HEFCE

Corporate Plan 1996-99

Reference M 18/96

June 1996

View most recent strategic plan (April 2004)

Chairman's Preface

This Corporate Plan sets out the HEFCE's strategic aims and key objectives for 1996-99 and its key performance targets for the year 1996-97. The Plan covers three years but is revised annually to take into account changes which have taken place over the previous year.

The main changes in our environment since the 1995-98 Plan was published last year are the prospect of the establishment of a new quality assurance agency and the serious cut in capital funding announced in the November 1995 budget. Both these changes will impact not only upon institutions but also upon the organisation and work pattern of our staff. Currently about 20 per cent of our staff are employed in the Quality Assessment Division which manages the quality assessment of teaching, while a proportion of the work elsewhere in the Council relates to capital project bidding exercises which are unlikely to be undertaken in the foreseeable future. On the other hand, the increased financial pressure on institutions, which has resulted from the capital cut and from continuing demands to increase efficiency, means that the Council's work on monitoring the financial health of institutions is increasing.

Despite the tight funding constraints we are likely to suffer for the next three years, there remains scope for the Council to fund initiatives which will benefit the sector. It is important for the Council to retain its pivotal role in promoting teaching and research. We are continuing to run initiatives which lead to the spread of good practice in teaching and HE management. At the same time, in a rapidly changing environment we must grasp opportunities when they arise to promote world-class research in universities and colleges in England. In all cases, we are committed to evaluating the effectiveness of the initiatives we undertake.

We continue to work in co-operation with the other funding bodies involved in further and higher education in the UK, with the research councils and with the institutions' representative bodies. Several aspects of the Plan involve the Council acting in partnership with these bodies: for example the move towards the combined quality audit and assessment agency mentioned above; the launch of an initiative to jointly fund research equipment in the Government's Technology Foresight Programme priority areas; and an examination of the links between higher and further education.

Universities and colleges play a vital national role in the maintenance of a vibrant, innovative economy through the provision of education, training and research. They are also increasingly important players within their own regions and local communities. We expect students increasingly to enter HE within their own regions. We also expect the pattern of study to be extended over a longer period, using different modes of study. These expectations are reflected in the policy studies being undertaken on the regional dimension, the new teaching funding method, and the development of postgraduate education following the recent review.

The Council is continuing to develop its own policies and initiatives, including the two new funding methods for teaching and research to be introduced during the planning period. Wide consultation is taking place. Meanwhile, we are looking forward to the outcome of the National Committee of Inquiry into Higher Education being chaired by Sir Ron Dearing. Its recommendations will influence significantly the development of HE and students' experience, and the impact of HE on the local and national economy. We look forward to making a significant contribution to the Inquiry, based on our knowledge of the HE sector.

I hope that in reading our Corporate Plan you will gain some insight into the complexity of our operation, our relations with other bodies and our intentions for the future.

Brandon Gough

Mission Statement

1. The HEFCE's mission is to promote high quality, cost-effective teaching and research within a financially healthy higher education sector, having regard to national needs.

2. In pursuing its mission the Council will:

Promote high quality education and research which advances knowledge, and meets the diverse needs of students and the needs of the economy.
Encourage in higher education a widening range of opportunities through institutions which build on their strengths at local, regional, national, and international level.
Contribute to innovation and development in higher education through the assessment of teaching, learning and research, the funding of initiatives and research into the delivery and outcomes of higher education.
Develop active partnerships with institutions sustained through regular consultation, transparent funding mechanisms and the prompt provision of information.
Advise Government on the aspirations and needs of higher education and contribute to public information on the achievements and opportunities provided by higher education; in doing so take account of international experience.
Build partnerships with other bodies engaged in education and research in the UK and abroad and with employers.
Promote good management, effective accountability for public funds and value for money, both within higher education institutions and in the Council's own practices.

The Board

Statutory Basis

3. The HEFCE was created under Section 62 of the Further and Higher Education (FHE) Act 1992 and established on 6 May 1992. The Council took up its responsibilities fully from its predecessors (the Universities Funding Council (UFC) and the Polytechnics and Colleges Funding Council (PCFC)) on 1 April 1993. The powers and responsibilities of the Council are delineated in the FHE Act.

Membership

4. Under the FHE Act, the governing body of the HEFCE, known as the Board, comprises between 12 and 15 members of whom one is appointed Chairman. The Secretary of State for Education and Employment is responsible for making the appointments. Members are appointed for a term of two or three years, and may be reappointed. In making appointments the Secretary of State has to take account of the requirements of the Act, namely that members have experience in the provision of higher education, in either an academic or administrative capacity, or have experience in industrial, commercial or financial fields, or in the practice of any profession.

5. The Chairman, Mr Brandon Gough, was appointed on 19 April 1993 for a period of three years, extended in April 1996 for a further two years. The current Chief Executive, Professor Brian Fender, was appointed for three years in October 1995.

Assessors and Observers

6. The FHE Act provides for a representative of the Secretary of State to attend and take part in any deliberations (but not decisions) at Board meetings. The status of the Secretary of State's representative as an 'assessor' enables him to take full part in the Board's discussions but prohibits him from voting. The current Assessor is Mr Roger Dawe, Director General for Further and Higher Education and Youth Training at the Department for Education and Employment (DfEE).

7. The Board is entitled to invite observers to its meetings and has chosen to invite Mr Peter Holmes of the Department of Education Northern Ireland (DENI). The HEFCE provides advisory services to the DENI, the Northern Ireland Higher Education Council (NIHEC), and the Department of Agriculture for Northern Ireland (DANI). The chief executives of the Higher Education Funding Council for Wales and the Scottish Higher Education Funding Council and a representative from the Teacher Training Agency also attend.

Conduct of Business

8. The Board normally meets eight times a year. The Board's deliberations and decisions are based on papers put forward by the Executive. The decisions of the Board are carried through by the Executive and officers. In all its dealings, the Board observes the highest standards of impartiality, integrity and objectivity. In February 1995 it adopted a Code of Best Practice which sets out, inter alia, the corporate responsibilities of Board members; their responsibilities as individuals including their obligation to declare any personal or business interests which might conflict with their responsibilities as Board members; and the requirement to comply with the principles of openness and accountability later highlighted by the Nolan Committee.

Accountability

9. The Financial Memorandum between the DfEE and the HEFCE sets out the main financial responsibilities of the Chief Executive. As the Council's Accounting Officer, it is the Chief Executive's duty to satisfy himself that the uses to which funds received from the Secretary of State are put are consistent with the purposes for which they have been given and comply with the conditions attached to them. He is also responsible for promoting value for money through the Council's grants and associated guidance, and must be satisfied that the institutions the Council funds have appropriate arrangements for financial management and accounting.

10. The funds provided to the Council by the Secretary of State are subject to the terms and conditions of the Financial Memorandum between the DfEE and the HEFCE. Amongst other matters, this document requires the Council to draw up a financial memorandum with each institution it funds, setting out the terms and conditions on which payments will be made.

Committees and Groups

11. In order to carry out its responsibilities effectively, the Board has established the following standing committees:

Quality Assessment Committee (QAC)
Joint Medical Advisory Committee (JMAC) (with the SHEFC, HEFCW and DENI)
Joint Information Systems Committee (JISC) (with the SHEFC, HEFCW and DENI)
Joint Advisory Committee on Church Colleges (JACCC) (with the TTA)
Audit Committee
Remuneration Committee.

The membership of the QAC, the Audit Committee and JMAC includes at least one member of the Board.

12. The Council has also established at various times advisory and working groups to deal with policy issues as they arise.

Staff

13. The HEFCE currently employs about 190 people, almost all of whom are based at Northavon House, Bristol. It has retained a base in London which is used for Board, committee and group meetings.

14. The Council is working towards the Investors in People award, a national standard which recognises effective investment in staff development and training. The standard requires that resources are made available to staff in the form of advice on and financial support for learning and training; that training and development needs are reviewed regularly against business and personal objectives; and that development activity is evaluated in relation to the organisation's aims.

The Context in which the Council Operates

Functions

15. The chief functions of the HEFCE are to distribute the funds allocated to it by the Government and to advise the Government on the financial needs of the higher education sector. Funds are distributed to higher education institutions in England for the funding of teaching, research and associated activities and to some further education institutions in respect of higher education courses provided by them.

Guidance from the Secretary of State for Education and Employment

16. The statement of responsibilities in the FHE Act was supplemented by instructions from the then Secretary of State in the 'letter of guidance' addressed to the Chairman of the HEFCE dated 1 June 1992. This letter set out Government higher education policy as it related to the Council, such as the aims of the funding method, the assessment of quality of teaching, widening participation, and accountability for funds.

Budget Statement

17. Further advice is received each year from the DfEE, on the occasion of the announcement of public expenditure by the Chancellor of the Exchequer, which takes place annually in late autumn. These letters inform the HEFCE of its funding allocations, explain the assumptions made by the DfEE and include additional policy guidance.

18. The Council's activities are carried out within Government policies, as set out from time to time in this guidance, and within the funding made available.

Resources for the Period 1996-99

19. The funds available to the Council for distribution to higher education for the period 1996-97 were set out at the time of the 1995 Budget Statement, together with indicative figures for 1997-98 and 1998-99.

20. The funding announced by the DfEE on 28 November 1995 for the next three years is set out in the following table. The figures for 1997-98 and 1998-99 are indicative only.

	FY 1996-97	FY 1997-98	FY 1998-99
	£M	£M	£M
Recurrent *	3,196	3,157	3,151
Capital	243	218	181

* Includes the Council's running costs

21. Although the above table shows allocations for recurrent and capital purposes separately, from 1996-97 the Council's grant is a single allocation for distribution to institutions. The figures for 1996-99 indicate a reduction in cash from 1995-96 levels for both recurrent and capital purposes.

22. The DfEE's plans for student numbers are announced at the same time as the funding. These are, expressed as full-time equivalents (FTEs):

	FY 1996-97	FY 1997-98	FY 1998-99
Total FTEs	938,000	936,000	949,000

These figures are consistent with maintaining a participation rate amongst 18 and 19 year olds of some 30 per cent over the three years. The rise in numbers in 1998-99 reflects the demographic upturn in that year in the relevant age group.

23. The Council's policies during the period will have to reflect the reduced funding expectations outlined above and the Secretary of State's priorities. In guidance issued at the time of the 1995 announcement the DfEE reiterated the need to continue to exercise tight controls to ensure that the planned number of full-time and sandwich undergraduate students is not exceeded, while planned participation rates are met.

24. The Council's running costs for the next three years, also announced on 28 November 1995, are as follows:

	FY 1996-97	FY 1997-98	FY 1998-99
Running Costs	£ 12,733,500*	£ 11,216,250	£ 11,266,250

* Of which £1,285,000 for the 1996 Research Assessment Exercise

The Council's Policies

25. The Council's unique role in funding English higher education requires it to take account of the views and needs of Government, of the providers of higher education (the universities and colleges), of other funders, and of the users of higher education (students, employers and the beneficiaries of research). Within the statutory framework described above, the Council is a non-departmental public body which operates within guidelines set by the Secretary of State. But within those guidelines it has considerable discretion, through its funding methods and through special initiatives, to identify and respond to the needs of the others with an interest in higher education.

26. The Council respects the independent status of universities and colleges, and allows them considerable scope to respond to the markets in which they are players. The Council also identifies from time to time needs which it may not be possible for individual institutions to address. Examples include the Council's contribution through the Joint Information Systems Committee to the national infrastructure of electronic networking, and its identification of needs in, and specific funding for, academic libraries and learning centres. It also plays its part in promoting wider understanding of British higher education.

27. During the three years 1996-99 the Government's published expenditure plans continue to restrict public funding severely and keep student numbers under tight national controls. The Council's priority during this period will be to ensure sufficient flexibility in the system to respond to changing national, regional and local needs, within the funds available. It will achieve this through selective funding of research and by introducing a new method of funding teaching, the details of which will be determined through widespread consultation with the sector. At the same time it will promote further improvements in the quality of teaching and research, and aims to provide sufficient stability so that the rate of change faced by individual institutions can, as far as possible, be managed.

Co-operation with other Bodies

28. In implementing its policies, the Council seeks to co-operate with other bodies with cognate responsibilities. These include the other higher education funding councils, DENI, the Further Education Funding Council, and the TTA.

29. The Council's relationship with DENI is formalised through a Service Level Agreement which provides DENI with advice on planning and funding higher education in Northern Ireland. Northern Ireland universities participate in the quality assessment programme on an equal footing with English higher education institutions. A Service Level Agreement also specifies services which the Council provides to the TTA.

Key Performance Targets

30. As part of the mechanism for ensuring accountability for the expenditure of public funds, the Government requires non-departmental public bodies' key performance targets and progress against them to be published annually. The Council's key performance targets for 1996-97 are as follows:

To announce the main funding allocations by 31 March 1997 and to deliver all funding to institutions correctly and on time
Full and part-time student numbers in 1996-97 to be within 1.5 per cent of the Secretary of State's target
Following consultation, to introduce new funding methods for teaching and research which encourage improvements in quality and responsiveness to the needs of students and the wider community
To identify and support at least twelve PFI pathfinder projects in order to demonstrate the potential for application of the PFI in higher education
To complete the 1996 RAE and publish by 31 December 1996 assessments of research quality in all participating institutions
By March 1997, to have made over 200 assessment visits and published over 200 individual quality assessment reports
With CVCP and SCOP to have established a new agency for quality assurance in higher education, and agreed the framework for the future quality assurance process
To agree with the FEFC a policy on relations with, and funding of, institutions which offer both further and higher education
With OST and the research councils, to allocate up to £11.5 million in matched funding for research equipment in response to the Technology Foresight initiative, by 31 March 1997
To implement a new approach to written communications with institutions, giving them advance notice of future publications, which are clearer and better targeted
Within eight weeks of an institution being identified as in immediate financial difficulties, to secure the first steps of remedial action by the institution
To make 50 audit visits to institutions and produce 50 reports during 1996-97
To produce two guides for the sector on obtaining value for money
To provide an efficient, effective service within the £12.7 million running costs budget, achieving the 5.4 per cent real terms efficiency gain in 1996-97 required by the Secretary of State

31. Progress against these targets will be reported in the Council's Annual Report for 1996-97.

Strategic Aims for 1996-99

32. The HEFCE's mission, functions and aims were originally described in its Management Statement, published in November 1993. The Council's strategic aims for the period 1996-99 are listed below.

1.0 Funding cost-effective teaching and research and promoting the sector's infrastructure

2.0 Assessing and improving the quality of teaching and research

3.0 Meeting national and regional requirements by encouraging diversity, extending opportunities and advising the Government on the sector's needs

4.0 Developing active partnerships with institutions and promoting wider understanding of higher education

5.0 Promoting good management, value for money and effective accountability in higher education institutions and monitoring their financial health

6.0 Employing the Council's own resources cost-effectively

33. The following section describes, in terms of its current key objectives, how the Council intends to carry forward these strategic aims.

Implementing the Council's Strategic Aims in 1996-99

1.0 Funding cost-effective teaching and research and promoting the sector's infrastructure

The Council's main task is to distribute the funds made available to it by the Secretary of State.

The Council is reviewing the funding method for both teaching and research, and is also reviewing the effects of selectivity in research funding during its first years of operation. The reviews cover the Council's methods of allocating recurrent funding for teaching and research and of allocating capital funding during the planning period. They involve consultation with institutions and representative bodies during 1996. The revised methods will be used for allocating funding for the academic years 1997-98 onwards.

Funding for Teaching

Funding for teaching has hitherto been allocated using a core-plus-margin approach. During the transition from separate funding methods for the UFC and PCFC institutions, this has guaranteed a high degree of funding stability from year to year: in return, institutions are expected to meet student number targets. Funds in addition to the core are distributed on a competitive basis. Funding allocations are based on the academic year (August-July) and are paid to institutions monthly. Institutions also receive from public funds the tuition fees payable for mandatory award-holding students, via local education authorities.

Funding for Research

The Council's funds for research are one part of the dual support system. The other part, provided by the Research Councils, funds specific projects in response to proposals from staff in higher education institutions. The Council's role is to provide undirected funds to be spent at the discretion of institutions themselves. The Council's funds support academic salaries and the premises and general infrastructure on which institutions can secure research grants; they contribute to the training and education of postgraduates; they support new young researchers who may not yet be in a position to secure research grants; and they support 'seed corn', basic research.

The Council will continue to allocate research funds selectively, for the most part on the basis of quality determined by the outcomes of the 1992 Research Assessment Exercise (for the academic year 1996-97) and the 1996 Research Assessment Exercise (for the academic years 1997-98 and 1998-99).

Funding for Capital Requirements

Private finance is expected to become institutions' main source of funding for new developments and other major projects, in line with the Private Finance Initiative. The Council's policy is to encourage institutions to make more imaginative use of the full range of private financing options available, where these offer good value for money.

The Council's commitments to capital funding over the period include funding for backlog maintenance, based on national surveys carried out on behalf of the Council, and funding for specific estates projects. The Council's contribution to specific estates projects is normally not more than 25 per cent of the total cost of the project, with the balance of funding being provided from institutions' own resources or through borrowing or alternative sources of external finance. Payments relating to existing commitments to backlog maintenance and specific estates projects will continue to be made, subject to satisfactory progress, up to a deadline of 31 March 1998.

In future, and in the light of the reductions in capital grant announced in the Government's 1995 public expenditure plans, the Council's policy will be to allocate funding for capital formulaically wherever possible. Any future funding for specific projects is likely to be through special initiatives. The Council wishes to give institutions the maximum possible flexibility over how they spend the funds available. In the light of DfEE's decision, announced in its 1995 guidance letter, to allocate the Council a single grant for use on either capital or recurrent purposes, the Council has decided that institutions should have complete freedom in 1996-97 to vire between their recurrent grant and their formula capital funds at their discretion.

The information systems infrastructure is being promoted by the Joint Information Systems Committee (JISC) of the Higher Education Funding Councils for England, Scotland and Wales. Networking is a core activity of JISC and the joint academic network (JANET) is available to all HEIs. SuperJANET, a broadband network designed to facilitate the development of novel teaching and research methods, currently serves over 95 sites. A separate initiative has been launched to support the enhancement of local area networks (LANs) and metropolitan area networks (MANs). This arrangement allows SuperJANET to be more pervasive within the resources available. JISC also funds cost-effective projects and services, and is managing a major programme of information systems developments following the recommendations of the Joint Funding Councils' Libraries Review.

For 1996-99, the Council has the following key objectives for funding teaching and research and promoting the sector's infrastructure:

1.1 To allocate and distribute to institutions each year funding made available by the Secretary of State for Education and Employment.

1.2 To secure the student number targets identified in the Government's expenditure plans.

1.3 To review and revise the funding method for teaching in the light of current policies.

1.4 To make teaching and learning more productive and efficient.

1.5 To strengthen the link between funding and the quality of teaching and learning.

1.6 To review and revise the funding method for research in the light of current policies.

1.7 To contribute towards the creation of wealth through selective funding of research.

1.8 To review whether it is still appropriate to keep a separate formula allocation for capital or whether funding for capital purposes should be subsumed within the funding models for teaching and research.

1.9 To encourage institutions to take maximum advantage of the opportunities offered through the private finance initiative, wherever these offer good value for money, and to help institutions attract a diversity of funding by providing key information and assistance to HEIs and the commercial market.

1.10 To encourage through its funding methods and guidance the development, maintenance and effective utilisation of estates.

1.11 Through the Joint Information Systems Committee to encourage and enable the sector to derive maximum benefit from its investment in information systems, including SuperJANET and local and metropolitan area networks.

Key Performance Targets

To announce the main funding allocations by 31 March 1997 and to deliver all funding to institutions correctly and on time
Full and part-time student numbers in 1996-97 to be within 1.5 per cent of the Secretary of State's target
Following consultation, to introduce new funding methods for teaching and research which encourage improvements in quality and responsiveness to the needs of students and the wider community
To identify and support at least twelve PFI pathfinder projects in order to demonstrate the potential for application of the PFI in HE

2.0 Assessing and improving the quality of teaching and research

The Council is required by the Further and Higher Education Act 1992 to secure the assessment of the quality of education in the institutions for whose activities it provides financial support. Following consultation a revised method for the assessment of the quality of education, involving universal visiting and quality profiles, was introduced in April 1995. The Council's assessment of the quality of education has three main purposes:

to obtain value from public investment
to encourage improvement and development
to provide effective public information on the quality of higher education, measured against the subject aims and objectives set by the institution.

The Council has published a forward programme for quality assessment which sets out the timetable for the completion of the first full cycle of subject assessment.

Following a request from the Secretary of State for Education in December 1994, the HEFCE is working with representatives of institutions and other funding bodies to establish an independent agency which will co-ordinate an integrated quality assurance programme. This work is being taken forward by the Joint Planning Group and the agency is likely to be established in early 1997.

The Council, together with the higher education funding bodies in Scotland and Wales and with the Department for Education Northern Ireland, is mounting a research assessment exercise (RAE) in 1996 to produce ratings of research quality. These will be used by the HE funding bodies in determining research funding for the institutions which they fund, with effect from 1997-98. Day-to-day management of the exercise is undertaken by the RAE Team, based at the HEFCE offices in Bristol, on behalf of the four funding bodies. All UK HEIs receiving funding from these bodies are eligible to participate.

During the period 1996-99 the Council intends:

2.1 To continue to implement the first quality assessment cycle, scheduled for completion by the year 2001.

2.2 To work with the Joint Planning Group to develop longer term quality assurance policy and methods.

2.3 To conduct the 1996 assessment of research quality, in order to encourage the progressive improvement of research, and provide information on which to base selective funding.

Key Performance Targets

To complete the 1996 RAE and publish by 31 December 1996 assessments of research quality in all participating institutions
By March 1997, to have made over 200 assessment visits and published over 200 individual quality assessment reports
With CVCP and SCOP to have established a new agency for quality assurance in higher education, and agreed the framework for the future quality assurance process

3.0 Meeting national and regional requirements by encouraging diversity, extending opportunities and advising the Government on the sector's needs

In developing its policies and practices, the Council helps to identify and take into account national and local needs. Some are identified from time to time by the Secretary of State in guidance to the Council, by HE institutions, by industry and commerce, and by the broader community. During the planning period the Council hopes to have an opportunity to contribute to the Secretary of State's National Committee of Inquiry into Higher Education, chaired by Sir Ron Dearing, and to take forward its recommendations, due in 1997.

The Council has a continuing policy to encourage diversity in the provision of HE, particularly in widening access to groups currently under-represented in HE and ensuring that HE is accessible to as many people as possible on a geographical basis. The Council will encourage regional links and collaboration between neighbouring HEIs. It will also encourage co-operation with industry and commerce, both in meeting the national education and training targets and in improving the vocational and lifelong learning needs of a highly skilled workforce. It will fund continuing vocational education (CVE) and, as may become appropriate, promote NVQs and GNVQs in higher education.

The Review of Postgraduate Education was the Council's first investigation of the postgraduate sector and was prompted by a range of developments including expansion of student numbers. The Review, co-sponsored by the CVCP and SCOP, reported in May 1996 with recommendations on the size, organisation, structure and funding of postgraduate education.

The 1993 White Paper Realising our Potential identified the need to encourage greater interaction between producers and users of research, the need to take account of the relevance of research to users in the distribution of funds and the need for more explicit priority-setting. The Government's Forward Look and Technology Foresight Programme (TFP) continue to take forward these objectives and the Council contributes to these. It will monitor the take-up of TFP priorities in the sector and will develop funding responses within its review of research funding.

For 1996-99 the Council has the following key objectives aimed at meeting national and regional objectives:

3.1 To advise the Secretary of State on the funding needs of higher education, and on future higher education policy.

3.2 To act upon the 1995-96 review of postgraduate education, so as to provide support for postgraduate provision which responds to the national need for very highly qualified manpower.

3.3. To contribute to the Government's Technology Foresight Programme.

3.4 To encourage wider access and participation.

3.5 To play a key role in the provision of medical education in response to needs identified by the Department of Health, and in particular to secure implementation of the medical school mergers in London proposed in Making London Better (1993).

3.6 To encourage links between HEIs, FEIs, industry and commerce in support of continuing development and skills training, and encourage regional collaboration between HEIs.

3.7 To maintain diversity of provision by encouraging a wide range of institutions to maintain their individual and distinct characteristics, in particular to develop a more clearly defined role for FEIs in higher education.

3.8 To take account of national priorities as identified by the Secretary of State in guidance from time to time.

Key Performance Targets

To agree with the FEFC a policy on relations with, and funding of, institutions which offer both further and higher education
With OST and the research councils, to allocate up to £11.5 million in matched funding for research equipment in response to the Technology Foresight initiative, by 31 March 1997

4.0 Developing active partnerships with institutions and promoting wider public understanding of higher education

The Council aims to build constructive two-way relations with all higher education institutions in the sector. These relations will be based on a mutual understanding of each other's missions and roles, and a respect for the independence of universities and colleges.

The Council has developed a plan to improve its communications with institutions during the 1996-99 period. The plan will be reviewed following a survey which is due to report at the beginning of the period.

The plan involves:

providing fewer, shorter, clearer and better targeted publications
giving institutions advance notice of forthcoming publications and events and meeting published deadlines
developing two-way face-to-face communications in consulting and providing information.

Officers with regional responsibilities have a key role in developing effective personal contacts with institutions, dealing promptly with enquiries and ensuring Council policies are understood. Through these contacts, regular visits to institutions and reviews of institutional strategic plans and estate strategies, the Council is developing an extensive knowledge base of universities and colleges.

The Council is also planning to review and develop policies through more open face-to-face discussions with members of institutions through its annual conference and a series of regional seminars and workshops.

The Council plans to use its increasing knowledge of universities and colleges to help draw public attention to their activities and achievements. These plans include producing a range of materials to increase public understanding of the value of teaching and learning and research, as well as promoting good practice throughout the sector. In many of these projects, the Council will work closely with partners including the CVCP, SCOP, the DfEE and the other UK higher education funding councils.

During the period 1996-99 the Council's key objectives in this area are:

4.1 To develop clear, open and responsive communications with higher education institutions.

4.2 To plan written communications in accordance with a published timetable which gives institutions an adequate time for response.

4.3 To request information only where there is a clearly stated need, and to rationalise the number of circulars and other publications.

4.4 To foster constructive relations with institutions which are based on effective personal contacts.

4.5 To promote a wider understanding of the Council's work and the achievements of the sector by working closely with other bodies, including the institutions themselves, their representative bodies, the DfEE, other funding bodies, the Research Councils and professional associations.

Key Performance Target

To implement a new approach to written communications with institutions, giving them advance notice of future publications, which are clearer and better targeted

5.0 Promoting good management, value for money and effective accountability in higher education institutions and monitoring their financial health

All HEIs are independent bodies. Their governing bodies are responsible for the proper use of the public funds allocated to them and for the effective control and management of their institution. Under the terms of his appointment the Chief Executive of the HEFCE is responsible and accountable to Parliament for the administration of the funds made available to the Council. The Chief Executive's responsibilities extend to higher education institutions which the HEFCE funds. He is required to:

satisfy himself that institutions have appropriate arrangements for financial management and accounting, and that the uses to which the Council's payments are put are consistent with the purposes for which they have been given and comply with the conditions attached to them
promote good value for money
monitor the financial health of institutions
safeguard public investment in HEIs
specify accounting requirements and require the institutions to provide audited accounts
draw up codes of practice governing institutions' internal and external audit.

Accountability for the funds distributed by the Council is exercised in a number of ways:

Through its financial memorandum with each institution it funds
Through a funding agreement which spells out how many students an institution must teach, in what subject areas, in return for funds for teaching
Through a programme of assessment of the quality of educational provision
Through regular assessments of research taking place in HEIs
Through visits to institutions by the Council's Audit Service
Through annual returns from institutions on research funding allocations
Through the financial health monitoring process.

During the planning period the Council intends:

5.1 To continue to monitor the financial health of HEIs so that any problems can be identified at an early stage, and to ensure that institutions facing problems take the action necessary to recover their position.

5.2 To keep under review the Council's revised model financial memorandum with institutions, and to monitor compliance with its requirements.

5.3 To monitor institutional borrowing.

5.4 To satisfy itself that the institutions it funds have appropriate arrangements for financial management and are fit and proper organisations to receive public funds.

5.5 To promote value for money and good management practice, and to reinforce sound governance in HEIs, taking account of recommendations from the Committee on Standards in Public Life and emerging best practice in the corporate sector.

Key Performance Targets

Within eight weeks of an institution being identified as in immediate financial difficulties, to secure the first steps of necessary action by the institution
To make 50 audit visits to institutions and produce 50 reports during 1996-97
To produce two guides for the sector on obtaining value for money

6.0 Employing the Council's own resources cost-effectively

The Chief Executive is responsible for the administration of funds provided to meet the Council's running costs, which amount to £12.7 million for 1996-97, £11.2 million for 1997-98 and £11.3 million for 1998-99. After taking account of the costs of the research assessment exercise in 1996, these figures imply a cumulative real terms reduction of 12.12 per cent over the period.

The Council is committed to the Investors in People standard, which aims to link the contribution of each member of staff with organisational objectives. In this context there will continue to be an annual staff attitude survey. In addition, those whose job it is to supply services to others within the Council will test the quality of the service they provide to their internal customers through customer satisfaction questionnaires.

Approximately 190 people are employed by the HEFCE, currently on terms and conditions analogous to those in the Civil Service. Following the ending of nationally agreed Civil Service terms and conditions, the Council is conducting a fundamental review of its pay, grading, and other conditions of employment, with a view to implementing changes from April 1997. Meanwhile, terms and conditions of employment will continue to parallel broadly those adopted by the DfEE.

During 1996-99 the Council intends:

6.1 To ensure that the Council has sound systems, regulations and procedures for allocating, managing, controlling and accounting for its programme and running costs budgets.

6.2 To achieve closer integration of the Council's planning and budgeting processes.

6.3 To ensure that progress against targets is regularly reviewed and that reports of actual performance are provided on a regular basis.

6.4 To maintain and keep under review the financial regulations and procedures governing the Council's operations.

6.5 To administer the Board, Board committees and other committees and groups within the Council in order to achieve effective and efficient decision-making, taking into account the recommendations of the Committee on Standards in Public Life.

6.6 To secure and where possible enhance the effective and efficient use of the Council's resources.

6.7 To develop further and implement the information systems strategy developed in 1995 in order to reflect changes in technology and the needs of the Council.

6.8 To explore cost effective options for communicating electronically and exchanging data with the sector and other agencies and to provide Council-wide access to such a system.

6.9 To continue to develop and implement best professional practice in human resource management throughout the Council.

6.10 To gain and maintain recognition as an Investor in People.

6.11 To take the opportunity provided by pay delegation to develop and implement pay systems, conditions of employment and organisational structure which satisfy the business needs of the Council.

6.12 To promote effective internal communications at all levels in the Council.

Key Performance Target

To provide an efficient, effective service within the £12.7 million running costs budget, achieving the 5.4 per cent real terms efficiency gain in 1996-97 required by the Secretary of State