Press release

7 March 2003

Grants settlement supports student success and research excellence

More funds to widen access, and to improve retention of students most at risk of dropping out, and more money for excellent research are the main features of the annual grants to universities and colleges announced by the Higher Education Funding Council for England today (Friday 7 March 2003).

The HEFCE announced that it was distributing £5,485 million in 2003-04, which represents an increase of 7.6 per cent compared with 2002-03. Funding for teaching has increased by 3.8 per cent (1.6 per cent in real terms), allowing provision for an additional 19,700 full-time equivalent student places for 2003-04 (note 3). Funding for research has increased by 10.9 per cent.

The overall total includes:

£3,399 million for teaching
£1,042 million for research
£451 million for special funding
£364 million for earmarked capital funding
£178 million for rewarding and developing staff
£47 million for increases in pension costs.

Sir Howard Newby, Chief Executive of the HEFCE, said:

'The grant settlement reflects major themes in the Government's White Paper and our own strategic thinking (note 6). We have provided institutions with funding for widening participation which recognises the extra costs of supporting students from disadvantaged and non-traditional backgrounds, increasing the likelihood that they will complete their courses successfully. At the same time we are providing additional funding to support the best research, including extra money for departments which have consistently achieved the highest quality ratings.
'There are also substantial increases in capital funds for teaching, research and IT, which will make a significant contribution to redressing past under-investment in infrastructure. Institutions have already been notified about the second round of the Science Research Investment Fund and will be notified of other allocations later. These sums will increase more steeply in the future. The £364 million allocated for capital in 2003-04 will rise to £649 million by 2005-06.

'This settlement will enable universities and colleges to take stock of their individual missions and build on their strengths. In some cases this may involve restructuring and in others greater collaboration with other institutions. In all cases we want to work with universities and colleges to help them achieve their goals.'

Funding for teaching

The £3,399 million allocated for teaching is made up of:

core funding - £3,063 million
additional funded places - £71 million
widening access and improving retention - £265 million.

The £265 million for widening access and improving retention recognises more fully the additional costs of providing for students who are most at risk of dropping out. This total is made up of:

£38 million allocated, as in previous years, on the basis of postcodes, to support recruitment of students from low participation neighbourhoods
£155 million allocated for full-time undergraduates, on the basis of previous entry qualifications and age
£62 million is to support part-time students
£10 million allocated on the basis of the number of students receiving the Disabled Students Allowance.

Funding for research

Funding for research takes account of the Government's White Paper 'The future of higher education' and the grant letter from the Department for Education and Skills to HEFCE on 22 January. Total recurrent funding for research is £1,042 million, an increase of £102 million (10.9 per cent) over 2002-03. In distributing this funding HEFCE has:

maintained the average unit of resource in real terms for departments rated 5* (five star) in the 2001 Research Assessment Exercise (RAE)
provided additional funding of £20 million to departments that achieved a rating of 5* in both the 1996 and 2001 RAEs
restored in real terms the average unit of resource for 5-rated departments to 2001-02 levels
allocated the remaining quality-related (QR) research funding to 4-rated departments. (This reduces the research funding allocated for 4-rated departments from £139 million in 2002-03 to £118 million in 2003-04).

HEFCE is providing £20 million as a capability fund to support research in emerging subject areas where the research base is not as strong as in more established subjects. Mainstream QR funding to 3a-rated departments will be discontinued.

The seven emerging subject areas to receive capability funding are:

nursing
other studies and professions allied to medicine
social work
art and design
communication, cultural and media studies
dance, drama and performing arts
sports-related studies.

Capability funding will be allocated for 3a and 3b rated departments in these seven subjects on condition that institutions submit acceptable research strategies for each subject.

Third stream funding

HEFCE's direct contribution towards the permanent third stream of business and community activity in higher education continues with £20 million per year. Added to the funds from the Office of Science and Technology, this will be taken forward under the Higher Education Innovation Fund as already announced. Third stream funding activity will be further strengthened from 2004 by up to £10 million per year for up to 20 Knowledge Exchanges (to increase knowledge transfer and innovation from higher education to the wider community). Complementing this, HEFCE will also extend the Higher Education Active Community Fund from 2004.

Ends

Notes to Editors

1. 'Recurrent grants for 2003-04' (HEFCE 2003/10) is available on the HEFCE web-site (www.hefce.ac.uk). The document summarises provisional allocations of recurrent funding to institutions for the academic year 2003-04. Final allocations will be announced in July.

Summary tables

Regional tables

2. The recurrent grant will be distributed to 132 higher education institutions and 170 further education colleges teaching higher education courses.

3. The increase of 3.8 per cent in HEFCE funding for teaching equates to an increase of 2.4 per cent in the average unit of resource (HEFCE grant and tuition fee income) per full-time equivalent student. The increased funding for rewarding and developing staff, which we expect to consolidate into teaching funding in 2004-05, provides a further 1 per cent increase in the teaching unit of resource.

4. As in previous years HEFCE will provide funds to moderate significant changes in funding by providing a safety net. Institutions will not receive a reduction in resource (teaching and research grant, plus regulated fee income) in real terms, compared with the equivalent figure for 2002-03. Moderation funding is a short-term measure enabling institutions to secure change and manage the transition to lower levels of funding.

5. Distribution of special funding, including capital and earmarked funding, is not included in this grant announcement. Universities and colleges will be informed of the allocation of this funding later in the year.

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