Changes to funding priorities 2008-11

To:

Heads of HEFCE-funded further education colleges, Heads of HEFCE-funded higher education institutions, Heads of universities in Northern Ireland

Dear Vice-Chancellor or Principal

This letter announces changes to funding priorities that have arisen as a result of requests in the January 2008 grant letter from the Secretary of State. No action is required in response.

On 3 July the HEFCE Board considered how it might address the changing demands and priorities for funding over the three years 2008-09 to 2010-11. These were in response to the January 2008 grant letter from the Secretary of State, including the request to rationalise and reduce our special funding streams.

The total funding available for the three years 2008-09 to 2010-11 is unchanged from that previously announced. The decisions set out below enable increased funding to be directed to higher priority areas.

Areas of increased priority

The demands being placed on the Strategic Development Fund (SDF) continue to increase. The Secretary of State's grant letter asked for up to £90 million to be invested over three years on employer engagement. There are also further demands from higher education institutions (HEIs) and to support new priorities such as the New University Challenge. We will therefore be providing additional funding of £100 million over 2008-11 for the SDF, in addition to a maximum of £90 million for developing employer engagement and co-funded provision.

Additional recurrent funding for very high cost and vulnerable science subjects has already been agreed at £25 million a year for three years only (2007-08 to 2009-10) to maintain capacity while demand for these subjects increased. While there is evidence of increased recruitment to these subjects, it is too early to be able to assess whether the demand-raising activities, with some funding through the SDF, are achieving long-term change. We will therefore extend this additional recurrent funding to 2010-11.

These additional funding investments amount to £215 million over the three years 2008-09 to 2010-11.

Other changes to funding

The increased investment in the areas set out above is being achieved through changes to other programmes. These changes are set out below.

Special funding programmes

We will be consulting shortly on proposals for the funding of teaching quality enhancement from 2009-10. This will incorporate £40 million currently provided through the Teaching Quality Enhancement Fund (TQEF) as well as other components of existing targeted allocations. £15 million previously associated with the TQEF will be redirected to contribute towards meeting other priorities. Funding for the National Teaching Fellowships Scheme will continue at its present level.

When funding for the first 74 Centres for Excellence in Teaching and Learning (CETLs) was announced it was conditional on these being self-sustaining when the five years of recurrent funding came to an end. Phase 1 of the CETL programme will be completed at 31 July 2010. Any continued funding will depend upon successful evaluations of the impact of the policy and additional funding secured through a future government spending review.

We intend to phase out funding for the Overseas Research Student Awards Scheme (ORSAS). Funding for 2008-09 has been announced and will not change. However, HEIs receiving ORSAS grant will receive two-thirds of that amount in 2009-10, one third in 2010-11 and no funding after that date. HEIs will wish to bear this in mind when taking decisions on what support to offer to overseas students over the coming months.

The decision to phase out funding for ORSAS was taken because we consider that ORSAS has achieved its purpose and no longer represents a high priority for public funding. The UK HE funding bodies recently commissioned an evaluation of ORSAS. It found that institutions and students receiving the awards were generally highly appreciative. However, it also noted that the scheme was only partly fulfilling its objective of attracting the best students - since more than a half of the awards were received by students who had already chosen to study in the UK; and that many of the recipients had ORSAS funding as part of a larger package of support put together by the HEI from several sources and might not be aware that they were receiving ORSAS funding at all. We are aware that decisions are yet to be made by the other UK HE funding bodies on this funding.

Funding for museums, galleries and collections will continue in its present form for 2009-10. We will however be reviewing this funding by the end of 2009 to decide how this should be provided in the longer term.

Changes within targeted allocations

As included in the 2008-09 recurrent grant announcement (HEFCE 2008/12) new targeted allocations replace some of the premiums that were previously included in our main teaching funding method; these additional funding allocations are linked to particular strategic objectives.

We will maintain overall funding for these new targeted allocations in cash terms from 2009-10, subject only to our continued commitments arising from the implementation of the Government's policy on funding for equivalent or lower qualifications (ELQs), to increase the targeted allocation for part-time undergraduates by £30 million from 2009-10. These new targeted allocations will also not form part of the calculations to determine the rate of funding for additional student numbers. The HEFCE Board will keep these issues under review.

Other changes

A number of funding streams will naturally cease over the coming three years. These include the joint Veterinary Science Initiative with DEFRA, the Teaching and Learning Research Programme and the development element of Foundation Degree Forward. We have made additional minor changes to the profile of grant for other funding streams.

The funding consequences of all the above decisions will take effect from August 2009 and will be taken into account in the funding announcement and institutional grant letters issued in March 2009.

If you need further details on any of the above please contact Ian Lewis (telephone 0117 931 7336, e-mail i.lewis@hefce.ac.uk).

Professor David Eastwood
Chief Executive

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