Dear Vice-Chancellor or Principal
1. This letter is to clarify what we expect higher education institutions (HEIs) to continue to do in achieving value for money in utilising capital funding.
Capital Investment Fund
2. At the end of January 2008 HEFCE published 'Capital Investment Fund: Capital for learning and teaching, research and infrastructure 2008-2011' (HEFCE 2008/04). Paragraph 12 of that publication states: 'As in previous capital rounds we expect all HEIs to adopt good practice in procurement, making investment decisions and in project management'. We have updated the guidance in Annex C to HEFCE 2005/08 and this is available on our web-site.
Equipment procurement
3. In previous capital rounds we collected details of equipment being purchased through capital funding in order to determine whether there was potential in procuring common items collaboratively. Where there was potential, collaborative procurement groups were established under the Research Equipment Affinity Group (REAG) which managed procurement exercises on behalf of the higher education (HE) sector. Collaborative procurement exercises for capital equipment to date have delivered an average of 15 per cent efficiencies for participating institutions, through direct cash savings from price reductions, additional functionality for the same price, or some other added value. These savings were retained by institutions to re-invest in other activities.
Collaborative procurement efficiencies not only deliver real benefits to institutions but also demonstrate the actions being taken by the HE sector in delivering Efficiency Review targets set by the Government in 2004. The second round of the Efficiency Review commences in April 2008, with increasingly challenging procurement targets for the sector. These are set out in the DIUS Value for Money Delivery Agreement, published in December 2007. It is important that this strand of efficiencies is maintained as part of the Capital Investment Fund.
4. We therefore expect institutions to continue to participate in collaborative procurement for capital equipment. This should apply to equipment for learning and teaching and other activities, as much as for research. REAG will collect capital equipment data and will continue to facilitate collaborative procurement exercises. This will allow REAG to maintain its activities for the benefit of the HE sector and deliver efficiencies for institutions.
5. We will be passing institutional contact details to REAG so that they can begin the equipment data collection process. REAG will be in contact with each institution in due course. As stated previously the savings that are achieved through this collaborative process are for institutions to re-invest themselves.
Sustainability
6. The January 2008 grant letter from the Secretary of State for Innovation, Universities and Skills states:
'....while higher education institutions have made some progress in reducing their carbon emissions, more needs to be done if the 2050 commitment to reduce emissions by 60 per cent is to be achieved. I expect HEFCE to work with the sector to ensure these targets are met. Over the spending review, all institutions in receipt of capital funding should have plans to reduce carbon emissions, and performance against these plans should be a factor in future capital allocations. I would be grateful for a report on your plans for taking this forward by September 2008.'
7. There are growing requirements in this area coming from Government, and we will shortly be in discussion with sector bodies on how we can best respond to the Secretary of State. In the meantime, energy performance and efficiency should be carefully considered when determining how capital funding is applied. It is clear that systems for reducing and monitoring energy usage are often most easily adopted in conjunction with capital expenditure.
New buildings and refurbishments
8. Evidence from Estate Management Statistics and the UK HE Space Management Group shows that the sector has made significant progress in improving space efficiency. Gains have been made as a result of technology, building design and management practices.
9. There is strong evidence that further gains can be made, leading to reduced operating costs and allowing capital funds to be deployed on improving existing facilities. Crucially, efficient space use is an important means of reducing carbon footprint. For these reasons efficient space use should be an important consideration in institutions' capital plans.
10. I would be grateful if you would give these matters your consideration when utilising capital funding.
Yours sincerely
Professor David Eastwood
Chief Executive
