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The grant letter sets out government funding and priorities for HEFCE and for higher education for the coming year (Note 1). It confirms funding of £3.7 billion, including capital funding of £478 million.

Teaching

HEFCE is asked to protect, in real terms, the total amount of funding for STEM and other high cost subjects, as announced in last year’s Autumn Statement.

The letter asks HEFCE to target Student Opportunity funding more effectively to support the delivery of the Prime Minister’s participation goals for students from disadvantaged backgrounds, with a particular focus on geographical areas with lower than expected participation levels. HEFCE is also asked to focus on institutions recruiting the highest proportions of at risk students from disadvantaged backgrounds.

HEFCE welcomes the request in the grant letter to take responsibility for implementing the second year of the Teaching Excellence Framework (TEF). This will enable us to continue working with BIS and the sector towards a single coherent system for quality assessment and teaching excellence, as set out in the Government’s Green Paper on higher education.

Research

The letter emphasises the importance of quality-related research funding in supporting sustainable economic growth, and reaffirms the Government’s commitment to the dual support system (Note 3).

Working with the sector and other HE Funding bodies, HEFCE is asked to support and engage with the work of the Stern Review of the Research Excellence Framework (REF), and to take account of the outcomes in developing proposals for the next REF exercise, which should be completed by the end of 2021.

A further £400 million is to be allocated via the UK Research Partnership Investment Fund (UKRPIF) through to 2021, levering at least £800 million in private investment in the university research base.

Knowledge exchange

The Government recognises the important role that Higher Education Innovation Funding (HEIF) plays in supporting university-business engagement, and expects HEFCE to introduce a long-term methodology which balances predictability of funding while rewarding dynamism. HEFCE will maintain HEIF allocations at current levels, with a continued focus on outcomes-based funding approaches.

Other priorities

The letter asks HEFCE to work with the Government, students and the sector on a range of other aspects of higher education reform, including:

  • working with Universities UK and the sector to implement the recommendations of the Diamond efficiency reviews
  • a review of teaching funding
  • monitoring implementation of the new Prevent duty in the higher education sector
  • supporting BIS to implement the new postgraduate masters loan scheme, and assisting on the design of the doctoral loan scheme.
  • encouraging collaboration between universities, employers and professional bodies to support the growth of degree apprenticeships
  • continuing to support BIS on applications for specific course designation, and identifying options for the transfer to HEFCE of further work on Gateways.

The grant letter also includes indicative figures for financial year 2017-18.

Notes

1. All HEFCE's annual grant letters can be read on the HEFCE website. The finance annex to the 2016-17 grant letter shows that HEFCE will have a total of £3,712 million to distribute for the 2016-17 financial year, and sets out funding for higher education across recurrent and capital funding for education and research. Universities and colleges will be informed of their allocations on 19 April 2016.

2. The reports referred to in the release are available online:

3. The BIS Press Release provides further detail on the dual support funding streams.

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  • HEFCE 2017 conference
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