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Executive summary


1. This document summarises our provisional allocations of recurrent funding to institutions for academic year 2010-11.

Key points

2. The total HEFCE grant available for the 2010-11 academic year is £7,356 million. Although this is a reduction in cash terms of £573 million compared to the budget for 2009-10 of £7,929 million, this is largely attributable to the bringing forward of £250 million of capital funding from 2010-11 into 2008-09 and 2009-10. Adjusting for this capital shift, the underlying reduction in grant from 2009-10 to 2010-11 is 1.6 per cent in cash terms.

3. The total includes recurrent funding of £4,727 million for teaching (of which £144 million is for widening participation and £269 million for teaching enhancement and student success), £1,603 million for recurrent research and £150 million for business and community engagement. In addition, we are providing a further £562 million for earmarked capital grants and £294 million for special funding.

4. When compared with the 2009-10 academic year, the 2010-11 allocation represents:

  1. 0.9 per cent cash increase for recurrent grants (teaching, research and the Higher Education Innovation Fund)
  2. 14.9 per cent reduction in cash terms in capital funding after adjusting for the £250 million of capital funding that was brought forward from 2010-11 into 2008-09 and 2009-10
  3. 7 per cent reduction in cash terms in special funding.

5. We recognise that real-terms funding reductions will be challenging to institutions, but acknowledge the work that many are doing in preparing for a more uncertain future. The impact of the grant allocations will affect universities and colleges differentially, but there will be moderation funding to help institutions manage change. We will continue to work with institutions as they adjust their activities to meet growing financial pressures.

6. In 2010-11 we will directly fund 130 higher education institutions and 123 further education colleges. The institutional allocations announced in this publication show an average 0.4 per cent increase in recurrent grant for the sector, although there remain some further allocations of recurrent teaching grant that are not yet included. We have provided an uplift (at 1.25 per cent) to the main teaching grant allocation for each institution. Some institutions have gained additional funded student numbers. The total funding for widening participation and for teaching enhancement and student success is also being raised by 1.25 per cent. However we are reducing funding by £76 million in respect of three other targeted allocations.

7. Recurrent research funding has increased by 2 per cent, in keeping with the Government's commitment to enhance the research base through both sides of the dual-support system.

8. We are allocating a total of £562 million for earmarked capital grants. The distribution of capital funding between institutions has been announced separately and is not included in this document (paragraphs 96 to 101 provide further information).

9. The allocations in this document are provisional: we will aim to finalise them in time for the funding agreements that are issued in July. Institutions should note in particular that our grant lettersee note 1 from the Department for Business, Innovation and Skills of 22 December 2009 did not confirm funding for the 2011-12 financial year. In order to announce funding for the 2010-11 academic year, which has a four-month overlap with the 2011-12 financial year, we have assumed that funding will be maintained in cash terms for 2011-12. If we receive information regarding our grant for 2011-12 that suggests this assumption is no longer appropriate, then we reserve the right to review all of our allocations for the 2010-11 academic year. This would be with a view to smoothing any change in funding for institutions that might be necessary by 2011-12.

10. We recently wrote to individual institutions announcing the specification of the new student number control relating to full-time (FT) undergraduate (UG) and Postgraduate/Professional Graduate Certificate in Education (PGCE) students for 2010-11. We will monitor each institution's compliance with the student number control that we have specified for them. Where we find that an institution has exceeded its limit, this will result in a reduction to grant, which may be applied in the 2010-11 and/or 2011-12 academic year(s). This reduction will be repeated in subsequent years to the extent that the institution continues to contribute to excess student support costs.


11. The total recurrent funding for teaching that is available has increased by 0.4 per cent over the equivalent final allocation to the sector for 2009-10 and represents a reduction of £215 million compared to previously announced planssee note 2. There is also a further reduction of £83 million in the funding available for additional student numbers by 2010-11. In implementing these reductions, we have sought to target them at specific areas to limit across-the-board reductions for the whole sector.

12. We are reducing funding by £76 million in 2010-11 in relation to three targeted allocations within teaching grant, as previously notified in 'Changes to teaching funding targeted allocations for 2010-11' (HEFCE Electronic publication 11/2009). We are:

  • withdrawing £40 million for old and historic buildings in 2010-11
  • withdrawing £24 million related to accelerated and intensive taught postgraduate provision in price group D
  • phasing out over two years the additional £24 million funding provided to support foundation degrees. The allocation will therefore be reduced to £12 million in 2010-11 and withdrawn fully in 2011-12. Thereafter foundation degree students will be funded at the same rate as other undergraduate students.

13. We are increasing core recurrent teaching funding by 1.25 per cent. This is less than the Government's revised inflation figure of 2 per cent, so represents a real-terms reduction of £31 million or 0.75 per cent. The reduction in the Government's inflation figure – from the 2.75 per cent assumed in the January 2008 grant letter to 2 per cent assumed in the 2009 pre-Budget report – accounts for a further reduction of £31 million.

14. The £65 million reduction in teaching funding announced for 2009-10 has been consolidated into 2010-11 funding.

15. The total of £4,727 million allocated for teaching includes the following:

  1. £3,945 million for mainstream teaching grant.
  2. £144 million to support widening participation for students from under-represented groups.
  3. £269 million to support teaching enhancement and student success.
  4. £370 million for other elements of teaching grant.

16. The total for teaching includes £10 million that has been set aside to support institutions that are shifting the balance of their provision towards vulnerable science, technology, engineering and mathematics (STEM) and modern languages subjects. The distribution of this funding between institutions will be confirmed later in the year.

Controlling student numbers

17. In 'Higher education finances for 2009-10 and 2010-11' (HEFCE Circular letter 32/2008) we asked institutions to review their planned recruitment for 2009-10 in order to avoid any further increase in FT UG and PGCE entrants above the level of their actual admissions in 2008-09, plus any ASNs allocated to them for 2009-10. The Minister of State for Higher Education David Lammy reiterated this position in July 2009. In the 22 December grant letter, the Secretary of State asked us to make appropriate adjustments to the allocations of those institutions that have over-recruited, at a rate of £3,700 per full-time undergraduate and PGCE student recruited above the permitted level. We are currently in discussion with a number of universities and colleges about this. We are not in a position to confirm a final figure, and the funding adjustments for individual institutions are not included in this announcement.

18. At sector level, early student returns indicate that the rise in full-time undergraduate intake numbers in 2009-10 was approximately 15,000. These returns also show that full-time undergraduate student numbers for all years have increased by 44,000 in 2009-10, while full-time postgraduate numbers rose by 5,000. Full-time equivalent part-time numbers grew by 3,000. Overall, all-year, full-time equivalent HEFCE fundable student numbers rose by 52,000.

19. We are changing the way we specify the limit for 2010-11 to make it easier for institutions to monitor against their offers of places to prospective students for the coming academic year and to restrict the control to a smaller population – those fundable by HEFCE. We believe that setting a specific number for each institution will ensure clarity in what we expect of them. The limit represents the maximum number of HEFCE-fundable and employer co-funded students starting FT UG and PGCE study in the academic year 2010-11. This new student number control has been derived using a baseline taken from 2008-09 individualised student data returned to the Higher Education Statistics Agency (HESA) and the FE Data Service's individualised learner record (ILR) plus other adjustments, including allocations of additional student numbers and transfers between institutions that have subsequently been implemented.

20. We have written to individual institutions announcing the specification of the new student number control and providing a provisional limit for the year. Institutions that exceed their student number control limit for 2010-11 will be liable for a reduction in HEFCE grant.


21. A total of £1,603 million is allocated for research. This is an increase of 2 per cent compared with the equivalent funding for 2009-10. In distributing the total we have prioritised increases towards the mainstream quality-related research (QR) allocations, although the budget for the charities element of QR has also increased in line with inflation. The total is made up of the following elements:

  • £1,097 million for mainstream QR
  • £33 million for London weighting on mainstream QR
  • £205 million for the research degree programme supervision fund
  • £198 million for the charity support element
  • £64 million for the business research element
  • £6 million for national research libraries.

22. In response to the Government's presumption in the grant letter in favour of more research concentration, we have introduced a steeper funding 'slope' for all subjects by increasing the weightings for research activity at different levels from the previous 1:3:7 (at 2*, 3*and 4* levels respectively) to 1:3:9. The effect of the change will provide an initial step towards increased concentration.

23. We are also enhancing the mainstream QR grant allocated for research in geography and psychology. These subjects did not benefit from the protection for research grant in STEM disciplines introduced in the allocations for 2009-10. We recognise that around half the research activity in these disciplines returned to the 2008 Research Assessment Exercise could reasonably be regarded as more akin to work in STEM disciplines than to that in the other social sciences. We are enhancing the grant in these disciplines in 2010-11 to reflect this.

Higher Education Innovation Fund

24. We are providing £150 million for the Higher Education Innovation Fund. The distribution of this funding between institutions was previously announced in 'Higher Education Innovation Fund round four outcomes' (HEFCE 2008/34).

Moderation of teaching and research

25. We have continued our policy of phasing in changes by moderating the total allocations of teaching and research grant. Moderation funding is limited to £20 million for the sector. This has therefore required a threshold in these provisional allocations such that no institution sees a reduction to their recurrent grant for teaching and research of more than 0.8 per cent in cash terms compared with the equivalent, unmoderated figure for 2009-10. We will not provide moderation funding if it amounts to less than £100,000. The total funding for moderation may fall as a result of subsequent changes to grant for individual institutions.

Non-recurrent funding

26. Non-recurrent funding comprises special funding and earmarked capital. We are allocating a total of £562 million for earmarked capital grants. The total of £294 million allocated as special funding has decreased from £316 million last year. Special funding represents 4 per cent of total grant.

Action required

27. No action is required in response to this document.


  1. Grant letters to HEFCE from the Secretary of State for Business, Innovation and Skills can be read in full.
  2. In our grant letter from the Department for Innovation, Universities and Skills of 18 January 2008.

Date: 1 March 2010

Ref: 2010/08

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, Planning

Enquiries should be directed to:

HEFCE higher education policy advisers