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The Rt Hon Vince Cable MP
Secretary of State for Business Innovation & Skills
The Rt Hon David Willetts MP
Minister of State for Universities and Science
24 June 2010
This revised grant letter provides details of the additional funding the Department for Business Innovation and Skills is making available to the Council compared to its grant issued on 22 December 2009 and instructs you to issue 10,000 extra student places for entry in Autumn 2010.
It is a high priority for the Government to rebuild the economy and secure sustainable growth. Universities and colleges have a central role to play in that. Our future prosperity depends on the creation, transmission and application of new knowledge, ideas, creativity and innovation. The Coalition Agreement makes clear that we will continue to invest in Higher Education (HE). So, we are increasing funding for teaching by £50m and overall funding for the sector by £70m compared to your December settlement.
We remain committed to supporting extra university places for 2010/11. To achieve this, we would like you to refocus the University Modernisation Fund (UMF announced in the Budget in March 2010) in line with the advice you have offered, on the highest quality proposals the Council has already received for this scheme. We are making £152m available to support the UMF, realising a saving of £118m compared to original plans.
We want the Council to use £132m of this to meet the teaching costs of issuing 10,000 extra student places in 2010/11 (compared to the position as set out in your Grant Letter of 22 December 2009) and securing savings in future years to support these places for the duration of the course without extra teaching grant from the Government. Approximately 8,000 of these places should be full time and 2,000 part time. As you know, bids for these extra places were sought in economic priority areas such as Science, Technology, Engineering and Maths (STEM) and the higher skill priorities identified in the Skills Audit. The Council should only approve bids where institutions have robust plans to drive modernisation and efficiency. FE colleges providing higher education should be eligible for this funding.
We are fully committed to the shared services element of the UMF. We are maintaining this £20m budget to be invested in delivering economies through the increased use of shared services, particularly in support functions, and collaborative procurement.
We fully recognise the importance of investment in science and research as the economy continues to recover. We are protecting spending in these areas and the Council's recurrent and capital budgets here should remain at previously planned levels.
As you know, on 24 May, the Chancellor of the Exchequer announced £6.2bn of in year savings across Government. These are necessary to help reduce the deficit and ensure a successful economy for the future. This Department’s contribution to these savings is £836m. It is right that Higher Education contributes its fair share to these overall savings.
As a result, we are making a reduction of £82m in the baseline you were issued in your grant letter of 22 December 2009. It is, of course, for the Council to decide on how this reduction is delivered. But we look to you to do this in ways that protect the front line activities of teaching and research whilst promoting more vigorous activity to increase efficiency and value for money. We appreciate that these efficiency savings will have implications for allocations in academic year 2009/10. We are requesting that the savings are split between a £52m reduction in the teaching grant and a £30m reduction in teaching capital. We expect the Council to be able to demonstrate clearly that splitting the savings in this way meets the priority of delivering a more efficient HE system.
BIS and its partner organisations have also been asked to find extra savings of £100m in 2010-11, which equates to an 11% reduction in running costs. We expect HEFCE to play its full part in achieving this target. We will discuss with you the composition of these savings and their implications. Your baseline in the attached annex does not take account of these additional savings and so remains provisional at this stage. The annex details all the other changes we are making to your funding with this letter.
The financial settlement for the HE sector for 2010-11 enables a positive response to continued buoyant demand for university and college places by supporting additional, sustainable growth in student numbers. It also protects investment in science and research. These will play an important role in economic recovery. The settlement will require universities, colleges and the Council to adopt a renewed and strengthened focus on efficiency and securing the greatest possible value for public money including on salaries and pensions. But we believe that is both right and fair in the wider economic climate.
|This table shows the changes in funding to HEFCE since the December 2009 grant letter and the March 2010 Budget, following the savings announcements on the 24th May 2010.||December 2009 2010-11 allocation||Revised allocation after Budget March 2010||Revised 2010-11 allocation|
|a||Recurrent funding for Teaching||5027||5277||5107|
|o/w University Modernisation Fund||250||132|
|b||Recurrent Resources for Research||1618||1618||1618|
|Total (a + b)||6645||6895||6725|
|c||Total Capital Grants||404||404||374|
|1||o/w Teaching and other capital||237||237||207|
|d||Science and Research Funding||271||271||271|
|o/w RCIF and SRIF Transitional||158||158||158|
|e||AME Provisions and release (formerly Non-cash budgets)||−29||−29||−29|
|f||University Modernisation Fund – shared services||20||20|
|Sub total funds for teaching (a+c1)||5264||5514||5314|
|Total grant (a+b+c+d+e+f)||7291||7561||7361|
|g||Voluntary Matched Giving||62||62|
|h||FE ITT funding||8|
|i||Access to Learning Fund||40|
|Growth in Core Funded Students (FTEs in thousands)||40||40|
|Employer co-funded provision (FTE) numbers||15||15|