Invitation 99/40

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

Invitation to apply for special funding

Executive summary

Purpose

1. This document invites higher education institutions (HEIs) to apply for special funding for activities to increase their capability to respond to the needs of business, including companies of all sizes and 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 in order to contribute to economic growth and competitiveness.

Key points

2. The Higher Education Reach-Out to Business and the Community Fund will be allocated in response to applications from HEIs in England and Northern Ireland. The fund has been 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. The HEFCE expects to make this a permanent funding stream within its grant, with the expectation that the fund would remain at or above this level in subsequent years.

3. HEIs are invited to apply for funding in accordance with the arrangements set out in this Circular. Applications from consortia of HEIs which show added value over what could be achieved individually will be welcome. Allocations will be made as four-year grants to individual HEIs, or to consortia of HEIs through a nominated co-ordinating institution.

4. HEIs which are unsuccessful, or decide not to bid, in response to the present call for applications will be invited to participate in a further round of applications for funding from 2000-01. This will be launched by January 2000 after allocations in the first round have been announced. We hope that resources will be available to make further allocations in due course to supplement and build upon the achievements of all HEIs through the fund. The emphasis would be on developing high quality centres for effective interaction with business to enhance wealth creation and national competitiveness, recognising that these may often be effective at local or regional level.

5. Full guidelines for preparing and submitting applications, and the arrangements for assessing these, are set out at Annex A. A note on the proposed arrangements for monitoring and evaluation is at Annex B.

Action required

6. Applications for special funding under the programme (10 copies) should reach Vanessa Conte by Wednesday 15 September 1999. HEIs intending to apply are encouraged to discuss the terms of their application with their HEFCE regional consultant.

Background

7. HEFCE 99/16 set out proposals to establish a Higher Education Reach-out to Business and the Community Fund from 1999-2000, to be allocated in response to applications from HEIs in England and Northern Ireland. We invited comments on the strategic aims and objectives of the fund; on detailed draft guidelines for institutions preparing applications; and on the proposed arrangements for allocating grants and for subsequent monitoring and evaluation.

8. The main points made in response to the consultation are summarised at Annex C. Respondents were supportive of our aims, and many said that they would like to see more resources made available through the fund. A number of detailed points have been taken into account in revising the guidelines, and some questions that were raised are dealt with in the following paragraphs.

Funding

9. Allocations will be made by the HEFCE and DENI to HEIs in England and Northern Ireland respectively, in response to the highest quality applications. Following the present call for applications, allocations will be made, for the four-year period 1999-2003, to HEIs (including consortia of HEIs) whose applications best meet the criteria in the application guidelines at Annex A. There will be a second call for applications by January 2000, when further four year allocations for the period 2000-04 may be made to HEIs that were unsuccessful, or had not applied, under the first call. 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.

10. As previously proposed, the resources available for distribution (including a contribution from the DTI) will rise to some £22 million per annum from 2001-02. The distribution of these funds between allocations in response to each of the two calls for applications will be decided in the light of the quality of the applications received in response to this Circular. Other things being equal we would expect this to be in line with the indicative distribution shown in the consultation paper and reproduced below.

11. The total 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.

12. 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.

Application process and timetable

13. The process and criteria for making allocations from the fund are set out at Annex A. These are designed to apply to both the present call for applications and the second call. The membership and terms of reference of the expert advisory group, which will assess applications and advise the funding bodies on monitoring and evaluation, will be announced shortly.

14. Applications are due by 15 September. We intend to convene the advisory group during October and to announce allocations early in November 1999. The second call for applications will follow a similar timetable, allowing three months for response and announcing the outcome around two months after the closing date.

Monitoring and evaluation

15. Arrangements for the monitoring and evaluation of activities supported by the fund are set out at Annex B.

Annex A

Higher Education Reach-out to Business and the Community Fund: 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 business1, including 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.

2. Extensive links between higher education and business already exist. 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 area, and a range of new initiatives to enhance HE-business interaction were announced in the recent Competitiveness White Paper. These 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 to develop high quality centres for effective interaction with business, while recognising that such interactions are many and varied, and that each institution will wish to develop these 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 developing 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 and with a range of bodies within the community which contribute to wealth creation and competitiveness more generally.

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 help institutions to understand the needs of business, and targeted marketing to enable them 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. The creation and development 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 understanding, protecting and exploiting intellectual property (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. The fund will not support activities for which funding is already available from other sources but proposals may be made for activities to complement and build upon work funded from elsewhere.

11. In addition to building upon the existing range of HE-business interactions, we hope that the fund will contribute to the development of interactions between HEIs and a broader range of bodies within the community. This includes voluntary and not-for-profit organisations, and bodies active in the cultural sector, where such interactions have the potential to make a significant contribution to wealth creation and the development of economic activity locally and regionally.

Information required

12. 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 respond, where appropriate, 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 effectiveness of pre-existing interaction between the HEI and business, including activity to promote the employability of graduates and diplomates. This need not include returns already made to the Higher Education Statistics Agency (HESA). The nature of this evidence should reflect the institution’s particular achievements, and reference should be made wherever possible to quantifiable outcomes achieved during 1997-98. The indicators selected might include:

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.2 This would include arrangements for ensuring that action under this fund complements, and does not duplicate, the continuing work of these agencies.

13. 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.

14. An HEI should submit only one application unless it also proposes to conduct some activities in consortium (see paragraph 18 below). Applications should not be longer than eight A4 pages. Brief appendices setting out relevant additional material including statistical information may be attached to these, but are not required. Where applications refer to material already provided to the HEFCE (for example, institutions’ current strategic plans) this need not be reproduced in full.

Assessment procedure

15. 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 12 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 effectiveness of the HEI’s pre-existing interaction with business, as indicated by information given in the application (see paragraph 12g above) and by reference to statistical information available from other sources, including the HESA finance record (research income from industry, tuition fees paid by industry and income under TCS). Applications not scoring well on this criterion are unlikely to be funded in the first round.

16. 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.

17. Thus the maximum total available for an HEI in the first category would be in the region of £1.1 million over four years. In making their proposals for funding, institutions should identify and justify the level of funding sought.

Applications from consortia of HEIs

18. Where two or more HEIs propose collaborative action to be funded within the programme:

a. A single joint application should be submitted by each group of HEIs, identifying the activities for which that group seeks funding as a consortium. The amount of grant allocated to a consortium may be increased above the levels set out in paragraph 16 in proportion to the number of HEIs participating (and having regard to paragraph 18d below).

b. The application should identify a co-ordinating institution within the consortium which would receive the HEFCE grant, and be responsible for securing proper and effective application of the grant and for providing monitoring statements.

c. The application should indicate clearly the additional benefits which acting in collaboration would achieve, either within a single region or across regional boundaries.

d. The HEIs concerned may also submit separate individual applications. If an institution applies successfully both individually and in consortium, its likely share of any collaborative funding will be taken into account in determining its grant for individual activities under paragraph 16 above.

Management

19. 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.

20. We envisage appointing a manager for the fund whose remit will include:

Monitoring and evaluation

21. 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. These arrangements are described in more detail at Annex B. 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.

22. 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 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.

23. 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

Monitoring and evaluation

Introduction

1. In keeping with the normal procedures of both HEFCE and DTI for special funding schemes, the HEFCE will undertake both monitoring from year to year, and evaluation over a longer timescale, of the activities and outcomes supported by the fund and its impact on the achievements and culture of HEIs.

2. Allocations from the fund will support activities in HEIs which were proposed by the institution in the light of its own mission and circumstances and consonant with the aims of the national programme. Institutions will be required to set out for each activity:

a. Targets for the delivery of specified services compatible with the aims of the fund and in terms open to quantitative monitoring.

b. An indication of how progress will be monitored by the HEI and from what quantified institutional baseline.

3. How the achievements of an institution, or consortium of institutions, may be monitored in quantitative terms will thus be determined by the nature and anticipated effects of the funded activities.

4. Against that background we propose to monitor progress within each institution receiving funding under the programme, by requiring annual returns detailing activities undertaken with the funding and progress made towards the institution’s own targets. This will enable us to assess the effectiveness of the programme at institutional level, as well as verifying that the grants were used for the intended purpose. There will also be a full formal evaluation of the programme during its fourth year and a less detailed interim evaluation towards the end of its second year.

Monitoring

5. Progress at the national level will be assessed in three ways:

a. By aggregating, as far as is practicable, the monitoring returns made by individual HEIs detailing progress towards their own targets for activities funded under the programme.

b. Through less formal reports from HEFCE regional consultants and the programme manager, giving their impression of progress achieved in institutions they have visited, and reporting any particular problems or issues that have come to their attention.

c. Through available national sources of information, such as statistical returns already made on a regular basis by HEIs (the HESA finance return) and occasional surveys similar to the 1998 PREST survey of HE-industry links (HEFCE 98/70).

6. The following paragraphs describe each of these in turn.

Monitoring returns

7. Annual monitoring of progress towards HEIs’ own targets will take place each year within our annual exercise to collect planning and operating information from HEIs. Starting in 2000, institutions will be requested in April each year to return by the end of July a statement in standardised format setting out:

a. Their current best estimate of outcomes for the academic year then ending.

b. Starting from the second year of funding, a final statement of outcomes for the previous year.

c. Their current expectations for outcomes in the following academic year (from that summer).

8. In all cases returns will be expected to combine:

a. A narrative element, which should describe activities undertaken with the special funding, and review achievements against the institution’s strategy statement made at the time of its application for special funding.

b. A quantitative element, showing progress made or (for the year then ending) forecast towards the institution’s own quantitative targets set out in its application, in terms which can be benchmarked against its starting position on these indicators also described in its application.

9. It should be possible to determine from the monitoring return both the actual activities funded by the grant and the outcomes that resulted on the ground. For example, if an institution had requested funding to set up a unit to improve availability of work experience places for its students, it would be expected to describe briefly the composition and activities of the unit and to give statistics for the actual or forecast increase in numbers of students with work placements as a result.

10. We will aggregate institutions’ returns to provide a snapshot of the achievements of the programme at national level. We would hope, for example, to be able to show that the programme had led nationally to measurable increases in:

a. Numbers of work experience placements.

b. Income from research and consultancy commissioned by industry.

c. Placements and secondments in businesses for academic staff.

d. The number of HEI part-owned and spin-out companies and the income from these.

11. We intend to continue to mount at regular intervals national surveys of HE-industry links, on the lines of the surveys conducted for DTI by Tartan Technology and for HEFCE by PREST in 1998 (HEFCE 98/70). The next of these is planned for the first half of 2001, and is likely to collect a similar range of data and opinions to the 1998 survey. In addition to giving a valuable picture of trends and achievements nationally, these surveys will provide an indication in quantitative terms of the extent to which the Reach-out fund is successful in generating higher levels of activity, and in changing institutional attitudes and cultures, across England and Northern Ireland.

12. The HEFCE regional consultants will discuss with institutions their progress with activities under the programme and any difficulties which may have arisen in achieving their targets. The programme manager will also be well placed to offer an overall view of progress nationally. Reports from these sources will inform any subsequent round of grant applications to ensure that lessons from the first round are taken into account.

13. We shall also consider what the annual HESA finance returns tell us about the level of activity in certain forms of HE-business interaction, and about the effect of the Reach-out fund on these. The indicators within the HESA return which are most likely to be helpful here are research income from industry; income from teaching company schemes; income from intellectual property rights; and possibly ‘other services rendered’ income from industry, though we recognise that this may be harder to interpret.

14. We are considering introducing other measures to disseminate and publicise achievements of the programme, to help HEIs to share best practice. These might include:

a. Seminars or conferences, possibly on a regional basis and probably held in the autumn of 2000 or early 2001.

b. An annual report to the sector about achievements funded by Reach-out, which would also provide a vehicle for sharing the results of monitoring.

15. It is envisaged that an annual report will be made to the expert advisory group which advises on the allocations, or a similar body convened for that purpose, to secure an informed view on the adequacy of the progress being made and any scope for further improvement.

Programme evaluation

16. We will commission a full evaluation of the programme during its fourth year, in time to inform decisions about renewed allocations of grant as the first four-year allocations come to an end. We shall give further consideration to the specification for this, but we anticipate that it:

a. Would examine the impact of the programme at national and institutional level, including the effect on academic culture.

b. Would identify particular achievements and areas where there had been less impact.

c. Might suggest particular areas of work to be targeted in making further allocations.

17. We will also undertake a less full formal evaluation of the programme towards the end of its second year. This will draw upon the full range of monitoring information identified above, as well as advice from the advisory group, and would be available to inform discussions about the level of funding for the programme beyond that stage.

Annex C

Responses to Consultation

1. The consultation paper published in March (HEFCE 99/16) invited comments on the strategic aims and objectives for the fund and on draft criteria for allocations. Responses were received from 118 HEIs and from a number of other bodies in HE and in business. The key issues raised are summarised below. Where appropriate our response to points raised is given in italics.

Support for the fund

2. There was strong support for the creation of the fund as a stimulus to HEIs’ interaction with business. The intention that this should become a third permanent core funding stream within HEFCE grant was also welcomed. Most respondents believed that the broad nature of the fund recognised diversity in the sector and diversity of provision, and welcomed the fact that it would allow HEIs to decide their own priorities within fairly broad guidelines.

Interaction with business

3. Some respondents pointed out that interaction between business and HEIs should be a two-way process, and there was a need to stimulate the business side, especially small and medium sized enterprises, as well as the HE sector. (The Competitiveness White Paper announced a number of measures to encourage business, particularly small businesses, to interact with HEIs. These included an expansion of the successful TCS - Teaching Company Scheme.)

Definition of business and community

4. Respondents felt that the meaning of ‘business’ and ‘community’ within the fund required some clarification. There was widespread support for broad and inclusive definitions which would cover interactions between HEIs and public, voluntary, charitable, not-for-profit and newly privatised organisations where these had clear benefits for the local or national economy. Some respondents felt that a wider notion of the community, as partner and beneficiary, should be embraced in the context of broader policies for lifelong learning and competitiveness. (In revising the guidelines we have sought to make it clear that applications proposing activities with this broader impact will be considered.)

Funding

5. While welcoming the proposed allocation of funds as a starting point, some respondents felt that achieving the fund’s objectives of culture change and improved structures would require a much larger investment; though equally this should not be done by taking funds from core teaching and research activities.

Allocations

6. Some questions were raised about the proposal for banded allocations, with a few respondents requesting more flexibility. A number asked for more detail about the handling of applications from consortia of HEIs especially where institutions might also apply individually. (This is covered in the revised guidelines.)

Assessment procedure

7. Opinion was divided about the intention to consider HEIs’ track record for interaction with business when assessing proposals. Some respondents supported this opportunity to build on existing activity, while others felt it sat uncomfortably with the fund’s aim of developing activities and building capacity. It was also suggested that HEIs without past experience might have greater potential and were in greatest need of funds to exploit this.

8. Concern was expressed about the use of the HESA finance record to judge HEIs’ track record. The statistics were not originally intended for this purpose, and it was considered that they did not record all HEI business activity. (The guidelines indicate that information from HESA will be used alongside that provided by HEIs in their applications.)

Monitoring and evaluation

9. Most respondents agreed with the proposed monitoring and evaluation procedure but said that they would welcome further information and guidance (see Annex B above). Some respondents suggested that there should be qualitative as well as quantitative measurement of the impact of the fund, but opinion was divided about assessing through national targets. There was widespread support for the dissemination of good practice to inform the sector and build on success.