employers. This should be reflected in the content of submissions to HEFCE, supplemented with more detailed information on the skills needs identified and, where known, the employers being targeted.

10.   HEIs and FECs with an existing co-funding allocation may bid for ASNs to support provision in line with the demand from employers and employees across any sector of the economy. This will enable these institutions to extend their existing employer co-funded operations in line with the expertise and infrastructure they have put in place to deliver co-funded provision.

11.   HEIs and FECs not yet in receipt of a co-funded allocation are encouraged to bid for co-funded growth in line with the Government's priority areas for skills and economic growth as outlined in the government framework for the future of higher education, 'Higher Ambitions: the future of universities in a knowledge economy'See note 3. Specifically, institutions new to co-funding should bid for numbers to recruit students co-funded by their employers in one or more of the following areas:

  1. HE provision for employee learners whose employers align with the business sectors and themes outlined as strategic priority areas in the Government's strategy document 'New Industry, New Jobs'See note 4. Some of the priority areas may be cross-cutting, such as low carbon developments, and co-funded provision can support these priority areas in any business sector.
  2. Employee learners with no previous HE experience (defined here as an HE qualification within the Framework for Higher Education QualificationsSee note 5).
  3. Strategically important and vulnerable subjectsSee note 6.
  4. We will also consider applications for funding that supports other areas of activity. When bidding, institutions should make a case for why these other areas are of strategic importance. Evidence to support the case for supporting these areas would strengthen a bid. If we are over-subscribed for funding, we may not prioritise these other areas of activity.

12.   The UK Commission for Employment and Skills will be conducting an annual audit of skills, the first of which is due to be published in March 2010. The audit will look at skills needs across the country that will support future economic growth and will also look at current skills needs. Institutions may wish to take account of these skills audits when planning co-funded provision that responds to employer demand, but this is not a requirement for the 2010-11 ASNs.


13.   Institutions that have been allocated co-funding will have targets relating to the FTE students to be recruited that are co-funded by their employers. Co-funding lies outside of mainstream funding, so co-funded students will therefore not count towards institutions’ mainstream targets.

14.   Our policy requires employers to contribute wholly or in part towards the cost of HE provision that is responsive towards their needs for the training and development of their employees. Growth in provision that facilitates employer engagement of this type will be supported by HEFCE on a co-funded basis.

15.   Co-funding is allocated through a method similar to fully funded ASNs, where institutions state in advance the level of FTEs (by price group, mode, level, and length of study in the year) they will be able to recruit. This recurrent co-funding allocation rolls forward year to year, subject to recruitment. Funding is incorporated into institutions’ grant tables in advance of the academic year and funds are paid in-year. Institutions will be allocated a proportion of the funding HEFCE would normally pay, with the expectation that they would secure any fee (from either employer or employee) plus the balance of the funding that HEFCE would normally otherwise pay from the employer.

16.   For these additional co-funded ASNs for 2010-11, we will fund all FTEs at a fixed rate of 50 per cent of what we would pay if the places were fully funded – therefore employers are required to provide the other 50 per cent. Any tuition fees will also need to be recovered from the employer and/or employee.

17.   Employer contributions may be in cash or in kind. Where an employer is providing in-kind contributions, institutions should cost this contribution to ensure this is reducing the costs to the institution (hence reducing a proportion of the costs of delivery that is normally funded by HEFCE).

18.   Institutions should ensure that the combined contributions of HEFCE and employers (and employees paying fees) meet their costs.

Changes in the way we deal with under-recruitment

19.   We recognise there are challenges for institutions in developing new approaches that respond to the employer market and stimulate employer investment in HE learning for their employees. We also expect that employers' decisions to invest in higher-level skills may fluctuate from year to year.

20.   Our approach to dealing with under-recruitment to date has been to:

  • reduce grant where recruitment targets have not been met in a particular year
  • maintain institutions' funding and targets for future years without consolidating reductions for institutions that have under-recruited in previous years.

21.   The approach to maintain funding and targets has provided flexibility to institutions in the early phase of this new funding mechanism, particularly where institutions are implementing significant change programmes in order to respond to employers' skills needs.

22.   Now that experience of co-funding recruitment is building up across the sector, and in preparation for the next phase of co-funding (post 2010-11), we are considering introducing a 'two chance' rule for all our co-funding from 2010-11 onwards. This rule would mean that institutions would have two chances (across two academic years) to recruit students – any non-recruitment after two years would lead to HEFCE reducing an institution’s co-funded allocation. This change would bring co-funding more into line with the approach for fully funded ASNs.

23.   If we do decide to introduce such a change, we will write to co-funded institutions separately to provide details of the changes. Institutions bidding for additional co-funding should be aware that their co-funding allocation may be subject to this proposed change.

Monitoring arrangements

24.   Full details of monitoring arrangements will be provided in an award letter from HEFCE. To summarise, co-funding provision is returned through the following annual data monitoring processes:

  1. The Higher Education Students Early Statistics (HESES) and Higher Education in Further Education: Students (HEIFES) surveys – institutions record co-funded activity as non-fundable. For further details, see 'HEIFES09: Higher Education in Further Education: Students Survey 2009-10' (HEFCE 2009/37) and 'HESES09: Higher Education Students Early Statistics Survey 2009-10' (HEFCE 2009/36).
  2. End-of-year data monitoring return – this separate co-funded employer engagement (CFEE) monitoring return records co-funded activity within an academic year. It provides data according to the definitions and criteria for inclusion as set out in our HESES publications. It also collects additional information on the nature of activity in the year.
  3. Higher Education Statistics Agency (HESA) data and Individualised Learner Record (ILR) data – we are able to explicitly identify co-funded students from institutions’ HESA and ILR student returns. Following the end-of-year monitoring, we will reconcile the data reported in the CFEE survey with the final outturn reported to HESA and ILR.

25.   The CFEE monitoring return has been developed in recognition that, particularly in the early years of co-funding, the HESES survey submitted in December may not capture all the activity associated with co-funding allocated. Now that co-funding recruitment is building up across the sector, we intend to explore whether the HESES survey is now more appropriate for collecting recruitment data on which we can inform our funding decisions. This work may include capturing co-funded recruitment in 2010-11 through both the 2010 HESES survey and the CFEE return for 2010-11.

26.   We intend to commission a data audit review in 2010 of CFEE monitoring returns for 2008-09. This review will check the accuracy of data provided to HEFCE and provide evidence of good practice for dissemination across the sector.


27.   Funding is available to HEFCE-funded HEIs and to FECs that have more than 100 directly funded FTE students. We will accept collaborative proposals but these must be led by a single, named institution.

Application process, selection process, criteria and timescale

28.   We will assess bids to ensure that the questions on the bidding template have been sufficiently addressed and that activities to be supported align with the criteria for funding at paragraphs 9-11 of this letter. Where we have queries, we will seek to resolve these with bidding institutions, but reserve the right to exclude bids that we feel do not sufficiently align with the criteria.

29.   All bids meeting the criteria will be supported subject to the availability of resources. If the available numbers are over-subscribed, we will seek to reduce numbers allocated by:

  • applying a minimum and maximum number of co-funded ASNs we allocate to institutions
  • reducing the numbers allocated on a pro rata basis
  • excluding bids, or parts of bids that are a lower priority (see paragraph 11d)
  • a combination of the above.

30.   We reserve the right to adjust an individual HEI's or FEC's allocation where its bid is disproportionately large.

31.   To apply, HEIs and FECs should download and complete the appropriate application form, which can be found below. Completed forms should be e-mailed to Kellie Walters ( by noon on Friday 5 March 2010. Please note that enquiries should be directed through the relevant HEFCE institutional team.

32.   A co-funding spreadsheet is available to help institutions calculate notional HEFCE funding and employer contributions for co-funded provision for particular rates of employer contribution. It can be found on the HEFCE web-site at the location specified in paragraph 31.

33   Institutions should take account of the guidance on recording non-standard academic years when applying for provision funding. See Annex E of the latest HESES/HEIFES publications (HEFCE 2009/36 and HEFCE 2009/37, respectively) for further information.

34.   Recommendations for funding will be presented to HEFCE's Chief Executive's Group in March 2010 for my approval. Institutions will be informed of the outcome shortly afterwards.

Summary of timetable

Date (all in 2010)Event
5 March Deadline for receipt of applications for funding
8-12 March Applications assessed for fundability
23 March Allocations reviewed and approved
April Institutions will be contacted to collect detailed funding information
July Funding confirmed in grant tables
From August Funding commences

Freedom of Information Act 2000

35.   HEFCE is subject to the Freedom of Information Act 2000 which gives a public right of access to information held by a public authority. This may result in applications, communications between us and the institution, information arising from this work, or the outputs from the work undertaken being subject to disclosure if a valid request is made to us. We will comply with such requests in accordance with the legislation and our own policies.

36.   Institutions may, if they wish, provide potentially sensitive information (such as information relating to commercial interests) in a separate annex attached to the application for funding. This will highlight to us that there are concerns over disclosure.

37.   Where we consider it to be appropriate and practicable we will seek the views of applicants before disclosing this information. The applicant acknowledges that information provided in any annex is of indicative value only and that HEFCE may nevertheless be obliged to disclose this information. Our assumption will be that all information in the main application document may be disclosed upon request. Further information about Freedom of Information can be found on the Information Commissioner's web-site.

Yours sincerely

Sir Alan Langlands
Chief Executive

Date: 9 February 2010

Ref: Circular letter 03/2010

To: Heads of HEFCE-funded further education colleges, Heads of HEFCE-funded higher education institutions

Enquiries should be directed to:

relevant HEFCE institutional team