Consultation 98/59

Funding higher education in further education colleges

Respond by 1 February 1999

Executive summary

Purpose

1. The Government has agreed to transfer to the HEFCE responsibility for funding the higher education provided by further education colleges that was previously funded by the Further Education Funding Council. The transfer will begin in 1999-2000 with all Higher National Certificate and Diploma, undergraduate and postgraduate level provision.

2. This document seeks views on our proposals to introduce new arrangements in 1999-2000 with further changes in 2000-01.

Key points

3. Further education colleges have a crucial role to play in the development of a higher education system that meets the growing demands of the learning society and increases the opportunities for students from disadvantaged backgrounds to participate.

4. To support these activities we propose to maintain both direct and indirect (franchised) funding of higher education provision in further education colleges. We also propose to build on existing good practice by regulating the operation of franchises to ensure that all students pursuing higher education have an experience of comparable quality.

5. We propose to encourage collaboration and partnerships between colleges, and between colleges and higher education institutions, to develop a more comprehensive strategic approach to meeting student demand.

6. Both further education colleges and higher education institutions have a considerable tradition of successfully providing higher education. We propose to continue to support provision where it is appropriate, and not to prescribe the level of provision offered by either sector.

7. This consultation refers to the findings from two research reports: ‘The nature of higher and further education sub-contractual partnerships’ and ‘Study of the relative costs of higher education provision in further education colleges and higher education institutions’. The key findings are summarised at Annexes A and B. Full copies of the reports are available on our web site (http://www.hefce.ac.uk) and from our Corporate Communications department (0117 931 7438). The latter report was jointly sponsored by the FEFC and is also available on its web site and from its External Relations department.

Action required

8. Issues for consultation are highlighted throughout the text. Please send any comments on these proposals to Nicola Dowds by 1 February 1999.

Context

9. In its submission to the National Committee of Inquiry into Higher Education (the Dearing Committee), the HEFCE argued that to avoid duplication and mission drift, and also to optimise regional coverage, there would be merit in requiring the development of higher education (HE) in further education colleges (FECs) to take place in a structured way. The Dearing Committee subsequently made a number of recommendations concerning the provision of HE in FECs. In particular, it recommended that:

a. FECs should primarily focus on sub-degree provision, and such provision should be the main area of initial expansion in HE.

b. All HE in FECs should be funded by the HEFCE.

c. Where possible, colleges should receive funds for their HE provision directly from the HEFCE, rather than indirectly. (Indirect funding relationships are where an institution sub-contracts some of its student numbers to another institution to deliver the provision. Such arrangements are commonly termed ‘franchises’.)

10. The Government has agreed that from 1999-2000 the HEFCE should fund all Higher National Certificate and Diploma (HNC and HND), undergraduate and postgraduate level provision currently funded by the Further Education Funding Council (FEFC) (A detailed breakdown of provision fundable from 1999-2000 is available in HEFCE Circular 98/53 ‘Higher Education in Further Education: Student Survey 1998-99 (HEIFES98)’.) As a result, we will initially be responsible for funding an additional 52,000 students and roughly 200 more colleges. Future discussions with the FEFC and the DfEE will determine whether other higher-level provision, including professional and craft provision and level four and five National Vocational Qualifications (NVQs), should also be funded by the HEFCE.

11. This consultation paper seeks views on the future role of FECs in providing HE, the most appropriate mechanisms for funding HE provision in FECs, and the timetable for achieving any changes to current arrangements.

The role of FECs in higher education

12. FECs play a crucial role in widening access to, and participation in, higher education. They also contribute to diversity in terms both of their nature as HE providers and of the students who enter HE. Among the distinctive features which characterise HE in FECs are:

a. Geography. The relatively high density of FECs and their location makes them well placed to serve the needs of geographically dispersed and educationally marginalised populations. They play an essential role in widening access to HE; and as the numbers of local, part-time, and mature students have increased, so has the importance of FECs in providing HE.

b. Type of HE provision. An emphasis on vocational qualifications, at both further and higher education levels, has been developed in FECs through NVQs, GNVQs, and certificate/diploma-level vocational work. There are many HE programmes which have naturally developed from FE-level activity. Higher level certificates and diplomas often represent the pinnacle of this process.

c. Specialist. Some FECs offer unique and specialist HE provision, often in relation to particular local and employer/industry needs. Furthermore, the many programmes which have developed from higher levels of FE are often in subject areas which have a strong FE tradition, and may not be as well covered in higher education institutions (HEIs).

d. FE environment. The perceived strengths of the FE ethos – such as relatively small group sizes, high levels of contact between students and staff, directed learning, and good academic support and guidance – are often seen as being particularly appropriate for HE in FECs, and for the students attracted to HE provision in FECs.

e. Sub-degree level. Most higher level provision in FECs is not degree level, including programmes where the course delivery is split between an HEI and a FEC, with the latter offering a foundation year and/or an initial year of the course.

f. Progression. HE provision in FECs allows a smooth transition from FE level to HE level, where a degree of continuity is maintained for the student in terms of location and institutional ethos. Furthermore, with a concentration on higher level certificates and diplomas, FECs play an important role in preparing students for progression to degree level work in HEIs.

(These features are more fully explored in our two earlier reports ‘Higher Education in Further Education Colleges: Funding the Relationship’ January 1995) and ‘Higher Education in Further Education Colleges: A Future Funding Approach’ (February 1996)).

13. These features are consonant with the national priorities for lifelong learning and widening participation in HE. They suggest a distinctive role for FECs as HE providers, concerned with widening participation, providing progression routes from higher level certificates and diplomas to degree level provision in HEIs, and responding to local and regional demand, particularly for vocational skills.

14. In encouraging such a distinctive role for FECs in HE, we are nevertheless clear that many HEIs share similar characteristics. Many are also vocational, local and access-oriented, and would seek to continue to be so. There seems no good case for restricting sub-degree level work to FECs, and HEIs should continue to be able to grow such provision.

15. Similarly, there are strong reasons not to deny FECs the option, where appropriate, of running courses at first degree level. For example, in some cases colleges deliver only part of the provision, and the student progresses to an HEI for the final years of their degree; in others, colleges have areas of specialist provision which may need to develop to degree level if there is demand from employers and students. However, in future when FECs wish to bid for additional student numbers to provide all three years of a degree, there should be evidence that it is appropriate for such provision to be in the college.

16. We propose to continue to support provision where it is appropriate, and not according to the nature of the institution, and we would expect many FECs to play an important role in delivering the expansion of higher level certificates and diplomas as planned by the Government. In making decisions about future growth, we will take account of evidence about the quality of provision, and guard against a blurring of mission in either FECs or HEIs.

17. We will discuss further with the FEFC the role of FECs in higher education, and identify possible areas of undesirable mission drift and appropriate policies to limit this.

18. We seek views on the proposals that we should continue to support provision where it is appropriate, and that we should not prescribe the level of provision offered by either FE or HE sector institutions.

Funding mechanisms

19. Until now, FECs making HE provision have been able to receive HEFCE funds either directly from the Council, or indirectly from an HEI with whom they have a franchising arrangement.

20. For the future, there are a number of possible approaches to channel Council funds to FECs:

a. To fund all HE provision directly, as recommended by the Dearing Report.

b. To fund all FECs indirectly via franchising, where an FEC delivers HE provision to students enrolled by an HEI and under the control of an HEI.

c. To determine whether colleges should be funded directly or indirectly on the basis of external criteria, such as the total volume of HE provided.

d. To allow both direct and indirect funding to continue, and, as at present, not to seek to regulate indirect funding relationships.

e. To allow both direct and indirect funding to continue - and indeed to develop new forms as appropriate - but to regulate any indirect funding relationships.

Direct funding relationships

21. The Dearing Committee received reports of some unsatisfactory franchises, particularly cases where only a small proportion of the funds received by the HEI was passed on to the FEC that made the provision. We commissioned research (see paragraphs 25-26 below) which found that, in terms of our teaching funding method, between 31 and 98 per cent of the standard HEI funding rate was passed to FECs through franchises. The Dearing Report also expressed concern about the quality assurance arrangements of some franchised provision. For this reason it recommended that, where possible, HE provision in FECs should be directly funded by the HEFCE.

22. It is true that the direct funding of colleges would enable us specifically to influence factors contributing to the quality of the student experience: for example, we could ensure an appropriate unit of resource through the teaching funding method. However, a direct funding relationship would not necessarily be the best route for all colleges.

Indirect funding relationships

23. Increasing the participation of groups currently under-represented in HE is a key policy aim for the Council and the Government. Partnerships between HEIs and FECs help achieve this aim by providing coherent progression routes to HE-level work. Franchising – particularly where the provision is part-delivered in the FEC and the student is guaranteed progression to an HEI to complete a recognised award – meets the needs of students who seek an award from an HEI but who, at least initially, benefit from local access and the distinctive ethos of the FE environment. Franchising also stimulates joint development of the curriculum, encourages sharing of physical and human resources, and facilitates credit transfer arrangements.

24. Franchises can help small providers of HE to manage resources and fluctuations in student demand, thus preventing programme closures. They can also avoid the bureaucratic costs of maintaining a direct funding relationship for relatively small numbers of students. Such advantages might equally be achieved by FECs providing HE through mutually supportive and coherently planned regional networks or consortia. This may be of particular value where nearby HEIs have little or no experience in the subject areas concerned.

25. Following the Dearing Report’s suggestion that franchising arrangements were in some cases unsatisfactory, we commissioned a study, with the Quality Assurance Agency for Higher Education (QAA), of franchise arrangements between HEIs and FECs. The key findings, summarised at Annex A, demonstrate how such partnerships can add value to the HE system by providing coherent progression routes for students. We are also aware that many franchises take place within highly defined partnership arrangements, particularly when they are between an HEI and its associate FE colleges. Such arrangements promote a collaborative approach to course provision which can widen the choice of courses available to students in a region or sub-region.

26. Results of the study highlight the strengths of particular types of partnership and good practice that could form the basis of future indirect funding arrangements. However, they also show that aspects of some partnerships require improvement, in terms of contractual, financial and organisational arrangements. If sub-contractual (franchise) funding arrangements are to continue – and there are strong arguments in their favour – then the evidence of the study is that they should be subject to some regulation.

Regulating indirect funding relationships

27. An approach which would maintain the benefits of sub-contractual partnerships, but give greater confidence in the quality of the student experience, would be to regard the contracting institution as our agent, responsible for the quality and accountability of HEFCE-funded HE provision in a non-HE sector institution. This would develop the strengths of existing franchising and associate college models, which many HEIs have established with FECs and other providers. In particular, it would foster opportunities for student progression and academic synergy between institutions.

28. An institution acting as an agent must be able to fulfil responsibilities at least as well as the Council, and need not necessarily be an HEI. For example, in some circumstances it might be appropriate for an FEC with a large HE programme to act as an agent for an FEC with small numbers of HE students, or as the lead institution on behalf of a consortium of neighbouring FE providers.

29. In developing the agent’s role, we would need to set the terms and conditions of partnerships to ensure a satisfactory level of experience for students. Among the most important considerations are the level of resource per student, and the need to ensure choice for locally based students. The terms and conditions would therefore include:

a. An agreement that the HE provider (the FEC) would receive from the contracting institution an appropriate amount of funding (determined by our funding method for teaching). However, we do not propose to require a fixed percentage of the teaching funding to be passed to colleges, because individual partnerships will need to take account of any justifiable and agreed charge for services and support provided.

b. A contract between the HEI and the provider which guarantees student numbers for the provider over an agreed period, and which would require Council approval for any significant change. To ensure stability and coherence, we need to avoid situations where student numbers controlled by one institution but delivered by another are moved around by the former at the expense of the latter – and without taking account of local demand.

c. Adherence to the QAA’s code of practice for collaborative arrangements. The QAA is presently revising this.

30. Our requirements could be formally delivered in several ways. One option is for institutions, through their Financial Memorandum with the Council, to be required to adhere to the guidelines specified above.

31. A more regulated approach to indirect funding would require institutions with existing franchises to re-examine these and to adapt accordingly. Some HEIs may seek to withdraw from franchising agreements rather than maintain them under such conditions. We intend that the overall changes that flow from our proposals should improve HE provision in an area, and should not reduce opportunities for access, participation and progression. We therefore expect institutions in 1999-2000 at least to honour existing arrangements, and to notify us of any changes proposed for 2000-01.

Implications of maintaining two funding mechanisms

32. The imminent transfer of funding responsibilities from the FEFC to the Council provides an opportunity to reassess the most appropriate funding channel for existing as well as new provision. According to its individual circumstances, a college may have sound reasons for seeking to have its provision funded either directly or indirectly via an HEI or another FEC. For example, many FECs with student numbers transferring from the FEFC already have other partnership arrangements with HEIs. They may wish to extend these to include the newly transferred numbers and funding, rather than be funded directly by the HEFCE. Some colleges may wish to establish new partnerships and receive funds indirectly to strengthen their HE with the support of an HEI, particularly where a college has small number of HE students or where partnerships may improve progression for students. Others may prefer to maintain a direct funding relationship, though in the future with the HEFCE in place of the FEFC. The overriding consideration should be which arrangement best promotes the interests of students.

33. Some colleges might want to support both types of funding relationship simultaneously – via franchises for some programmes, and direct funding for others – despite the burden of maintaining two administrative, funding and quality assurance systems. Colleges will need to make appropriate choices for their HE funding (though in the case of existing franchise relationships where the HEI provides its own student numbers to the franchisee college, choices will need to be jointly exercised) and we will provide guidance for colleges to help them choose funding arrangements which support the quality of their students’ experience of HE.

34. In due course, when the transfer of funding from the FEFC has been completed, we might review individual colleges’ funding arrangements. We could then consider, where there are multiple funding routes, which of these best serve the student experience, or if it would be preferable for one or other form of funding to apply. However, the immediate concern is to avoid undue turbulence, and to maintain existing franchising relationships whenever they are working effectively.

35. Comments are invited on these issues and in particular on proposals that:

a. Existing franchised provision should continue, unless both parties agree that the arrangements should be terminated.

b. Existing provision directly funded by the HEFCE should continue to be directly funded, unless the FEC agrees with an HEI that the numbers and funding should transfer to the HEI and be provided in future under franchise.

c. FECs with provision that is currently funded by the FEFC should be able to choose whether to have this provision directly funded by the HEFCE in future, or to transfer the student numbers and funding to an HEI, and to make the provision under franchise.

d. FECs which are seeking additional funded student numbers in future should be able to make a case for these numbers to be either directly funded, or under franchise to an HEI or FEC.

36. Comments are also invited on the proposal that franchised provision should in future be subject to regulation, and on the nature of such regulation.

Rate of funding

37. The HEFCE’s teaching funding method calculates the rate at which directly funded institutions should be funded, taking account of the mix of provision. The key principle of our teaching funding method is that similar activities should be funded at similar rates. However, when we implemented the new teaching method in 1998-99 we deferred applying it to directly funded FECs. In particular, we needed to understand more about the cost of provision in FECs, relative to provision made by HEIs, before deciding whether they should be funded at the same rate, or at a reduced rate to reflect lower average costs.

38. We therefore, jointly with the FEFC, commissioned KPMG Management Consultants to review the cost structures of HE in FECs, by comparing them with costs for similar provision in HEIs. A summary of the review findings is at Annex B.

39. The KPMG study demonstrates that the costs of HE provision in FECs and HEIs are not significantly different for HNDs and degrees in business studies. As this subject constitutes a large proportion of HE in FECs, it is likely that in future we will fund most HE provision in FECs at a rate similar to that in HEIs. However, before we take final decisions, we will extend the study to review further the provision described as ‘science and engineering’ in the FEFC’s funding, to establish the appropriate level of grant under our funding method. This second stage of the review will also investigate the relative costs of HNC programmes, given that this is a new responsibility for the HEFCE.

40. Following these investigations, we will establish the appropriate price groups to which HE provision in FECs should be allocated, and determine the standard rate of funding for each college according to the mix of its provision. Transparent pricing will be in place by the year 2000. All colleges will then be expected to migrate to within ± 5 per cent of their standard rate of funding over a period of three years, and at most five years, according to individual circumstances. In 1999 some convergence will be expected for those colleges at the two extremes of the funding range.

41. Consideration of HE in FECs has raised a wider question: whether there are significant differences between the costs of degree and sub-degree programmes, irrespective of the types of institution offering them. We plan to consider this question and see whether any adjustment to our funding method would be appropriate in the longer term.

Quality assurance

42. We have a statutory responsibility to ensure that provision is made for assessing the quality of all the education we fund. This will automatically include all the HE in FECs for which we become responsible. The QAA is currently developing a new quality assessment framework for the HE sector, which will operate at both institutional and programme levels. That framework will not be universally applicable to the HE we fund in FECs, because there our interest is in specific programmes rather than the whole institution. Institutional-level quality assurance arrangements are now, and would remain, the responsibility of the FEFC. We are currently in discussion with the QAA and the FEFC about future arrangements.

Other matters

Special initiative funding

43. In December 1995 we agreed that in future directly funded FECs should not automatically be excluded from special initiative funding. Their eligibility is considered programme by programme. In some cases their eligibility is conditional on making collaborative proposals with HEIs, where the initiative is targeted at HEIs to influence behaviour or improve areas of institutional provision. There seems no reason to alter the principle that FECs should be eligible to bid for special initiatives unless they are targeted at institutions rather than at programmes.

Additional student numbers

44. Colleges which choose to be funded directly will be able to grow through successful bids to the HEFCE for additional funded student numbers. Colleges choosing an indirect funding relationship will be able to bid in collaboration with their franchiser as the lead institution.

Funding contracts

45. Within our funding method, institutions are free to vary their provision as long as their funding does not fall outside acceptable limits (usually within ± 5 per cent of the standard rate of funding). However, many FECs will have small numbers of HE students, thereby severely restricting their ability to vary provision or deal with small variations in demand and retention. We will consider further how the terms of our funding contract affect smaller providers.

Timetable

46. In 1999-2000 we plan to implement interim funding arrangements while the longer-term possibilities are being developed. In that year, we will continue to fund all our currently directly-funded provision directly, and all our currently indirectly-funded provision indirectly. We will fund directly those FECs with HE provision transferring to the HEFCE from the FEFC.

47. Subject to the outcome of our consultation, we propose to introduce a new funding approach in 2000-01, including the regulation of new and existing sub-contractual relationships, and to implement the new arrangements set out in this paper.

48. Please send three copies of your response to this consultation by 1 February to:

Nicola Dowds
Policy Directorate
HEFCE
Northavon House
Coldharbour Lane
Bristol
BS16 1QD

Annex A

The nature of higher and further education sub-contractual partnerships

1. This annex summarises the main findings arising from the QAA/HEFCE research study into the nature of higher and further education sub-contractual partnerships. These are partnerships in which the student is registered with an HEI but the course is delivered wholly or partly in an FEC. It covers only those arrangements where the student place is funded by the HEFCE.

Types of sub-contractual provision

2. There are several types of sub-contractual arrangement, but it is not possible to identify one as more successful than another. Overall, sub-contractual provision has resulted in:

a. Widening and extending access, via the types of students enrolled and increased local delivery of HE.

b. The development and extension of HE qualifications in specialist vocational areas of provision, based on FE expertise.

The student experience

3. The HEQC’s ‘Guidelines on Collaborative Provision’ issued by the former higher education quality council (HEQC) are being implemented. The quality of the student experience in FECs is broadly comparable to that in HEIs, except where there are intentional differences appropriate to the client group.

4. The researchers recommend:

a. That more attention is given to the possible disjuncture between HE and FE approaches to teaching and learning when students progress to an HEI.

b. Improved monitoring to establish the factors associated with non-completion.

c. Periodic critical review to assess achievements against aims and objectives.

d. That institutions should designate a central unit to be actively involved in managing collaborative schemes.

e. That the QAA could consider developing more differentiated guidelines on collaboration to assist institutions further.

Multiple partnerships and geographical proximity

5. The propensity to develop single or multiple partnerships is influenced by the nature of individual schemes. There is no consistent application across the sector.

6. Most sub-contractual arrangements are between institutions within the same locality or region. However, the research shows that geographical proximity is not in itself a guarantee of a better quality relationship. Distance does not seem to influence attendance at key meetings or involvement in staff development and similar activities. Similarly, geographical proximity to the HEI does not necessarily promote greater use of HEI learning resources by students based in an FEC.

Funding

7. All schemes use a marginal income model (commonly referred to in the sector as a fees-based model) as the basis for funding, with significant adjustments (both additions and reductions) at scheme level. These reflect a variety of factors, in particular, high-cost provision, special HEI-FEC relationships, HEI involvement in teaching or other activities incurring costs, and administration and validation charges.

8. There are significant variations in the funding received by FECs. This is partly a consequence of the fee levels in operation at the start of the scheme. The adjustments can also have a significant impact. The amount currently paid to FECs varies from £900 to £2,200 for band 1 students, and £1,600 to £4143 for band 2. Expressed as a percentage of 1992-93 tuition fees this varies from 53 to 150 per cent. A calculation using the HEFCE’s new funding methodology (effective from 1998-99) shows percentages varying from 31 to 98 per cent.

9. There is little costing at course level in either FECs or HEIs. There has been none at all in the indirect cost areas, such as quality assurance and co-ordination and management of schemes. Consequently, it is not possible to state whether marginal or full costs are being covered in the FECs; or whether HEIs’ costs are being covered by their administrative charges. It would be good practice for both parties to undertake a cost-benefit analysis of their franchise-type schemes.

10. Present funding arrangements have generally supported growth and diversity of provision. There are cogent arguments for maintaining sub-contracted HEI/FEC funding for courses part-delivered in the college with guaranteed progression to the HEI to complete a recognised award. Where, however, the HEI simply validates provision and there is no progression, or where there is no guaranteed progression from an FEC to the partner HEI, there is more scope to investigate alternative funding arrangements.

Contractual arrangements

11. All institutions recognise the need for a written agreement between the parties that carries corporate authority. The researchers recommend periodic institutional review and updating of contractual arrangements.

12. HEQC guidelines on memoranda of agreement remain valid. However, there is evidence that three areas of difficulty would benefit from clear statements of intent or procedure in partnership documents. These are:

a. Student recruitment, particularly where under-recruitment might cause particular difficulties in the HEI or the FEC.

b. FEC staffing, in particular the employment of part-time staff and staff development opportunities for all staff teaching HE on sub-contracted courses.

c. Student access, and the extent of such access, to HEI facilities.

13. The basic framework of accountability is in place: funds passed from HEIs to FECs are being used for teaching students enrolled on an HE programme; the quality of student experience is comparable; and adequate systems are in place to handle basic financial and student number information. However, the framework of accountability would benefit from attention to the following:

a. Further written clarification of the resource levels required.

b. Better information on student cohort data and success rates across schemes.

Annex B

Study of the relative costs of HE provision in HE institutions and FE colleges

1. This annex is the executive summary of a study commissioned by the HEFCE and FEFC. The study looked at the relative costs of degree and Higher National Diploma (HND) programmes in Business Studies, Engineering and Art & Design provided in further education colleges (FECs) and higher education institutions (HEIs). The study also analysed differences in the student experience, differences in course design and student profiles between the two sectors.

Approach

2. The study involved the collection, through visits to the institutions and a questionnaire, of cost data and data relevant to assessing differences in course design and the student experience. Data were for the academic year 1996-97 from a matched sample of FECs with substantial HEFCE-funded provision, and HEIs. Cost data collected at institutional, faculty/school and departmental level, were input to a costing model which allocates central institutional, faculty and departmental costs in a cascade to the level of individual programmes. As far as possible, a consistent set of cost drivers was used across all the institutions. The data on cost drivers were also collected from the institutions.

3. The model calculated the total costs by adding the allocated indirect costs to the direct costs, derived from the timetabled academic staff time for the programme in question and the average cost of timetabled academic staff. Unit costs were then derived using the student numbers returned to the HEFCE in November 1996, in the annual Higher Education Students Early Statistics (HESES) return.

Results: unit costs

4. The principal results in relation to the unit costs measured by the study are:

• significant variation within sectors as well as between sectors;
• on average, for HNDs in Business and degrees in Business Studies, very similar unit costs in the HEIs and FECs in the sample, which provided the largest number of data points for the three subject areas covered in the study;
• on average somewhat higher unit costs, attributable mainly to much higher central costs, in Engineering and in Art & Design courses in HEIs than in FECs (but this conclusion is based on a relatively small number of data points);
• the number of students on HNDs in Engineering is almost universally low across the sample, at least in part because of competition from degree programmes.

5. Sensitivity analysis suggests that much of the variation is real rather than as a result of assumptions in the model, although the analysis shows the importance of space data as a basis for allocating premises expenditure between different subject areas which have substantially different space requirements.

6. The analysis suggests that a significant source of the observed variation lies in the snapshot approach adopted, in that it picks up both decisions by individual resource managers to subsidise certain programmes, and shortfalls in student numbers for particular programmes which cannot readily be allowed for in-year.

7. The finding that, on average, the unit costs for HNDs in Business and degrees in Business Studies are very similar in HEIs and in FECs in the sample is of particular importance. Business Studies accounts for the highest proportion of all HE students in FECs funded by the HEFCE; it is the area where it was possible to collect most data points; and it is the area of greatest overlap of provision in the two sectors.

Results: type of students, the student experience and course design

Student profiles

8. The profile of students on HE programmes in FECs in the sample differs in certain key respects from the profile of those on similar programmes in HEIs in the sample:

• hey are somewhat older on entry;
• they are more likely to reside within a 35 mile radius of the institution;
• they are more likely to enter with qualifications other than A-levels.

On completion:

• those on degree programmes are around 15 per cent less likely to achieve the qualification, but there is little difference in completion rates for HNDs;
• they are significantly more likely to have entered employment, and slightly less likely to have progressed to further study three months after completion.

Student experience

9. The principal comparisons between the student experience in FECs and HEIs on similar courses are:

• student taught hours and staff timetabled hours are higher in FECs;
• there are on average (in the sample of institutions) more computer workstations per 1,000 students in the FECs, but fewer open access workstations;
• there are fewer library study spaces per 1,000 students and significantly fewer quiet study spaces in FECs.

Course organisation and delivery

10. Perhaps the most striking difference in the delivery of similar programmes in FECs and HEIs in the sample is the pattern of teaching to different sized groups:

• in HEIs in the sample, for course both at HND and degree level, the standard pattern is for large group lectures supported by a number of smaller tutorial or seminar groups, on the assumption that students will take a degree of responsibility for their own learning;
• in FECs in the sample there is no such clear distinction between lectures and tutorials; tutorials are more usually used for personal counselling than supporting lectures. The different pattern of teaching has been driven to some extent by the lack of large lecture theatres in most FECs. The pattern is also consistent with the organisation of FE teaching, where larger cohorts are generally catered for by increasing the number of groups receiving parallel teaching;
• a few of the FECs in the sample have sought to bring their approach to teaching more into line with that in HE, in some cases establishing HE faculties, but they are hampered by the absence of suitable large spaces.

Conclusions

11. The principal finding of the study is that the unit costs of HNDs in Business and degrees in Business Studies are on average similar in HEIs and in FECs in the sample. This result is of particular significance because students on Business Studies degrees and HNDs in FECs are the largest single group of HE students currently funded by the HEFCE in these colleges. The average unit costs for Engineering and Art & Design programmes are higher in HEIs that in FECs in the sample, principally due to higher central costs.

12. The pattern of teaching in FECs, with its higher timetabled teaching hours, is the main explanation for the similarity of unit academic staffing costs in the two sectors, even though on average the cost of academic staff is higher in HEIs than in FECs. The higher overall unit costs for Engineering and Art & Design programmes reflect the extra provision of specialist space and the provision of more technician support in the HEIs in the sample.