| 12 October 2007 |  |
| To | Heads of HEFCE-funded higher education institutions Heads of further education colleges, directly or indirectly funded by HEFCE Heads of universities in Northern Ireland |
| Direct Line | 0117 931 7300 |
| Direct Fax | 0117 931 7203 |
Circular letter number 27/2007
For further information contact Ruth Tucker, tel 0117 931 7367, e-mail r.tucker@hefce.ac.uk
Dear Vice-Chancellor or Principal
Higher education in further education colleges: implementation of HEFCE policy
1. I am writing to inform you how HEFCE intends to implement its policy for supporting higher education in further education colleges and to invite colleges to express an interest in participating in piloting the process we are developing for colleges' higher education strategies. Expressions of interest should be received by 12 November 2007.
2. We consulted on our policy proposals in HEFCE 2006/48: 'Higher education in further education colleges: consultation on HEFCE policy'. The proposals covered four main areas:
- the distinctive contribution that higher education (HE) in further education colleges (FECs) makes to HE provision overall
- the strategic development of HE in FECs
- funding and relationships
- Centres for HE Excellence in FECs.
3. We received very strong support for almost all our proposals, with the exception of our proposal about capital funding, on which there was no consensus. A full analysis of the responses is published in the report 'Higher education in further education colleges: outcomes of the consultation', prepared for HEFCE by Professor Gareth Parry and Dr Anne Thompson.
4. Given the high level of support for our policy on the strategic development of HE in FECs, and funding and relationships, we do not believe that a further consultation on these proposals, as originally envisaged, is necessary. Instead, we intend to implement them as follows.
5. Our proposals on security of funding and student numbers, and relationships, aim to create a more supportive and stable environment within which collaborative provision can continue to flourish, alongside the provision that we shall continue to support through direct funding. Centres for HE Excellence in FECs will create a developmental opportunity for those colleges with successful bids, as well as showing what colleges do really well in relation to workforce development and widening participation.
Strategic development of HE in FECs: pilot process
6. We want all FECs to be strategic about their provision of higher education, and to play a full part in the development and delivery of HE. This is particularly important because HE is not their core business. Thus, they should be able to show that the contribution they make to HE ensures high quality provision, provided in an appropriate environment, and which adds value, particularly in relation to HE provision across a region or sub-region. In addition, that provision should complement colleges' core work, building on their further education strengths, with progression facilitated within and across institutions.
7. In our consultation we received overwhelming support for our proposal to request a strategy on higher education provision from all FECs, whether their HE was funded directly or indirectly.
8. If all colleges delivering HE are taking a strategic approach, we expect quality to be enhanced. We also expect that our strategic approach to working with FECs, which are themselves committed to the development of their HE, will enable us to support the growth of this provision, meeting local needs and widening access more effectively.
9. We will request higher education strategies from all FECs delivering HE and assess them. We will pilot this new system during this academic year and introduce the new procedure in the following year.
10. FECs in the pilot will make a valuable contribution, working with us to ensure our system for assessment is a robust one, and is responsive to all colleges irrespective of size of provision or method of funding.
11. For the pilot we envisage collecting a sample of about 30 strategy documents, drawn from across the nine regions, and reflecting the diversity of provision (size of provision, method of funding, qualification aim, and mode of study etc). Groups of colleges, with their higher education institution (HEI) partners, might wish to submit a joint strategy, and we would wish to include such examples within our pilot. We will assess the strategy documents with the help of the Quality Assurance Agency (QAA) and with the involvement of our regional teams. It will be a process owned by HEFCE.
12. We are inviting colleges to volunteer to participate in the pilot. In particular, we would encourage those FECs with a comparatively small amount of HE provision to give serious consideration to participating. This will help us to ensure our process for assessing strategies is fair, and one that creates as low a burden as possible.
13. We believe that there will be an additional benefit for colleges if they participate in the pilot. The pilot will provide them with the opportunity to develop their own strategy towards HE and to demonstrate the distinctive contribution which they can make to the overall pattern of HE provision in their region (see HEFCE 2006/48, paragraphs 38 and 44 for our view of this). Furthermore, the pilot will provide an opportunity for colleges with varying degrees of experience to share their work. The pilot will be developmental and those colleges which participate will be supported in improving their HE strategies. They will then have the opportunity to develop a final version of the strategy during the following academic year, if they wish. Participating in the pilot will have no consequences for funding.
14. For many colleges, formulating the strategy will not involve any real change to the normal college process of reviewing an existing strategy for their HE provision, other than providing a document for HEFCE. Wherever possible, we will wish to use existing college documents.
15. We shall inform the participants selected for the pilot by 30 November 2007. Participating colleges will receive a copy of our draft guidance, the assessment criteria for the strategy statement, and be invited to an information workshop in January 2008. Partner HEIs will also receive an invitation. Strategies will need to be submitted by 1 March 2008.
16. Our process in the pilot will be evaluated throughout by our external consultants Professor Gareth Parry and Dr Anne Thompson of Sheffield University. The outcomes of the pilot will inform how we proceed with our proposal to request strategies from all colleges in the 2008-09 academic year. We shall return to our Board with detailed proposals in autumn 2008.
17. Volunteers for the pilot should send an expression of interest by 12 November 2007 to Ruth Tucker (e-mail r.tucker@hefce.ac.uk).
Funding and relationships
18. The funding and relationships elements of our policy are concerned with ensuring that strategic and sustainable partnerships exist between those HEIs and FECs that deliver HE through indirect funding arrangements. In recent years there have been substantial developments in collaborative working between FECs and HEIs, for example in establishing Lifelong Learning Networks. However, not all partnerships operate with the clarity and transparency that we would expect. Against this background, our consultation included a range of proposals that would help us secure the student experience through all indirect funding partnerships.
19. In the consultation we proposed that we should take steps to satisfy ourselves that institutions adopt the proposed changes to indirect funding agreements. We asked what these steps should be. Both HEIs and FECs stressed that we should use low burden methods for monitoring agreements and that we should work with and through existing accountability mechanisms. These included the QAA's audit and review processes, making use of the Annual Monitoring Statement (AMS) from HEIs, and lining up what we do within the timeframe of the 'single conversation' with HEIs.
20. We set out below how we propose to use existing mechanisms to implement the funding and relationships elements of our policy.
Security of funding and student numbers
21. We proposed that under normal circumstances indirect funding arrangements should provide member institutions with security of funding and student numbers for at least three years. This received extremely strong support from both FECs and HEIs. Many suggested that using the AMS that HEIs already return to HEFCE would be a low burden way of determining whether HEIs are providing the proposed security for provision sub-contracted to colleges. We intend to ask HEIs to confirm, through the AMS, that they are providing at least three years security of funding. If we have questions about a response, we will consider writing to the institution in question to seek clarification; and then, if necessary, we may follow this up with an action plan for the institution. This follows our standard practice in dealing with areas of concern we find through the AMS. We expect to make this addition to the AMS for the return next year, in December 2008.
Management and structural arrangements of indirect funding agreements
22. We made two proposals for changes to indirect funding arrangements. These were that they should all reflect the structural and management arrangements associated with genuine collaborative working and that all data returns for indirect funding arrangements should be made by the lead institution. Both proposals received strong support from institutions, though there was evidence of some confusion about the proposal on data returns. This change affects only those institutions in HEFCE-recognised funding consortia, and had been requested by them. In this respect, the proposal brings funding consortia into line with practice for other indirect funding relationships.
23. We will rationalise our two existing codes of practice on indirect funding arrangements and agreements into one document, revising it to reflect the collaborative structural and management arrangements that we seek from institutions. We are in discussion with the QAA to ensure that our revised code of practice dovetails seamlessly with its guidance covering collaborative provision.
24. We have also been discussing with the QAA how its processes could be used to check that institutions' indirect-funding agreements follow our revised code of practice. The QAA has advised that, whilst the new Integrated Quality Enhancement and Review (IQER) method for assuring quality of HE provision in FECs will identify whether an indirect funding partnership agreement is in place, it will not be able to provide information on whether the agreement satisfies our code of practice. The QAA has proposed that it should carry out a 'low burden' desk-based review to fulfil this aspect. As a result, we intend to commission the QAA to carry out a special, mainly desk-based, review of indirect funding agreements.
Proposed timetable for review of indirect funding agreements
| January 2008 | HEFCE issues revised code of practice for indirect funding agreements and arrangements |
| January 2008 | HEFCE agrees specification for desk-based review of indirect funding arrangements with the QAA |
| January 2009 | QAA begins desk-based review |
| May 2009 | QAA reports outcomes of review |
Information on the costs of teaching
25. To help derive the costs of collaborative activity, including the services provided by the lead institution in an indirect funding arrangement, we proposed that more work should be done on developing information on the costs of teaching. We wanted to do this, without adding to the administrative burden for institutions. We suggested that extending the development of the Transparent Approach to Costing (TRAC) to FECs might be helpful. Whilst a clear majority of respondents from FECs and HEIs supported this, many also thought there were other barriers to the production of clear and transparent funding agreements, mostly related to the level of costs for different activities.
26. We have decided that, in the short-to-medium term, TRAC is probably not the right tool to help FECs and HEIs understand the full range of costs associated with collaborative working, and also that it would be burdensome for colleges. We think that a better approach is to commission a special study of the costs involved in partnership arrangements both for FECs and HEIs. The study will be compatible with the TRAC methodology so that it can inform future developments of TRAC. We shall be commissioning this study in October and expect the work to be completed by summer 2008.
Capital
27. In our consultation we proposed replacing the existing formulaic capital allocations to all colleges with a selective approach whereby some colleges would receive support for large developments but many colleges would receive no capital funding. This proposal received the greatest variability in response and the lowest level of support, with just under half the respondents from FECs and HEIs in favour of it.
28. Therefore at present we intend to continue to provide formulaic capital allocations to all colleges. For the longer term we are continuing to discuss with the Learning and Skills Council how we can align our different approaches to capital investment.
Centres for HE Excellence in FECs
29. There was very strong support for the aims and objectives we proposed for Centres for HE Excellence in FECs and also for the proposed criteria and the selection process, but there was a general call for elaboration of the criteria and their application. We intend that these Centres for HE Excellence should directly promote the emergence of excellent practice and should contribute to the strategic development of HE provided in FECs. We depend upon resources being made available for them through the Comprehensive Spending Review. We will develop, and consult on, detailed proposals once we know the funding available for the next spending period, from 2008-09 to 2010-11.
Responses
30. Colleges wishing to express an interest in participating in the strategies pilot should contact Ruth Tucker (r.tucker@hefce.ac.uk) by Monday 12 November 2007.
Yours sincerely
Professor David Eastwood
Chief Executive