September 2008 | ref: Circular letter 23/2008
Dear Vice-Chancellor or Principal
1. This letter outlines the 2008 review of the subject price groups. The review has been carried out using 2006-07 TRAC(T) data, submitted by institutions in spring 2008. Further information is available on the HEFCE web-site.
2. In 2006, we agreed through consultation that we should not change the subject price group weightings in the short term. We proposed instead that we should develop a new framework for costing teaching, which could be used to review the price group weightings in the future. Over the past two years, this framework - known as Transparent Approach to Costing for Teaching (TRAC(T)) - has been developed in partnership with the sector and piloted with institutions.
3. In early 2008, over 90 per cent of English higher education institutions (HEIs) submitted TRAC(T) subject cost data, related to 2006-07 costs. We believe that these data are sufficiently robust to inform a review of the price group weightings. A large majority of those institutions that participated in the exercise agreed that their data are fit for purpose, and that the data provide the most appropriate source of cost information to inform the review of the price group weightings.
4. We have reviewed the price group weightings using the TRAC(T) data submitted in 2008. An analysis of the data that we used to inform our review can be viewed on the HEFCE web-site. Our review suggested that there are a number of ways in which it might be appropriate in the long term to adjust both the assignment of cost centres to price groups and the price group weightings.
5. Nonetheless, we are not proposing any changes to the price group assignments or weightings for 2009-10. We are aware that 2009-10 is likely to be a challenging year for some institutions as they adjust to the outcomes of the 2008 Research Assessment Exercise and changes to the teaching funding method such as the introduction of the new targeted allocation to support teaching enhancement and student success. We do not wish to create unnecessary volatility by introducing further changes to the funding method in this year.
6. In addition, we believe the price group weightings should be considered in conjunction with a review of our treatment of other sources of income, including income from fees. This may include conducting further surveys of fees as well as consulting (formally and informally) with institutions and the Government. It would not be possible to carry out this review in time to implement changes in 2009-10. Neither would it be desirable, given our commitment to keep the fee assumption fixed, in real terms, until the end of 2009-10 to maintain stability while institutions adapt to the variable fees regime.
7. We therefore intend to reconsider the question of the price group weightings in spring 2009. This approach will also allow us to take account of a further round of TRAC(T) data. This will enable us to understand better the trends in the relative costs of different subjects and give us confidence that the 2006-07 data are not atypical.
8. Any changes proposed as a result of the 2009 review of the price group weightings would be implemented in 2010-11 at the earliest. We expect to use TRAC(T) to reconsider the price group assignments and weightings periodically in the future. This will enable us to understand and respond to the changing costs of higher education teaching, particularly as variable fees affect institutions' expenditure. TRAC(T) reporting will be mandatory for all HEIs in England and Northern Ireland from 2009 onwards, with a reporting deadline of Friday 27 February 2009.
Professor David Eastwood
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