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We commissioned this report by Frontier Economics to review our capital investment. The aim was to understand more about the uses of the funding, its wider economic benefits, its additionality, its ongoing need and the costs and benefits of different allocation methodologies. The review employed mixed methods to gather evidence, including quantitative econometric analysis and qualitative interviews with sector bodies.

Key findings include the following:

  • There is clear evidence that capital is associated with significant positive changes in a number of outcomes at higher education institutions, including student numbers, numbers of researchers and contract and consultancy research income.
  • Capital spending fell between 2008 and 2014 in 50 per cent of institutions, and by as much as 25 per cent in a third of institutions.
  • There is clear evidence of the ongoing need, on the part of Government and the sector itself, for further capital investment in the sector, to continue to attract the best students, lecturers and researchers in the world.
  • There is clear evidence of the additionality of HEFCE funding and the need for continued Government support for the sector.
  • A funding approach that combines the formulaic and competitive mechanisms should be continued.

Date: 1 July 2015

Ref: Independent research