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These decisions were taken in the light of the grant letter of 20 December 2010 from the Department for Business, Innovation and Skills (BIS). Details of the approach taken by the Board and its decisions are contained in 'Funding for universities and colleges for 2010-11 and 2011-12' (HEFCE Circular letter 05/2011).

The Board agreed the allocation of £6,507 million for the 2011-12 academic year covering teaching, research, capital and related activities (see note 1). The grants to individual institutions will be decided by the Board at its meeting on 3 March, and the full grant announcement will be published on 17 March.

The Board has also had to make reductions in funding for the academic year 2010-11 (1 August to 31 July) because the BIS grant announcement for 2011-12 relates to the financial year (1 April to 31 March) which affects the funding for the final four months of the 2010-11 academic year.

As a result funding for 2010-11 will be reduced by £162 million for teaching and £27.6 million for research. These reductions will largely be made on a pro rata basis and implemented through HEFCE's monthly grant payments to institutions between April and July 2011. The reduction to teaching grant is 3.5 per cent and the reduction to research is 1.7 per cent compared to previously announced figures (see note 2).

The Board decided that the £6,507 million for the 2011-12 academic year should consist of:

  • £4,339 million for recurrent funding for teaching. This is a further reduction of £180 million (4 per cent) for 2011-12. Funding for widening participation and improving retention has been maintained at current levels.
  • £1,558 million recurrent funding for research. This is a further reduction of £17.4 million (1.1 per cent) for 2011-12. Funding is being allocated more selectively by prioritising internationally excellent and world leading research, taking account of the steer in the grant letter.
  • £150 million for the Higher Education Innovation Fund (HEIF), which enables universities and business to continue to work more closely together. This is being maintained in cash terms (see note 3).
  • £30 million to be set aside for moderation funding. This will limit the reductions compared to 2010-11 for some institutions for one year and smooth the transition to the new funding environment from 2012-13.
  • £223 million for capital funding. This is a reduction of 58 per cent compared with the £532 million in 2010-11.
  • £207 million for special funding, as previous Board decisions to phase out programmes are implemented and other programmes come to an end. This is a reduction compared to the £330 million in 2010-11.

Sir Alan Langlands, Chief Executive of HEFCE, said:

'This is a challenging financial settlement. We are attempting as far as possible to support a smooth transition for all institutions to the new student finance and funding arrangements which will take effect in academic year 2012-13. Universities and colleges have anticipated the challenges ahead and many have already taken difficult decisions to reduce their costs.

'As far as funding for teaching is concerned we are supporting widening participation and improving the retention of students by maintaining funding for these programmes in cash terms. We are also reducing funding to other elements of teaching on a pro rata basis to maintain stability as far as possible and minimise uncertainty in a difficult transitional year.

'We welcome the decision of Government to ring fence and maintain in cash terms the overall funding provided by BIS for science and research, including the funding for the Higher Education Innovation Fund, which supports the links between universities and business. In line with the Government's priorities, we will distribute funding for research on a more selective basis and, following consultation, will allocate HEIF support to the most effective performers.

'Looking forward we will focus on the core strengths of higher education – excellence in teaching and research and effective knowledge exchange, supporting the growth of a vibrant economy – while recognising the overriding priority of securing the student interest.'


 

Notes

  1. The overall budget we have set for the 2011-12 academic year is £6,507 million. This is an underlying reduction compared to the previously planned total for 2010-11 of £685 million (9.5 per cent). In addition, short-term funding of £255 million is ending for some special funding programmes and the University Modernisation Fund (UMF), which was for 2010-11 only. These bring the total reduction to £940 million.
  2. Further information on changes to 2010-11 grant is in paragraphs 15 and 16 of Circular letter 05/2011.
  3. Further information on the Board's decisions about funding for HEIF has been published in Circular letter 04/2011.