Bringing forward capital spending from 2010-11

To:

Heads of HEFCE-funded higher education institutions

Dear Vice-Chancellor or Principal

1.   This letter asks higher education institutions to review their capital investment plans for 2010-11¹.

2.   In his Pre-Budget Report² on 24 November 2008 the Chancellor announced a package of measures to address the current economic position of the country and to stimulate economic activity.

3.   Within the £3 billion total of capital expenditure to be brought forward from 2010-11, universities and colleges are being asked to bring forward £250 million of capital expenditure: £200 million to 2009-10 and £50 million to 2008-09. With levels of annual capital investment running in excess of £2 billion this should be an achievable target.

4.   There is no overall additional capital funding available: this is about bringing forward capital expenditure within the same total over the three years 2008-09 to 2010-11.

Capital expenditure in 2009-10

5.   We are therefore asking universities and colleges to review their capital investment plans for 2010-11 to identify projects that could be brought forward into 2009-10. We are looking for projects where universities and colleges are confident that they will be delivered.

6.   Priority will be given to those projects that have the greatest economic impact in terms of their direct benefit to the level of economic activity in the UK.

7.   Our selection of projects will be advised by a panel of experts drawn from the sector. We will look to sector representative bodies (Universities UK, GuildHE, the Association of University Directors of Estates, the British Universities Finance Directors Group and the Association of Heads of University Administration) to suggest members for the panel.

8.   Universities and colleges should submit their proposed projects to be brought forward via the HEFCE extranet by 30 January 2009. A template and access details will be provided in a further letter by the middle of January 2009. The submission should include:

• a description of the project(s) to be brought forward
• details of the cost of the project(s)
• details of the increase in economic impact in 2009-10 and how this has been assessed
• the reasons why you are confident that the project(s) can be delivered by March 2010.

Submissions should be signed by the head of the university or college to certify that this is genuinely activity being brought forward and can be delivered by March 2010.

9.   The criteria to be used by the panel in selecting those projects that should be accepted are:

• the direct impact on the construction and supporting industries in the UK
• the direct impact on the local, regional, or national economy and employment
• the environmental impact of the proposed project(s), in particular their contribution to reducing carbon emissions
• the project(s) will be completed by March 2010
• the expenditure is not on the residential estate.

10.   Reflecting the commitment made by government departments and agencies in the Pre-Budget Report, we also ask that universities and colleges, in letting contracts, consider making it a requirement that successful contractors have apprentices as a proportion of the project workforce. Office of Government Commerce guidance is available on the inclusion of skills requirements in procurement processes in this way.

11.   We would, though, welcome any comments on the information to be provided in the submission or the selection criteria to be used by the panel. Comments should be made by 29 December 2008 and sent to Ian Lewis (i.lewis@hefce.ac.uk). This will allow us to confirm the final information to be provided and the selection criteria by 5 January 2009.

12.   In the event that the eligible proposals submitted exceed £200 million we may consider pro rata funding.

Capital expenditure in 2008-09

13.   We will allocate a further £50 million in January 2009 to those universities and colleges that have met the requirements of the Capital Investment Framework and are receiving Capital Investment Funding on a profiled basis, pro rata to their existing 2008-09 profiled payments.

14.   We expect these funds to be used for projects or other capital expenditure that could be brought forward and where universities and colleges are confident that they will be delivered. If you are unable to bring forward projects or other capital expenditure please advise Ian Lewis (i.lewis@hefce.ac.uk) by 29 December 2008, in which case we will not increase your allocation.

Notifying universities and colleges

15.   On 25 February 2009 the HEFCE Board will consider the panel's advice on which projects should be brought forward from 2010-11 to 2009-10. We will then confirm the outcomes to universities and colleges as well as inform them of the changes to the profile of capital funding (increasing funding in 2009-10 and reducing funding in 2010-11). We expect this to be in March 2009.

16.   We anticipate that we may be required to provide assurance that the projects have been brought forward and money spent. We therefore expect you will maintain sufficient records to demonstrate that this is the case and we may select a sample of proposals for audit.

17.   A further £25 million³ of Science Research Investment Fund transitional funding is being brought forward from 2010-11 to 2009-10. We will provide details of how this is to be handled through a separate letter.

Yours sincerely

Steve Egan 
Deputy Chief Executive

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Notes

1.   All years referred to in this circular letter are the Government's financial year, that is to 31 March each year, because this is the year that applies to capital funding.

2.   'Pre-Budget Report 2008: Facing global challenges: supporting people through difficult times' (H M Treasury Cm 7484, November 2008).

3.   This is a UK figure so not all of it will apply to universities and college in England.

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