Invitation/Request 00/09

Higher education in further education colleges
Development fund for learning and teaching

Respond by 2 May 2000

1. Executive summary

   Purpose

2. This document gives details of a new £9.5 million fund to help further education colleges (FECs) to develop their higher education (HE) programmes and specifically to raise the quality and standards of HE learning and teaching.
3. It also:
4. 1. Reports on colleges' funding choices made in response to HEFCE publication 99/36.
   2. Sets out arrangements for all directly funded FECs to return HE strategies to the HEFCE.
   3. Describes monitoring procedures for HEFCE funds distributed to FECs.

   Key points

5. The development fund will be available to all those FECs and FEC consortia which have 100 or more full-time equivalent (FTE) students on HE programmes directly funded by the HEFCE.
6. We are requesting statements of their strategy for developing their HE from all the FECs that we fund directly. FEC consortia will be able to submit collective statements.
7. In return for the development funding we are asking all eligible colleges and consortia to include within their statement a strategy and actions for developing the quality of their HE programmes.
8. Strategies will be monitored through annual operating statements to be returned each summer.

9. Action required and timing

10. Please send all strategy statements and applications for development funding to Jacqueline Fitzgerald by Tuesday 2 May 2000, at:
    
    

    Institutions and Projects Directorate
    Higher Education Funding Council for England
    Northavon House
    Coldharbour Lane
    Bristol
    BS16 1QD

11. We plan to confirm funding allocations for eligible colleges and consortia in June 2000.

12. Further information

13. Further information is available from Jacqueline Fitzgerald (tel 0117 931 7023, fax 0117 931 7226, e-mail j.fitzgerald@hefce.ac.uk or from your higher education adviser (full institutional contact details are available on the HEFCE web-site at http://www.hefce.ac.uk under 'About us').

14. Introduction

15. We have long funded some HE work in further education colleges (FECs). The recent transfer of responsibility from the FEFC for funding additional categories of HE in FECs, combined with the continuing growth of HE in FECs in line with our commitment to widening participation, have caused us to review the principles on which we fund this provision. As part of this review, we set out the principles and funding options for FECs providing HE in our publication HEFCE 99/36 'Higher education in further education colleges: guidance for colleges on funding options'. Annex A of this document outlines responses from FECs.
16. The FEFC remains the lead accounting body for FECs and as such takes responsibility for monitoring their overall health and development. But the HEFCE has responsibility to ensure accountability for the HE it directly funds. We therefore need to seek information from FECs about their strategic direction and priorities for HE, and their own assessment of progress against objectives. Paragraphs 21-33 below outline our new requirements for strategies and monitoring statements.
17. We are working towards parity of funding to help colleges to deliver the same quality and standards of HE as higher education institutions (HEls). This includes parity of funding from relevant special initiatives, some of which have, in the past, only been available to HEls. We are therefore introducing a special HE in FE development fund, which will distribute funds in 1999-2000 to 2001-02. This fund is described in paragraphs 34-56 below.

18. Funding options chosen

19. Last year, we sought initial statements from 283 FECs on their choices for funding their HE activity. The options available are: indirect funding ('franchising') through an HEI; funding through a consortium of FECs (also involving one or more HEIs); or direct funding by the HEFCE of individual colleges. In all cases, we asked colleges to consider carefully what forms of partnership and collaboration with HEls could best support the achievement of high standards and quality in their HE programmes.
20. We received responses from all 283 colleges. An analysis of the responses is given in Annex A.

21. HEFCE monitoring of HE in FECs

22. We are responsible for ensuring accountability for the HE we fund, both in terms of ensuring propriety and regularity in the use of public funds, and in ensuring acceptable quality and standards in the programmes offered to students. We will continue to work closely with the FEFC and its successor bodies to ensure that we are able to fulfil this responsibility.
23. In doing so we are mindful of the following principles:

24. a. The FEFC is the lead accounting body for FECs and the overall health and development of FECs is a matter for them.

    b. Our monitoring and accountability requirements should be in proportion to the scale of activity and funds concerned, and should not place an undue burden on FECs.

25. To date we have not requested financial or strategic information from directly funded FECs (indirectly funded FECs are monitored via the franchising HEls). Instead we have relied on the FEFC to monitor FECs' overall financial health and we have merely audited a small number of colleges for their accuracy in completing the HEIFES return that informs our funding allocations (HEFCE 99/58).
26. However, the scale and significance of HE provided through FECs has grown substantially in recent years, and is set to carry on growing. At the same time, expectations of accountability and quality in HE have been rising, and we have a responsibility to ensure that the student experience in FECs is comparable to that in HEls. We have therefore concluded that we need to start collecting strategic statements from colleges as a means of tracking progress, and developing our understanding of colleges. This is both to provide the context for discussions about specific HEFCE initiatives and funding programmes, and so that we can carry out our function of providing informed advice about HE provision to the Secretary of State for Education and Employment.
27. In addition to the HEIFES return, which we request to inform our funding calculations, we therefore intend to collect the following information from all directly funded FECs:

28. a. Information on their strategy for HE, to be submitted by 2 May 2000. Details are in paragraphs 21-30 below.

    b. An annual operating statement, to be submitted each year from July 2001.

    Preliminary details are in paragraphs 31-33 below.

29. Where FECs offer only indirectly funded franchised provision, we shall continue to look to the franchising HEI to provide comparable information.

30. HE strategy statements

31. We recognise that FECs have developed their HE provision for a variety of reasons, for example:
32. • to develop their local or regional mission
    • to develop specialist areas of provision
    • to broaden the range of opportunities for students and staff
    • to expand the sources and volume of their funding.
33. We know that some colleges already have a clear strategy for their HE, as they have informally shared this with their HEFCE higher education adviser or regional consultant. But we think it important that all colleges should periodically and systematically review their HE strategy, giving all the staff concerned an opportunity to assess the college's objectives in providing HE; the fit with its wider institutional mission; its current performance, strengths and weaknesses in providing HE; targets for improvement; and plans for development.
34. The request for HE strategies should not place an undue burden on FECs. We have already been encouraging a strategic approach as part of the additional student numbers (ASN) bidding rounds, so many FECs will be able to build on the strategic statements already returned to us with their ASN bids. In future, we will not request separate statements of HE strategy in our ASN bidding rounds, but will use the three year strategies submitted in May 2000 covering the period up to and including 2001-02.
35. All FECs which are directly funded by the HEFCE for all or part of their HE provision should send a statement of their HE strategy by Tuesday 2 May 2000 to:

36. Jacqueline Fitzgerald
    Institutions and Projects Directorate
    Higher Education Funding Council for England
    Northavon House
    Coldharbour Lane
    Bristol
    BS16 1QD.

    Content of strategies

37. The strategy must cover the three academic years 1999-2000 to 2001-02.
38. HE strategies will clearly vary in size and content according to the amount and nature of HE provision at each college. FECs with 100 or more directly funded FTE HE students (as shown in Annex D) should provide strategies with the following key components:

39. a. Key strategic objectives for the college's HE. These may take into account the local or sub-regional labour market, competitors' and collaborators' programme profiles, changing recruitment trends, and so on.

    b. Links between the college's overall corporate strategy and its specific strategic objectives for HE. This will give the college's vision for HE within the FE context and local circumstances.

    c. An assessment of current performance, strengths and weaknesses of the HE programmes.

    d. A set of specific and measurable operational targets for achieving the strategic objectives in the light of the performance assessment. These should in all cases include targets for developing the quality and standards of the HE programmes.

    e. A programme of activities for implementing the targets. This should include the activities proposed for special funding from the HE in FE development fund (see paragraphs 49-50 below).

    f. Monitoring and evaluation arrangements. Progress towards these operational

    targets must be monitored by the college and progress reported through the annual operating statement to the HEFCE.

40. Colleges with 100 or more directly funded FTEs should provide full strategies, as they will be assessed (together with their statements of how the funds would be spent) in order to confirm the allocation of special funds from the HE in FE development fund. As a guideline, we would not expect strategies to be longer than 10 sides of A4. Colleges should use the template at Annex B to compile their statements. An electronic version of this document, with the template, is available on our web-site at http://www.hefce.ac.uk under 'Publications'.
41. For more details on the allocation procedure, see paragraphs 53-56 and the timetable in Annex E. For the learning and teaching aspects of strategies, our publication HEFCE 99/55 'Learning and teaching strategies: a guide to good practice' may be useful. It is aimed at HEls, but contains relevant guidance on key components of a learning and teaching strategy. It is available on our web-site at http://www.hefce.ac.uk under 'Publications', or on request to the Council (telephone 0117 931 7438).
42. FECs that have formed consortia whose aggregate HE student numbers are 100 or more. FTEs should submit a collective strategy covering all the elements in paragraphs 25-26 above, and including a statement of how they will work together within the consortium to develop the quality of learning and teaching. Consortia strategies should be sent by the lead institution for the consortium, by the same deadline and to the same address as given in paragraph 24 above.
43. Colleges with fewer than 100 FTE HE students will not be eligible for development funding individually but may be eligible as part of a consortium (see paragraphs 44-48 below). However such colleges must also submit an HE strategy statement, covering the elements in paragraphs 25-26 above, although we would expect it to be no longer than three sides of A4. We require such a statement from all colleges in order to provide the assurance necessary for the continuation of HEFCE funding.

44. Annual operating statements

45. Once the HE strategy statements have been submitted by all directly funded FECs in May 2000, we propose to collect updated summary information each year. This will take the form of an operating statement to be submitted annually from July 2001.
46. This operating statement should contain information each year about FECs' HE targets and their own assessment of progress towards achieving these targets. The targets will be drawn from the HE strategies submitted in May 2000, but we are also likely to require information about the use of any special funding (for example, premiums for widening participation, and payments from the HE in FE development fund).
47. We are currently discussing with the FEFC how this might be collected within the annual strategic update which colleges provide to the FEFC or its successor bodies. A more detailed request for an annual operating statement will be made in April 2001 for submission in July 2001.We are also discussing with the FEFC what form of assurance it would be appropriate to expect in future from colleges' external auditors about the use of HEFCE grant.

48. HE in FE development fund

49. Colleges will have seen from our publication HEFCE 99/48 on the Teaching Quality Enhancement Fund (TQEF) that special funding is provided for the implementation of institutional learning and teaching strategies in HEls. Colleges are not eligible to apply for funds from the institutional strand. But we announced last summer that a separate development fund would be set up to support HE provision in these colleges (paragraph 25 of HEFCE 99/48).
50. Similarly, we announced in HEFCE 99/52, 'Project capital allocations', the creation of a fund to improve capital and IT infrastructure in support of teaching and learning. Again this was only available to HEls, and paragraph 15 said that a capital element would be included in the HE in FE development fund announced in HEFCE 99/48.
51. This HE in FE development fund does not relate to indirectly funded HE provision franchised from HEls to FECs. This is because the franchised student numbers were included in the formulae used to calculate the funds allocated to HEIs for both the learning and teaching revenue grant and the project capital grant. The assumption was that FECs with franchised provision would benefit from their partner HEIs' strategies for developing learning and teaching (for further details, see HEFCE 99/48 paragraph 24). The new FEC development fund covered by this document therefore relates only to HE provision funded directly or through consortia.

52. Development of the fund

53. The HEFCE Board agreed in June 1999 to establish a special development fund to support higher education learning and teaching in FECs, covering both capital and non-capital elements. The fund relates to the three academic years 1999-2000 to 2001-02. Its continuation will be reviewed towards the end of that period.
54. We established a task group to develop the fund. The task group was made up of FE College principals and representatives from the FEFC and the Quality Assurance Agency for Higher Education (QAA). A list of members is at Annex C.

55. Size and distribution of the fund

56. We have set aside a total of £9.43 million for the development fund across the three academic years 1999-2000 to 2001-02. This total was calculated to ensure that the fund will match, pro rata to student FTEs, the funds provided to HEls through the institutional strand of the TQEF and the capital and IT infrastructure funds for teaching and learning. The allocations do not take into account FE students or HE students who are indirectly funded through HEI franchises because, as explained in paragraph 36, these students are included in the HEI allocations.
57. There will not be a competitive bidding exercise. The fund will be allocated to eligible, directly funded FE colleges formulaically, conditional only on the production of satisfactory plans for expenditure with clear measurable outcomes, backed up by the strategy statements requested in paragraph 24 above. Our presumption is that all eligible FECs will receive their full allocation of funding.
58. We considered carefully whether the fund should be allocated to all directly funded FECs irrespective of the scale of their HE provision. We concluded against that, and instead decided to set a threshold so that the funds will be allocated only to those FECs and consortia with 100 or more directly funded HE students (according to the 1999-2000 standard HEFCE teaching model). This threshold has been put in place to:

59. a. Ensure that the amounts of funding allocated to each eligible college and consortium are large enough to make a significant difference.

    b. Support the development needs of colleges that already have significant HE provision, which is more than marginal to their institutional mission. We have a concern about the potential risk to the quality of the student experience where small pockets of HE are being taught in isolation. So where colleges wish to offer significant HE provision on a long-term basis, we want to use the development fund to encourage a critical mass sufficient to sustain the quality, standards and culture which are properly associated with the experience of higher education.

60. Indicative allocations for colleges that meet the eligibility threshold are shown in Annex D. These allocations are calculated according to standard teaching resource, as set out in Table B of each institution's funding agreement issued on 29 July 1999, or as subsequently revised. We recognise that student numbers have changed for some colleges, and will change further in future. But in order to provide a reliable basis for the allocation of funds, we have to take the latest confirmed and validated data. The indicative allocations will not be revised in the future, because we want colleges to be able to plan their expenditure now on a secure and definite basis. The only exceptions are where colleges enter into consortia arrangements (see paragraphs 44-48) or move into a franchise arrangement with an HEI during the period of funding. In this latter case if the teaching funding is transferred to the HEI, then we will also make arrangements for the development funds to be paid through the HEI.
61. We want each eligible college and consortium to receive enough funding to make a significant difference. So we have set a floor to the allocations: no college or consortium with 100 FTEs or more will receive less than £22,000 from the fund (across the three years 1999-2000 to 2001-02), provided that they meet the funding criteria.

62. Funds for consortia

63. Consistent with the principle of encouraging colleges to work in partnership between themselves and with HEls, we will allocate development funds to any consortium of FECs whose aggregate HE student total meets the 100 FTE threshold. In order to qualify, such consortia will need to adopt the principles for consortia set out in our consultation paper HEFCE 00/02, 'Higher education in further education colleges: draft code of practice for consortia'. As noted in paragraph 29 above, the strategy statement should be drawn up collectively by the consortium, and the members of the consortium will be able to decide between them how to use the funds allocated.
64. To qualify for development funding from 1999-2000, a consortium must be set up and apply to the fund by Tuesday 2 May 2000.
65. We recognise that many colleges and HEls are still considering the consortium option. We will be prepared to allocate development funding from 2000-01 to consortia that are unable to meet the deadline of 2 May 2000, but which are set up and apply for funding by the beginning of May 2001.
66. The allocation to a consortium will in all cases be calculated by aggregating the student FTE and standard resource totals for all the member colleges. There is no upper limit to the allocation of funds. So colleges which already meet the 100 FTE threshold individually will not lose out in funding terms if they decide to join a consortium.
67. In order to allow for the formation of new consortia, £1 million has been reserved from the £9.43 million available for the fund. That means we will distribute now to the colleges in Annex D a total of £8.43 million (subject to them meeting the conditions of the scheme), allocating the remaining £1 million, on the same level of FTE funding per year, as consortium applications are received from colleges which individually do not meet the 100 FTE threshold. We will not, of course, provide double funding: colleges that are eligible for funding in their own right, and decide to join a consortium, will have their Annex D allocation rolled into a single aggregate allocation for the consortium.

68. Priorities for use of funding

69. The development fund must be used to enhance the HE student learning experience. It is not to be used for FE provision. The fund can be used for revenue expenses such as consumables or releasing staff from some of their contracted teaching load so that they can spend time on developing the curriculum, teaching approaches, assessment methods, quality assurance procedures, or any other activity relating to the enhancement of the quality and standards of teaching and learning on the HE programmes. The funding can also be used for capital expenditure directly related to HE programmes, such as equipment or refurbishment.
70. All proposed activities should fit with one or more of the following priorities:

71. a. Supporting partnerships and collaboration between FECs and HEls, which promote high quality and standards in HE - for example, encouraging curricular activity to promote progression, and sharing of good practice and learning resources.

    b. Promoting activities which will increase the employability of graduates and diplomates - for example, improving work experience opportunities, developing students' key skills, and ensuring industrial or commercial updating of staff.

    c. Improving access to learning and information resources, particularly those associated with information and communications technology - for example, developing library stock, updating specialist equipment (particularly for vocational courses), and enhancing access to specialist databases for student project work.

    d. Supporting staff development which will have a direct impact on the HE student learning experience - for example, training to improve the reliability of assessment and its consistency of design, marking and moderation; and training to improve the quality and consistency of feedback to students.

    e. Undertaking capital projects to support HE learning and teaching - for example, re-equipping and refurbishment of specialist teaching facilities.

    f. Strengthening cross-institutional co-ordination to improve effectiveness of HE learning and teaching - for example, the development of rigorous quality assurance processes, the sharing of good practice across different HE subject areas within an institution, and encouraging a strategic approach to the development of an HE ethos.

72. At our request, the QAA will be extending the scope of its Teaching Quality Assessment programme to cover a significantly wider range of HE programmes in FECs. In any case where a QAA review finds scope for significant improvement in a college's provision, we would expect the college to use its development fund allocation to support action to secure that improvement.
73. The HE strategy statement should specify how the college proposes to spend its development funding, linked to the priorities specified above. Colleges are not obliged to cover all the priorities, but every activity proposed for HEFCE special funding must relate to one or more priority.

74. Allocation process

75. The timetable for the allocation process is at Annex E. Eligible FECs and consortia should submit three copies of each of the following documents to the HEFCE by Tuesday 2 May 2000 to the address given in paragraph 24:

76. a. Strategy statement for their HE provision, covering the period 1999-2000 to 2001-02. This should be prepared according to the guidance given in paragraphs 25-30, using the template at Annex B.

    b. Details of the activities to be funded (using the template at Annex F). The list of activities may cover the three year period, or may, in the case of (for example) capital projects or one-off purchases, be concentrated into one year. The list of activities to be funded by the HEFCE should include details of the amount of funding allocated to each. This should total to the three year indicative allocation for the college given in Annex D. The targets should be presented so that progress towards them can be monitored through the college's annual operating statement from July 2001.

    c. Monthly payment profile (included in the template at Annex B). This should state in which months (from June 2000 to June 2002) colleges will wish to draw down funding to carry out the activities listed. Colleges should draw down their three year entitlement according to need; for example, a college that wished to use its funds on a small capital project could be funded entirely in 2000-01. However, a college that had ongoing costs, such as staffing secondments, should draw down the funding evenly across all three years (1999-2000 to 2001-02).

77. With support from the FEFC, we will assess the strategies and statements of planned activities during May 2000. We will assess how far the planned activities fit with the priorities for the use of the fund, as given in paragraphs 49-50, and with the HE strategy statement. We plan to write to colleges in June, to let them know whether their strategy statement, project plan and payment profile are acceptable.
78. Colleges and consortia whose submissions are not accepted in May 2000 will be given feedback on the reasons for the decision, and asked to re-submit in May 2001.
79. Consortia which are formed too late to apply for the May 2000 deadline may also submit applications in the May 2001 round, as may individual colleges who, for whatever reason, are unable to meet the May 2000 deadline. Applications approved in the May 2001 round will only receive their indicative allocation for two years, that is 2000-01 and 2001-02.
80. We will monitor the use of funds, and colleges' progress towards their targets, through the annual operating statement (see paragraphs 31-33).

Annex A

Funding options chosen

1. Last year, we sought initial statements from 283 FECs on their choices for funding their HE activity. The options available are: indirect funding ('franchising') through an HEI; funding through a consortium of FECs (also involving one or more HEIs); or direct funding by the HEFCE of individual colleges. An analysis of the responses from all 283 FECs provided the pattern of choices as shown in the table below:

2. In all, 75 per cent of colleges wish to receive indirect funding for at least some of their provision, though only 29 per cent of these (81 colleges) would choose to be funded entirely through indirect routes. Of these 81 colleges, 35 expressed an interest in developing consortia funding arrangements. A further 22 colleges, from those who wish to be funded both directly and indirectly, have indicated that they wish to consider consortia funding, bringing the total interest in consortia to 20 per cent of all colleges.

3. Another way of analysing the options chosen by colleges is the extent to which they represent change from the existing pattern of funding. A clear majority of colleges (181 or 64 per cent) want to retain their current funding route. But the analysis identifies significant interest from colleges in moving into indirect funding partnerships. Some 32 per cent of colleges (91) have expressed a willingness to move in this direction, with numbers split more or less equally between those interested in franchise partnerships and those wanting to explore consortium funding. However, their interest is tempered with considerable caution. The majority wish to have only some of their HE provision indirectly funded and many do not wish to change their funding route for the next academic year, but would like more time to develop effective partnerships before any transfer takes place.

4. We were keen to ensure that the transfer of new funding responsibilities from the FEFC to the HEFCE did not encourage a proliferation of small pockets of HE being taught in isolation. One of the main reasons that we wished to promote partnerships was to avoid this outcome. On the whole, the responses from colleges allay this concern. Out of 283 colleges, 213 (75 per cent) want to work in partnership with others. Of the remainder, 51 (18 per cent) have either had previous direct funding from the HEFCE or have demonstrated sufficient quality of HE provision to be awarded additional student places for 1999-2000. In many cases, colleges are considering their positions, and are taking part in discussions with potential partners. To support discussions about consortia arrangements, we have issued a draft code of practice for consortia (HEFCE 00/02: 'Higher education in further education colleges: draft code of practice for consortia'). Colleges and HEls are also being invited to regional seminars in March to discuss consortia arrangements.

Annex B

Template for strategy statements: Higher education in further education colleges

In completing this template, please refer to the guidance in paragraph 26 (a-f). An electronic version of the document and this template is available on our web-site at http://www.hefce.ac.uk under 'Publications'.

Colleges or consortia with 100 or more student FTEs on HE programmes directly funded by the HEFCE should provide strategy statements of not more than 10 sides of A4.

Colleges with fewer than 100 student FTEs on HE programmes directly funded by the HEFCE should provide strategy statements of not more than three sides of A4.

(Note: the targets must include targets for developing the quality and standards of the HE programmes.)

Annex C

HE in FE Development Fund Task Group

Annex D

Allocation of funds

The table below shows the allocation of £8.43 million among all FECs with 100 FTEs or more (according to the HEFCE's 1999-2000 standard teaching model), subject to a threshold of £22,000.

NB: 1999-2000 FTEs are based on the HEIFES98 survey, plus numbers won for 1999-2000 in the additional student numbers bidding round.

Annex E

Timetable for allocating the HE in FE development fund

Annex F

HE in FE development fund: proposed activities

Note: A .rtf version of this annex is available.

Please specify, in the format shown below, how you propose to spend your HEFCE allocation for the development and enhancement of the HE student learning experience at your college or in your consortia.