HEFCE Annual Conference 2009

Current issues

Tim Melville-Ross, Chair, HEFCE

(Slide 1) Introduction

I have now been Chair of HEFCE for just over a year, and I have to tell you that I am enjoying every moment of it. One of the main reasons for that is the extraordinary support and encouragement I have had from everybody in the sector. This is especially true of your generosity in sharing information and views with me so that I can move as quickly as possible up my very steep learning curve. I am of course still climbing it, but I hope you will allow me this opportunity to range over the current issues that I believe are the most important from your point of view.

This is important raw material for the discussions which we will have during this conference which I hope will develop and take forward the sector view on what should happen over the next 15 or 20 years. It is also an important foundation for the new strategic plan that HEFCE is currently developing, and which I will touch on at the end.

I hope you won’t think it excessively arrogant of me in presuming to do this as I am not originally from the sector. All I will say about this in mitigation is that I am hugely enthusiastic about the sector and believe that its success is at the very heart of the success we all hope all our citizens will enjoy, both economically and socially, over the next 20 years. And I will also freely admit that I have had not a little help from my friends in putting these remarks together!

I will use a few slides, mostly to highlight some of the numbers I will quote. This first one gives you an idea of what I want to talk about:

(Slide 2)

  1. The 2008 RAE
  2. Research Issues Going Forward
  3. The Recurrent Grant Announcement
  4. Learning and Teaching
  5. Knowledge Transfer
  6. Future Funding
  7. Growth and ASNs
  8. Widening Participation
  9. Employer Engagement
  10. STEM
  11. Capital Funding
  12. Regulation
  13. HEFCE’s Role
  14. Taking the Planning Process Forward

Please don’t have a fit at the length of the list. I shall ensure my comments are succinct and, I hope, to the point. The list contains two of my three personal areas of interest, namely WP and Employer Engagement. It does not include the third, Leadership, Governance and Management, the quality of which I regard as central to the achievement of all our ambitions. The reason for this is because it is even more a forward looking than a current issue, and we will I hope spend time on it in our plenary session tomorrow, just before the Secretary of State speaks.

The 2008 RAE

I shall start with this because it has been so front-of-mind for all of us over the last few months. I believe we used a rigorous, fair and robust process, based on expert review. We identified research of the highest quality across the whole range of subjects wherever it was to be found. All kinds of research, whatever the subject and whether in islands of excellence or in the big research intensive institutions, were valued equally.

(Slide 3)

There is no doubt that research in the UK continues to be world-leading. Look at the numbers.

(Slide 4)

It is really very remarkable that over half the submissions were world-leading or internationally excellent. It is also remarkable that nearly all HEIs in the UK had some world-leading research in at least one of their submissions.

Research Issues Going Forward

The key issue here of course is the development of the Research Excellence Framework. I should stress that the REF will NOT just be about metrics, in any subject area. We have to develop a range of approaches including both statistical indicators and peer review. Like the RAE, the REF will encourage and reward research of all kinds, and will pay attention to economic and social impacts as well as academic. A full set of proposals will be available for consultation in the autumn, based on the experience of the pilot programme, three rounds of meetings of the Expert Advisory Group, several workshops with senior HEI staff, and many, many presentations. We really are taking this very seriously indeed.

Some other considerations will be the need to reward excellence wherever it is found, the positive impact of collaboration on research and its funding, and the continuing importance of the dual support system.

The Recurrent Grant Announcement (Slide 5)

This 2009-10 settlement is a good one for HE, especially in the current very difficult economic circumstances. It represents a significant overall increase, with a particularly positive rate of increase for research. It means continuing support for HE in aiding recovery from the recession, and also that we are in a position to help universities manage significant changes.

The main factor influencing changes in grant is of course the 2008 RAE result. Other factors include funding for additional student numbers, changes for funding for WP and student success, and the continuing impact of ELQ and the moderating measures we have put in place.

As far as research is concerned, we are funding excellence wherever we find it, and are continuing to protect STEM subjects.

Of course there have been some criticisms of the funding outcomes. But let’s remember that comparing funding changes over one year with volume changes over seven obscures the point that funding has risen 49 per cent in real terms, yes real terms, for STEM subjects over the RAE cycle and 27 per cent for non-STEM subjects. Of course no system is perfect, especially one as complex as this, but I believe a really good job has been done which will further enhance the capability and reputation of research in England. For teaching, maintaining the unit of resource is key to quality and flexibility.

As I’m sure you know, our grant letter this year only covered one year, so we have had to use 2008 grant letter allocations as the basis for providing the provisional grant allocations beyond 2010 issued recently. If our assumptions prove unfounded we shall obviously have to make adjustments.

This year we also tried to respond to criticisms that our grant letter was getting too complicated. We still provide institutions with all the detail so our processes are transparent, but the grant letter itself provides the vice chancellor with an at a glance assessment of what money you will get next year and what are the main reasons for changes from this year. I hope you found this helpful.

Learning and Teaching

Two topics – quality and standards, and flexibility.

There has been much debate, and indeed publicity (not all of it favourable), recently about quality and standards in HE. We must not be in any way complacent about this issue. We must provide increasingly clear assurances to a range of audiences, some with little to no knowledge of how HE works. We have to explain that institutions are not just competent guardians of quality and standards but are actively promoting teaching excellence and appropriately rigorous academic standards and level of challenge. Along the way, we may have to cope with requests for information that we will, shall we say, find challenging.

As the main provider of public funds for teaching, and in its regulatory capacity, HEFCE has a strong interest here. Colin Riordan, Vice Chancellor of the University of Essex, and his sub-committee of the Teaching, Quality and the Student Experience strategic committee are closely examining the extent to which we can have confidence that we are fulfilling our statutory responsibilities in this area, and will no doubt be making recommendations for action. They will be concluding their work in June and we are committed to taking a robust and evidence-based approach to dealing with this issue. It will be discussed in the challenges debate later today.

Flexibility in teaching is crucial if we are to address future social and economic challenges. This is true both in terms of the way we provide teaching funding and in the provision of learning and teaching opportunities.

Much is already being done. For 2009-10 we have allocated £73 million for part-time undergraduates on top of the funding already received through mainstream teaching grant.

We have also this year welcomed the introduction of a credit framework for HE and have continued in our support of flexible learning pathfinder projects.

Large numbers of students are studying part-time, and many are now more likely to change their study intentions, or to ‘dip in and out’ of HE.

After consultation with the sector we have concluded that some elements of our funding methods do not fully accommodate some of these patterns of student behaviour, and could even inhibit institutions which want to develop more flexible study options for their students. We are recognising this in our funding allocations from 2009-10 by including students that don’t complete what they set out to at the start of their year’s study, but who do complete at least 20 credits.

Knowledge Transfer

Over the last year, we completed the allocation of around £400 million for knowledge transfer through the Higher Education Innovation Fund (HEIF) round 4. HEIF rises to £150 million in 2010-11 meeting the target set in the 2003 Lambert Review. Funds were made available in response to your applications, and HEIs have been using allocations since last August.

We have published an overview of all strategies, which reflects the development of this agenda in the sector. In 79 per cent of HEIs, engagement work was judged to be fully integrated into core mission, with the rest at least loosely integrated. 83 per cent of HEIs responding said that they would target support to SMEs, a priority set by Government in the 2008 Sainsbury Review of Science and Innovation. Alan Langlands in his speech explained the similar results coming out of our evaluation of third stream support, being launched today, that the sector has made very good progress to embed this agenda and deliver value back for public funds.

We stress though that the job is not done yet on the third stream agenda, and HEIs will need continued support to make their full economic and social contributions. As part of this, HEIs do need their own capacity to negotiate sustainable relationships with business. We look forward to working with HEIs to improve the way in which this is done.

Future Funding (Slide 6)

Against a background of growing uncertainty about the availability of public funding, we can take some comfort, at least in relation to research funding, from an answer given by David Lammy in the House of Commons on 16 March. You can see the quote on the slide.

"HEFCE provides QR research funding to English universities. The CSR07 allocations are: £1,444 million in 2008-09; £1,509 million in 2009-10; and £1,634 million in 2010-11. HEFCE also provides capital grants to universities to ensure the maintenance of world class research facilities. The 2010-11 figures are indicative and will be finalised in early 2010."

This is a rare Government statement on funding beyond 2009-10.

We can take further comfort from many statements by government ministers that dual support is here to stay and the Prime Minister’s recent reassurance that research funding will be safeguarded within the science ring fence. Having said that, I think in the present climate we have to plan for the possibility of less generous grant outcomes, as I know many of you are.

Growth and ASNs

This I suspect may be the area of greatest interest to many people here, given the continuing high level of interest in a university education, boosted no doubt by current economic and employment challenges. We have a buoyant sector, with student numbers growing year by year, and apparently not constrained by top-up fees.

(Slide 7)

The number of accepted full-time applicants increased by 5.6 per cent between 2006 and 2007, and 7 per cent between 2007 and 2008. There are now more than 1.3 million home and EC students (FTEs) in higher education as shown on the chart.

But here is the problem. HEFCE will be funding 10,000 fully funded additional FTEs in 2009-10, and 7,000 co-funded ASNs. The Government’s original funding assumption was 15,000 fully-funded ASNs for 2009-10. We are entering a period of restrained growth. The Secretary of State has said he will review the 2010-11 position later this year. He has also asked HEFCE to develop proposals to minimise and preferably eliminate over-recruitment in 2009-10. Moreover, if DIUS were to reduce the HEFCE grant because of excess student support costs we would have to pass that reduction on to institutions, especially those that had over-recruited.

So what can we do? I believe the case for supporting higher education to the greatest degree possible through these difficult times is conclusive. Quite apart from the short-term benefit of keeping people who would otherwise be unemployed in useful higher education, there is the paramount need to position our economy and our society well for the challenges we shall have to confront as we emerge from the recession into an even more competitive world. This will also be a world in which the great issues of climate change, social unrest, terrorism and the rest will require the very best trained minds to address. As a sector, we must do all we can, especially through the National Economic Council on which the sector is represented by three very senior vice-chancellors, to persuade the Government of the need for further investment in the sector.

Widening Participation

Our three priorities are increasing links with schools, working with communities and securing evidence of the impact of the WP resource by examining strategic assessments carried out by individual institutions.

In March, as part of our response to the recommendations of the National Council for Educational Excellence published in the Autumn of 2008, we provided funding (£0.5 million) to a group of institutions to research models of effective school HE links. There are mutual benefits to be derived by both schools and HEIs when working in partnership and we have suggested that emphasis is placed upon exchanges which prioritise governance and management, curriculum delivery and HE-related information, advice and guidance. If you will indulge me for a moment in sharing a particular WP initiative at City University, I was particularly struck by their programme for encouraging young maths undergraduates to teach in local secondary schools. The results of this programme are spectacular, showing an average two grade improvement in the schools’ Maths GCSE performance. When I tell you that the average moved from E to C, you will see just how important the programme is in enabling more young people to aspire to go to university.

Ideas around social mobility and a fairer society continue to be a priority for government. The ‘New Opportunities’ white paper published in January set out the Government’s vision in this area. We have welcomed this and in particular its recognition of the role that higher education can play in social mobility. We need to ensure that this contribution is strong and long lasting. In this respect, the New University Challenge is important, as is the work that HEIs and FE Colleges are doing to develop opportunities for students who do not currently access HE.

Employer Engagement (Slide 8)

We have made a great start here, but the key strategic challenge remains getting businesses to understand and value what HE can offer. This in turn requires an understanding of the benefits of developing higher level skills, and the large economic – and social – benefits that can flow from this.

The slide shows the scale of the programme so far – all the funds currently earmarked have now been allocated. The investment we are making will help HEIs to develop and maintain strategic relationships with employers for long-term mutual benefit. It will also provide the infrastructure to be responsive to changing demands from employers as the economy recovers from the current downturn.

We are also pleased with the sector’s response to the launch of the Economic Challenge Investment Fund, specifically designed to be counter-recessionary. This is already somewhat over-subscribed, and we will be announcing allocations later this month.

STEM (Slide 9)

You will see from the slide the scale of the programme involving schools, universities, research councils and others to boost interest in STEM subjects, and also the very real signs of success. The University of Birmingham is leading the development of a national STEM programme, aimed at delivering a sustained increase in STEM graduates. Further action includes the science ring fence in the RAE, and continued monitoring of the level of interest in these subjects to identify any new or re-emerging vulnerability. We were also pleased to announce this year that the extra funding for high cost science subjects will be a permanent feature of our funding model rather than time limited to four years.

Capital Funding

Action has, of course, been taken to use capital funding to address some of our recessionary problems by bringing it forward. The sector has been quick to rise to this challenge. £150 million of capital funding has already been brought forward into 2009-10, which will actually deliver nearly double that figure in additional capital expenditure. The Government have asked the sector to bring forward £200 million of capital expenditure, so we have £50 million to go. We have invited institutions to consider again whether they are able to support this initiative.

Regulation

With all due modesty, this is another success story for HEFCE, working in partnership with the sector. A PA Consulting report published in January this year showed that, after a 25 per cent reduction in the administrative burden associated with regulation between 2000 and 2004, a further 21 per cent reduction was achieved between 2004 and 2008. Clearly HEIs have embedded many of the regulatory requirements that we have into their own systems. We are now working with UUK and Guild HE to establish a successor body to the Higher Education Regulatory Review Group, a body which we hope will deliver yet further efficiencies into the regulatory process.

All HEIs are of course charities, and HEFCE will shortly become the principal regulator of HEIs as charities. We will do our level best to ensure that any additional burdens from this are minimised. In fact, we are ambitious that the whole process of regulation should be and be seen to be proportionate to risk, and increasingly a process that adds value by supporting and building stakeholder confidence. We know, for example, that continued lending by banks in part depends on their confidence in the sector and in our regulatory approach. This subject too will come up in our challenges debate later this afternoon.

HEFCE’s Role (Slide 10)

I suppose most of what I have already said defines HEFCE’s role in some detail, but there are just three points I would like to make to underline it:

  1. The more I get to know HEFCE and the sector, the more I realise that it is very much in the interests of the sector, and indeed the Government, to have an intermediary funding, regulatory and policy body.
  2. This leads on to what I regard as perhaps our most important role of all, which is to preserve the autonomy of the sector. Echoing Alan’s words earlier, it is this autonomy that makes it great. Diminish that, and we diminish universities and higher education generally.
  3. I have talked a lot about change. HEFCE must adapt as the sector adapts and becomes more diverse if we are to continue to give you value.

Taking the Planning Process Forward

Our next plan will hardly be helpful if it assumes a single set of economic and social conditions as its framework. We have to articulate a way forward almost irrespective of the framework that emerges. But this is entirely consistent with the need to manage change and diversity. We must write a compelling story to help us all navigate through the recession and whatever follows. We must adopt a set of principles universally acceptable to the sector and good for virtually any scenario that emerges. We have to find a way of capturing, debating and revising our strategy in an age of uncertainty. This we will do, but we will need your active engagement!

Thank you.

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Last updated 3 April 2009