HEFCE publishes revised recurrent grant and student number allocations for 2010-11

HEFCE has revised its recurrent grant and student number allocations to the universities and colleges it funds.

Provisional 2010-11 recurrent grant allocations were announced in March 2010 (HEFCE 2010/08). These allocations have been further revised due to a combination of decisions made by Government and ones made by the HEFCE Board.

Overall, the tables published today show an increase of £21 million over the figures announced in March. All the changes are to teaching grant and moderation funding: there are no changes to research funding or the Higher Education Innovation Fund.

Of the 130 higher education institutions (HEIs) that HEFCE funds, 55 have seen an increase in funding and 75 a decrease compared with the allocations announced in March 2010. As for further education colleges that HEFCE funds directly, 35 have increased funding and 88 receive less funding.

This statement summarises the changes, and provides data on how they have affected funding (both recurrent and non-recurrent) and student numbers for each HEI, under the following headings:

• Government funding changes in the 2010-11 financial year
• HEFCE funding changes in the 2009-10 and 2010-11 academic years
• Outcomes for individual institutions
• Student numbers

Recurrent funding supports institutions' ongoing core activities of teaching, research and engagement with the economy and society. Non-recurrent funding, including capital funding, is used to secure change or fund activities that cannot be secured through core teaching and research funding.

Government funding changes in the 2010-11 financial year

In January, HEFCE Circular letter 02/2010 explained that HEFCE's budget for the 2010-11 financial year was £7,291 million. Since then it has increased to £7,359 million as a result of the following changes:

• +£152 million: an increase due to the University Modernisation Fund (UMF). £270 million was announced by the previous Government following its budget statement of 24 March 2010, but the revised grant letter of 24 June 2010 from the Department for Business, Innovation and Skills (BIS) reduced the amount by £118 million
• −£82 million: a saving from HEFCE’s baseline funding for institutions, also confirmed in the revised grant letter of 24 June
• −£2 million: a reduction in the budget for HEFCE's own administrative costs (amounting to approximately 11 per cent).

The resultant net changes in money available for distribution to institutions are broken down as follows:

• Of the £152 millionof UMF funding:
  • £132 million for 10,000 additional full-time equivalent entrants in 2010-11 and for efficiency projects to release savings that will support these students as they continue their studies into 2011-12 and beyond. Roughly one-third of the funding (£44 million) is allocated as teaching funding for 2010-11, and two-thirds is to support the efficiency projects
  • £20 million of UMF funding for shared services, for which an invitation to apply was issued in HEFCE Circular letter 16/2010
• Of the £82 millionsaving from HEFCE's baseline funding for institutions:
  • £52 million reduction in recurrent teaching grant
  • £30 million reduction in teaching capital.

The overall changes in HEFCE's budget for the 2010-11 financial year, including those previously announced in January, are summarised in Table 1.

Table 1
Overall changes in HEFCE budget for 2010-11 financial year funding

Changes announced in HEFCE Circular letter 02/2010	£M
Total change to 2010-11 financial year budgets	-381
Reduction in recurrent teaching grant (£164M + £51M)	−215
Reductions in ASNs by 2010-11	−83
Reduction in recurrent research grant	−16
Reduction in learning and teaching capital	−84
Removal of flexibility to carry forward capital balances at year-end	−51
Sub-total previously announced reduction in 2010-11 funding	−449
Changes announced since March 2010
UMF: teaching grant element to support 10,000 places	+44
UMF: efficiency project element	+88
UMF: shared services element	+20
June 2010 reduction to baseline recurrent teaching grant	−52
June 2010 reduction to baseline teaching capital	−30
Change to HEFCE's administrative costs budget	−2

The £52 million reduction in HEFCE's baseline teaching grant shown in Table 1 has resulted in funding changes in both the 2009-10 and 2010-11 academic years.

HEFCE funding changes in the 2009-10 and 2010-11 academic years

All the figures above refer to money paid to HEFCE by Government and allocated to institutions in the financial year; however, when HEFCE allocates actual amounts to institutions this becomes translated into academic years. It pays about 40 per cent of recurrent grant in the four-month overlap between the end of the academic year and the start of the financial year (the period from April to July).

The change to 2009-10 recurrent grant

The reduction of £52 million in baseline teaching grant for the 2010-11 financial year required HEFCE to implement a pro rata reduction of £20.8 million (40 per cent of £52 million) in the 2009-10 teaching grant previously announced for institutions. HEFCE Circular letter 14/2010 provides more details about this reduction.

Changes to 2010-11 recurrent grant

Although the overall budget for distribution to institutions for the 2010-11 financial year has increased since March, this still represents a reduction over 2009-10 of 0.4 per cent, after adjusting for £250 million of capital funding that was brought forward from 2010-11 into 2008-09 and 2009-10.

The change in the overall budget is largely due to those elements of the University Modernisation Fund that support efficiency projects and shared services, and which are not part of recurrent grant. HEFCE's recurrent grant budget for the 2010-11 academic year has fallen by £8 million. This is the increase of £44 million for the teaching element of the UMF less the £52 million reduction to baseline teaching grant, shown in Table 1.

As well as the changes to HEFCE's budget, the March 2010 announcement of recurrent grant explained that HEFCE had set aside some recurrent funding for the 2010-11 academic year, for allocation by July. HEFCE has now made allocations associated with this funding.

Overall, the 2010-11 recurrent grant tables published today show an increase of £21 million over the figures announced in March, and all institutions have a change in funding. All the changes are to teaching grant and moderation funding: there are no changes to research funding or the Higher Education Innovation Fund.

The breakdown of the £21 million is as follows:

• +£44 million: the teaching element of the UMF (the efficiency project and shared services elements of the UMF are not part of recurrent grant). The distribution of the additional places allocated through the UMF was announced in a news item on the HEFCE web-site on 24 June
• +£4 million: funding to support institutions that are shifting the balance of their full-time undergraduate provision towards science, technology, engineering, maths and modern foreign languages. Allocations made through this initiative were also announced in the 24 June HEFCE news item
• +£6 million: funding for new fully funded additional student numbers (ASNs). These are largely for places allocated in response to an invitation in 2009 to apply for additional student places for academic year 2010-11 (HEFCE Circular letter 22/2009), where the distribution of places between funding categories was not finalised in time for the provisional March 2010 recurrent grant announcement
• +£14 million: funding for new employer co-funded ASNs. These are largely for places allocated in response to an invitation in February to apply for employer co-funded additional student numbers for 2010-11 (HEFCE Circular letter 03/2010).
• +£5 million: additional funding for widening participation and teaching enhancement and student success. The provisional March announcement of recurrent grant for 2010-11 explained that HEFCE had set aside funding to allow for corrections by institutions to their underlying data. HEFCE has now allocated that funding
• −£52 million: the reduction to HEFCE teaching grant arising from the revised BIS grant letter of 24 June 2010. HEFCE has implemented this as a pro rata reduction of a little under 1.1 per cent from all elements of recurrent teaching grant for 2010-11.

While these changes sum to the increase of £21 million shown on the recurrent grant tables, a number of other changes apply differentially to institutions. These include:

• adjustments to grant following corrections to underlying data
• incorporation of funding changes arising from data audits and reconciliations
• the implementation of various transfers. These include:
  • transfers of funding for some Lifelong Learning Networks (LLNs) that were previously funded outside the mainstream teaching grant through a lead higher education institution and which, from 2010-11, will be funded through the mainstream teaching grant via LLN member institutions
  • incorporation into mainstream teaching grant of some funding for Dance and Drama Awards
• other miscellaneous changes for individual institutions.

2010-11 moderation funding

2010-11 moderation funding for institutions since March has also been recalculated. Moderation funding is funding to support actions that will secure change and help institutions manage the transition to lower funding levels for teaching and research.

HEFCE previously decided to make £20 million available for moderation funding in 2010-11, and this required it to set a threshold that meant institutions would not see reductions of more than 0.8 per cent in cash terms compared with the equivalent, unmoderated teaching and research grant for 2009-10. However, the £52 million reduction in teaching grant has made it necessary to revise the threshold for moderation in order to ensure the total allocated remains at £20 million: it is now set as a 1.2 per cent cash reduction compared to 2009-10.

An individual institution's allocation of moderation funding may also have changed because of other changes to recurrent grant since March. HEFCE does not provide moderation funding if it amounts to less than £100,000.

Outcomes for individual institutions

HEFCE is directly funding 130 higher education institutions and 123 further education colleges for 2010-11. Of these, 90 institutions have seen an increase in 2010-11 recurrent grant since March 2010, and 163 have a reduction. In very general terms, this is because all institutions are affected by the £52 million reduction to baseline teaching grant, whereas only some have offsetting increases, including as a result of the UMF.

For the first time the individual grant tables for each institution have been published online. HEFCE recommends that staff in institutions read these alongside the grant letters it issued in March and on 20 July 2010 and the technical guidance for institutions that accompanied the March grant announcement.

Tables which explain all the changes for all institutions since March have also been published.

Further changes for 2010-11 are possible

The grant letters sent to HEFCE by BIS of 22 December 2009 and 24 June 2010 did not confirm funding for the 2011-12 financial year or beyond. The Government has said that the 2010 spending review will be announced on 20 October 2010 and will set out its spending plans for the whole of this Parliament. It may be some time after that before the detailed outcomes for higher education are known. In the meantime, in order to announce funding for the 2010-11 academic year (which has a four-month overlap with the 2011-12 financial year), HEFCE has assumed that funding will be maintained in cash terms for 2011-12. If HEFCE receives information that suggests this assumption is no longer appropriate, HEFCE reserves the right to review all of its allocations for the 2010-11 academic year. This would be with a view to managing any change in funding for institutions that might be necessary by 2011-12. HEFCE believes that institutions will need to be prudent in preparing their budgets and take note of any general guidance from the Government about public expenditure.

Student numbers

HEFCE grant allocations for 2010-11 now support the additional student numbers shown in Table 2 through HEFCE's main allocations of fully funded and co-funded places.

Table 2
Allocations of additional student numbers for 2010-11

(Figures are rounded to the nearest 100.)

	Full-time	Part-time		Total
		Headcount	FTE	Headcount	FTE
Total	10,400	28,900	11,600	39,300	22,000
Mainstream additional funded places allocated mainly through ASN exercises	6,500	3,800	2,100	10,300	8,500
Medical/dental expansion	100	0	0	100	100
Sub-total fully funded ASNs	6,600	3,800	2,100	10,400	8,700
Employer co-funded ASNs	3,800	25,000	9,500	28,900	13,400

In addition to these figures, 8,400 full-time undergraduate and 1,600 part-time undergraduate full-time equivalent (FTE) places have been allocated through the UMF. The UMF places are mentioned separately because they are entrants, whereas Table 2 represents students in all years completing their year of study. These allocations of additional student numbers allow for an increase in full-time undergraduate entrants of up to approximately 9,000 compared with 2009-10. This comprises 19,000 full-time undergraduate places allocated for 2010-11 (including through the UMF), less 10,000 (unfunded) places that were made available in July 2009 for 2009-10 only (announced in HEFCE Circular letter 17/2009).

Student number control

HEFCE has set limits for institutions on the numbers of HEFCE-fundable and employer co-funded students starting full-time undergraduate and Postgraduate/Professional Graduate Certificate in Education (PGCE) study in the 2010-11 academic year. This is to reduce the risk of over-recruitment that might lead to a transfer of HEFCE grant back to BIS to meet consequent unanticipated student support costs.

The numbers counted towards this limit are defined in HEFCE Circular letter 10/2010. The limits for each institution are available in a separate table on the HEFCE web-site.

Adjustments to grant for over-recruitment in 2009-10

In response to the 22 December 2009 grant letter from BIS, HEFCE is reducing grant to those institutions that over-recruited in 2009-10, at a rate of £3,700 per full-time undergraduate and PGCE student recruited above the permitted level. This action is being taken to reduce the pressure on student support costs and to safeguard the position of institutions that followed the warnings given by Government and HEFCE about not recruiting above the permitted level.

The adjustments for individual institutions are summarised in a separate table on the HEFCE web-site. These reductions to the grant of some institutions are not included in the recurrent grant tables published today, because they are not consolidated parts of HEFCE funding allocations. They will be implemented in equal instalments from HEFCE monthly grant payments between August 2010 and January 2011.

The net financial implications for institutions of any over-recruitment will differ from the reductions made to HEFCE grant, because, for example, institutions will have retained a tuition fee from the excess student numbers recruited.

The following information is available at the link below:

• Revised recurrent grant tables for 2010-11
• Summary recurrent grant tables for 2010-11 by region
• Summary tables showing changes for each institution between the provisional allocations announced in March 2010 and those announced in July
• 2010-11 Student number control – limits for each institution
• Grant adjustments for over-recruitment in 2009-10 by individual institutions

Revised funding and student numbers for English universities and further education colleges