March 2006/08
Core funding/operations
Allocation of funds

This report is for information

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Recurrent grants for 2006-07

This document summarises our provisional allocations of recurrent funding to institutions for the academic year 2006-07. Final allocations will be announced in July 2006.

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To:	Heads of HEFCE-funded higher education institutions Heads of HEFCE-funded further education colleges Heads of universities in Northern Ireland
Of interest to those responsible for:	Finance, Planning
Reference:	2006/08
Publication date:	March 2006
Enquiries to:	HEFCE higher education advisers

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Executive summary (read on-line)

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Executive summary

Purpose

1.    This document summarises our provisional allocations of recurrent funding to institutions for the academic year 2006-07.

Key points

2.    We are distributing £6,706 million in 2006-07. This represents an overall cash increase of 5.9 per cent compared with 2005-06. The total includes recurrent funding of £4,228 million for teaching (of which £344 million is for widening participation), and £1,342 million for research. In addition, we are providing a further £704 million for earmarked capital grants and £432 million for special funding.

3.    The institutional allocations for teaching and research announced in this publication show an average 5.8 per cent increase in resource for the sector. If funding for additional student numbers is excluded, the average increase is 4.1 per cent, a significant real-terms increase in funding for the sector as a whole. None of the increases referred to in this document take account of the additional income that is to be expected from the introduction in 2006-07 of variable fees for full-time undergraduates. Our recurrent grant allocations therefore provide stability and some financial security for the year in which the more dynamic environment created by the 2004 Higher Education Act is introduced.

4.    There are substantial increases in funding for research, in keeping with the Government's commitment to enhancing the research base through both sides of the dual support system.

5.    We have provided a full uplift for inflation to the main teaching grant allocation. We have also provided substantial additional funding for widening participation, which has increased by 21 per cent. Many institutions have also gained significant additional funded student numbers.

6.    Funding for earmarked capital has increased by 8.5 per cent compared with last year. The distribution of this funding between institutions has been announced separately and is not included in this document (paragraphs 45 and 46 provide further information).

Teaching

7.    Our total recurrent funding for teaching has increased by 6.3 per cent over the equivalent figures for 2005-06. This has allowed us to provide approximately 26,000 additional full-time equivalent (FTE) student places for 2006-07, while providing an uplift for inflation in the unit of resource per student. This increase for teaching includes an additional £60 million for widening participation, compared with the allocations for 2005-06. Once the increase in funding for widening participation is included, the overall publicly-funded unit of resource per FTE student for teaching^[1] has increased by 3.3 per cent compared with 2005-06.

8.    The total of £4,228 million for teaching includes the following:

1. £344 million to support widening participation for students from under-represented groups or who are at greatest risk of not completing their studies. This is an increase of 21 per cent compared with last year.
2. £80 million for additional funded places awarded through our recent initiatives for managed and strategic growth, or through our earlier general bidding exercises.
3. £18 million for increases in medical and dental student numbers.

Research

9.    A total of £1,342 million is allocated for research. This is an increase of 7.3 per cent compared with the equivalent funding for 2005-06. Within this overall increase we have:

1. Established a significantly enhanced charities research support fund within quality-related research (QR).
2. Increased the average unit of funding by 6.1 per cent for departments rated 5 and 5* in the 2001 Research Assessment Exercise (RAE). This takes account of both mainstream QR and the additional funding for the 'best 5-star' departments.
3. Maintained the average unit of funding in real terms for departments rated 4 in the RAE.

Moderation of teaching and research

10.    We have continued our policy of phasing in changes by moderating the allocations. Institutions will not receive a reduction in resource (teaching and research grant, plus regulated fee income) in real terms, compared with the equivalent unmoderated figure for 2005-06.

Special funding and earmarked capital

11.    Funding for earmarked capital has increased by 8.5 per cent compared with last year. Special funding has been maintained at broadly the level provided in 2005-06.

Action required

12.    No action is required in response to this document.

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1. This unit of resource includes regulated fee income for full-time undergraduates at the 'basic amount' permitted under the 2004 Higher Education Act, rather than the 'higher amount'.