Consultation 99/16

Respond by 7 May 1999

Higher Education Reach-out to Business and the Community Fund:
Funding proposals

Outcomes of consultation (June 1999)

Executive summary

Purpose

1. This document outlines proposals for a special fund to increase the capability of higher education institutions (HEIs) to respond to the needs of businesses, from large to small companies, and of the wider community, where this will lead to wealth creation. The new fund is intended to initiate a third stream of funding, complementing the Council’s existing grant for teaching and research, to reward and encourage HEIs to enhance their interaction with business. The fund will provide a platform of core funding to help HEIs to put into practice organisational and structural arrangements to develop and implement their strategic aims in this area.

2. We invite comments on our strategic aims and objectives for the fund, and on the proposed criteria for allocations and distribution arrangements. These are set out in the draft guidelines for applications at Annex A and the proposed timetable for allocations at Annex B.

Key points

3. We propose to establish from 1999-2000 a Higher Education Reach-out to Business and the Community Fund, to be allocated in response to applications from HEIs in England and Northern Ireland. The fund would be established in partnership with the Department of Trade and Industry (DTI), the Department of Education Northern Ireland (DENI), and the Department for Education and Employment (DfEE). The total resources available in the first instance (including a contribution from the DTI) would rise to some £22 million per annum by 2001-02. We would expect to make this a permanent new funding stream within our grant, with the expectation that the fund would remain at or above this level in subsequent years.

4. The aim of the fund is to develop the capability of HEIs to respond to the needs of business, and to contribute to economic growth and competitiveness, by enabling HEIs to put into practice organisational and structural arrangements to achieve their strategic aims in this area.

5. HEIs which apply for funding would be expected to show that:

a. They have drawn up a strategy for managing and improving their productive interaction with business which reflects their own mission and their established record in this field, and which recognises specific regional and national needs of business.

b. They would use the funding to make specific additional provision, consonant with the fund’s objectives, to implement their strategy.

c. They have identified measurable outcomes expected to flow from this and have a plan for monitoring these outcomes.

6. We propose initially to invite applications in 1999 and again in 2000, for which some £56 million and £27 million of funding respectively would be made available. Allocations would be made in the form of individual four-year grants to HEIs whose applications were successful in either year. Thereafter we would hope to make further allocations in due course to supplement and build upon the achievements of those HEIs through the fund.

Action required

7. Please send any comments on these proposals to Vanessa Conte by Friday 7 May 1999.

Background

8. An important strand in the HEFCE’s policy aims is ensuring that higher education (HE) is responsive to the needs of business. This is seen in terms of equipping graduates and diplomates with the knowledge and skills they will need in employment, and taking measures to promote the transfer to industry and commerce of knowledge and ideas generated within HE.

9. There has been increasing Government interest in this subject, as evidenced by recent initiatives launched by several Government departments. The proposals in this document were drawn up against that background and in collaboration with the DTI and DENI (as co-funders) and the DfEE. We believe there is a need for further action to promote and support the strategic management by HEIs of their increasingly varied activities across the broad field of relations with business, and their response to other funding initiatives within this field.

Strategic aims

10. The fund is intended to develop the capability of HEIs to respond to the needs of business, and to contribute to economic growth and competitiveness, by enabling HEIs to put into practice organisational and structural arrangements to achieve their strategic aims in this area.

11. The objectives of the fund, and examples of the kind of activity it is expected to support, are set out at Annex A. It should be noted in particular that:

a. We propose that the fund should focus on rewarding and developing activities carried out within HEIs to build their capacity to respond strategically to the needs of business, across the full range of their academic activity.

b. All activities supported by the fund would be expected to lead within an agreed timetable to measurable outcomes consonant with the fund’s objectives and with the institution’s own strategy.

c. Institutions would be expected to propose for support activities which are linked to their corporate mission and objectives, which build upon their established strengths, and which respond to clearly identified business needs regionally and nationally.

Funding

12. Allocations of grant from the fund would be made by the HEFCE and DENI to HEIs in England and Northern Ireland in response to applications. We propose to make allocations in 1999, for the four-year period 1999-2003, to institutions whose applications best meet the criteria in the application guidelines. There would be a second call for applications in 2000 when it is anticipated that further four-year allocations could be made to institutions that had not applied, or had been unsuccessful, in 1999. It is hoped that around two-thirds of those HEIs wishing to participate and able to meet the assessment criteria would receive allocations from 1999, and the remainder from 2000.

13. The total amounts (including a contribution from DTI) to be allocated following each call for applications would be decided in the light of the quality of the applications and the resources available. Other things being equal, this would be in line with the indicative distribution below:

14. The figures for 2000-01 and later years are subject to confirmation when final Government spending plans for these years are announced. It is however envisaged that this will become a permanent new funding stream within HEFCE grant. We hope that early success will lead to a significant increase in funding in later years.

15. Subject to the availability of further resources, we hope to call for further applications in 2001 or 2002, when allocations could be made both to bring in more institutions and to supplement allocations already made. As the four-year allocations come to an end, new allocations would be made against criteria and objectives revised in the light of achievements to date, and of HEFCE and Government policy at the time.

Allocation process, monitoring and evaluation

16. The proposed process and criteria for making allocations to HEIs, and arrangements for monitoring, evaluation and dissemination, are set out at Annex A.

Issues for consultation

17. Comments are invited in particular on:

a. The aims and objectives of the proposed fund, as set out above and at Annex A.

b. The proposed criteria for applications and assessment procedure set out at Annex A.

c. Arrangements for monitoring, evaluation and dissemination within individual HEIs and nationally.

Responses

18. Responses to this consultation should be addressed to Vanessa Conte at the HEFCE and should arrive by 7 May 1999.

Annex A

Higher Education Reach-out to Business and the Community Fund: draft application guidelines

1. An important strand in the HEFCE’s aims and objectives is to ensure that higher education is responsive to the needs of business*, and of the wider community, where this will lead to wealth creation. We are concerned to encourage and reward partnerships between HEIs and business, the transfer of knowledge and expertise, and the development of employment skills.

* ‘Business’ in the present context encompasses a broad range of bodies engaged in wealth creation within the UK or the European Union. This includes UK-owned companies both large and small; foreign-owned or multi-national companies with production or service facilities within the UK or European Union; and UK Government research establishments or agencies.

2. Extensive links between higher education and business already exist, and reports commissioned by the DTI from Tartan Technology (published in 1996) and by the HEFCE from the University of Manchester (PREST) (HEFCE 98/70) show the extent and the richness of such links. Indeed, there is evidence that HE/business interaction has improved and increased in recent years. The HEFCE has encouraged particular types of interaction through its continuing vocational education (CVE) initiative, which ends in 1998-99, and has provided £60 million over four years for HEls to develop CVE courses, and through the ‘GR’ element in its research funding method, which provides incentives to institutions to conduct research collaboratively with business. An evaluation of the CVE initiative, commissioned from the University of Birmingham, was published in 1998 (HEFCE 98/44).

3. There has been increasing Government interest in this subject, and a range of new initiatives were announced in the recent Competitiveness White Paper to enhance HE-business interaction. These initiatives include the new Science Enterprise Challenge to create a limited number of world-class centres of enterprise in UK universities.

4. We wish to stimulate further the interactions between HEIs and business, while recognising that such interactions are many and varied, and that each institution will wish to develop these interactions along lines appropriate to its own circumstances.

5. We have therefore, in partnership with the DTI, DENI and the DfEE, established a Higher Education Reach-out to Business and the Community Fund. This fund is intended to initiate a permanent third stream of funding, complementing the Council’s existing grant for teaching and research, to reward and encourage HEIs to enhance their interaction with business. It will provide a platform of core funding to help them to put into practice organisational and structural arrangements to develop and implement strategic approaches to their relations with business, and to assist in activity to improve the transfer of knowledge and skills.

6. In the medium term, we would expect the great majority of institutions to benefit from this scheme, which has at its core the belief that all HEIs should be engaged with business in different ways. The fund will enable them to develop links across the full range of their academic endeavours, and to develop closer working relations with business which could also benefit the way in which they prepare their students for employment.

Aims

7. The fund is intended to develop the capability of HEIs to respond to the needs of business, and to contribute to economic growth and competitiveness, by enabling HEIs to put into practice organisational and structural arrangements to achieve their strategic aims in this area.

Objectives

8. We do not intend to prescribe in detail the purposes to which funds may be put; this will be for institutions to decide in the light of their own strategic needs. However, in considering their applications, institutions should have regard to the objectives of the funding partners. We wish to achieve:

a. Systematic and sustainable change within HEIs and in how they relate to business, particularly changes in institutional and academic cultures, to attach greater value to activities which are relevant to the needs of employers and business and which contribute to wealth creation and national competitiveness.

b. Improved organisational arrangements and structures within institutions so that they are better able to respond to business needs, and to interact more effectively with business, including with small companies.

c. Improved access to, and use by businesses of graduates and diplomates, products, resources and services produced in HEls.

d. More widespread, systematic and rapid transfer to businesses of new ideas, products and processes generated within HEls. Technology transfer is a complicated matter, not the linear process as which it is sometimes portrayed, and the fund should go beyond this to include a range of interactions involving the transfer of knowledge more broadly.

e. Improved relationships between HEls and businesses at the personal level, using staff transfers and other mechanisms to encourage mutual understanding and the development of lasting working relationships, especially at the level where knowledge transfer takes place.

f. Enhanced institutional capacity to respond in a concerted and effective manner to other initiatives promoting employability, enterprise and self-employment skills, particularly where knowledge transfer is concerned.

g. Recognition of regional and national needs including those identified by Foresight.

Fundable activities

9. Institutions will wish to consider what activities they wish to include in their application for funding in order to further these objectives. They will need to bear in mind the fund’s emphasis on improving structures and systems to facilitate increased and better targeted provision on the ground, and in particular the desired emphasis on building interactions with small companies. Examples of activities which might be supported include:

a. Establishing and developing within the institution a centre of expertise in business links.

b. Training and development for staff, including programmes of staff exchange.

c. Market research to enable institutions to understand better the needs of business, and targeted marketing to enable them better to bring their relevant expertise and services to the attention of business.

d. Arrangements to improve collaboration between HEIs to enable a better response to business needs.

e. Creation of units within the institution to promote and ensure wider experience by students and staff of employment outside higher education.

f. The creation and development of mechanisms and materials to promote and explain HE products, processes and services.

g. The creation and development of one-stop shops to enable business to access advice from HEIs more readily.

h. The creation and development of business incubator units in HEIs.

i. Setting in place arrangements within the HEI to improve the responsiveness of CVE programmes to local and regional needs.

j. Developing expertise in protecting and exploiting intellectual property rights (either in-house, or collaboratively).

10. These are given only as examples of the sorts of activity the fund might support, and to indicate the wide-ranging nature of the fund. It will be for institutions themselves to propose activities which will enable them to implement their strategic approach, and which are consistent with the aims and objectives of the fund.

11. All applications should include the following information:

a. Business plans, flowing from and directly related to the institution’s corporate plan, mission and objectives, and describing the institution’s strategic approach to securing the aims of the fund. These should specify intended outcomes, and the management structures and other internal arrangements to be introduced to ensure the necessary action.

b. Credible and effective proposals for measures to establish better links with a range of businesses, including small companies, and designed to encourage informed interaction and improved understanding. These should address in particular the need to offer smaller companies a range of services through a single point of contact, and to ensure this role is assigned to staff who both understand the companies’ needs and are well placed to ensure an appropriate response.

c. Evidence of how the proposed action will help to change the culture within the HEI, including measures to encourage individual staff members to forge links with business.

d. Evidence that the proposals where appropriate respond to identified regional skills and economic development agendas, and reflect co-ordinated planning at regional level.

e. Targets for the delivery of specified services, compatible with the aims of the fund and in terms open to quantitative monitoring, with an indication of how progress will be monitored by the HEI and from what baseline.

f. Evidence that the provision to be funded will be both additional to existing provision and sustainable in the longer term.

g. Evidence of the extent of pre-existing interaction between the HEI and business, including activity to promote the employability of graduates and diplomats.

h. Evidence that the possibility of collaborative action has been considered, both with HEIs and with others (such as businesses and Training and Enterprise Councils). Such collaboration might be based on regional planning or a shared interest in a particular area of work, and is encouraged especially where scarce specialist skills are to be deployed. Applications proposing that an HEI would take some actions alone and others in consortium would also be welcome.

i. Arrangements for building upon and drawing together existing good practice within HE, and previous and current specific initiatives in the field by other agencies. This would include arrangements for ensuring that action under this fund complements, and does not duplicate, the continuing work of these agencies.

12. Evidence will be required of commitment at the highest level within the institution to the aims and activities supported by the fund. The application should be signed off by the head of the institution.

13. Applications should not be longer than 10 A4 pages, including any appendices.

Assessment procedure

14. Applications will be assessed, in the light of advice from an expert advisory group, having regard to the institution’s past achievements in interacting with business and its future plans in this field, and in particular:

a. Overall strength and practicality, value for money, and the contribution to the objectives of the fund, including coverage of the issues listed in paragraph 11 above.

b. Conformity with the institution’s corporate plan, mission and objectives (including building upon and developing established strengths in this area).

c. Response to identified national, regional and local need, and links with the activities of other agencies working in the field, especially at regional level (such as Business Links, TCS Centres, Government Offices and Regional Development Agencies – RDAs).

d. The extent of the HEI’s pre-existing interaction with business, as indicated by information given in the application and by reference to statistical information available from other sources, including the Higher Education Statistics Agency’s finance record. Applications not scoring well on this criterion are unlikely to be funded in the first round.

15. Once applications have been selected for funding on this basis, funds will be allocated to HEIs at three levels, depending on the assessed strength of the application, the size of the institution and scale of its current activities in this broad field, and the scale of the proposed funded activity and the outcomes it would generate. The three levels will be finalised when applications have been scrutinised, but will be in the region of:

a. £200,000 in the first year and £300,000 in each of the following three years.

b. £100,000 in the first year and £150,000 in each of the following three years.

c. £35,000 in the first year and £50,000 in each of the following three years.

16 Thus, the maximum total available for HEIs in the first category will be £1.1 million over four years. In making their proposals for funding, institutions should identify and justify the level of funding sought.

Management

17. Funds are being provided by the HEFCE, with a contribution by the DTI. The expert advisory group to consider applications, chaired by the HEFCE, will include representatives from the DfEE and the DTI, from HEIs and from business. The group will take advice from HEFCE regional consultants on how the applications relate to the mission and strengths of the HEI and to regional needs and developments. This advice will reflect discussion between the regional consultants and regional agencies including Government Offices and RDAs.

18. We envisage appointing a manager for the fund whose remit will include: informal monitoring of progress; promoting collaboration and the sharing of good practice between HEIs; managing the relationship between the fund and other national agencies and initiatives; and advancing knowledge and understanding of the fund, and of what HE has to offer, within the business community.

Monitoring and evaluation

19. Progress in implementing HEIs’ plans will be monitored within the wider framework for HEI corporate plans and annual operating statements. Recipients of funding will be required to provide monitoring information each year, linked to their annual operating statement and focused on progress against the quantified targets stated in their initial application, to provide an account of the expenditure and outcomes for the grant received. The information collected through operating statements and monitoring returns will be considered by the advisory group, which will continue to meet regularly for this purpose.

20. In addition, the HEFCE will commission independent evaluations of the fund after two years and after four years, and will invite the advisory group to consider the conclusions to be drawn from these. The purpose of the evaluations will be:

a. To establish if the fund is succeeding in its aims of improving the interaction between HEIs and business.

b. To assess the success of individual elements of funding.

c. To provide good practice material for wider dissemination.

21. Although the aim of the fund is to establish long-term arrangements in institutions individually, rather than to pilot or demonstrate alternative options, undoubtedly some widely applicable lessons will arise. We shall, accordingly, consider how such outcomes should be disseminated.

Annex B

Higher Education Reach-out to Business and the Community Fund: proposed timetable