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Executive summary


1. We have a funding agreement with each institution that we fund, which specifies targets relating to student numbers. This document explains what action we will take if institutions do not meet their targets for 2010-11.

Key points

2. Within our funding agreements with institutions, we specify four targets that apply to student numbers funded through our mainstream teaching funding, although these targets will not all apply to every institution. They are:

  1. The contract range. Under our funding method for teaching, we calculate a standard level of resource for each institution, and an assumed resource (actual HEFCE teaching grant plus an assumption of income from fees). The percentage difference between assumed and standard resource for the academic year 2010-11 should be within a given range – known as the 'contract range'.
  2. The student number control. Our allocations for 2010-11 make provision for growth in the sector that is consistent with the Government's plans. To help manage the risk of over-recruitment, we have introduced a new student number control. We have specified a limit for each institution of HEFCE-fundable and employer co-funded students starting full-time (FT) undergraduate (UG) and Postgraduate/Professional Graduate Certificate in Education (PGCE) study in academic year 2010-11. Institutions recruiting above this limit will incur a reduction in grant.
  3. Funding conditional upon delivery of growth. This applies to institutions that are expected to increase student numbers in 2010-11, as a result of being awarded mainstream additional student numbers (ASNs) or additional new entrant places through the University Modernisation Fund (UMF). Funding for those places is contingent upon institutions actually recruiting additional students to fill the places.
  4. The contract full-time equivalent (CFTE). This is a minimum number for students on UG medical and dental courses to which a quota applies.

3. These measures are designed, respectively:

  1. To maintain broadly comparable resource levels per student so that the quality of the student experience is not put at risk.
  2. To reduce the risk of HEFCE's grant being reduced by Government in order to meet unplanned student support costs.
  3. To ensure that funds allocated for expansion do indeed deliver additional places.
  4. To ensure that the intended number of medical and dental students required to meet national needs is delivered, in return for the exceptionally high level of funding provided for such students.

4. To achieve these objectives we will withhold grant from an institution which meets one or more of the following criteria:

  1. The institution is found to have a level of assumed resource which takes it above its contract range.
  2. The institution exceeds its permitted level of HEFCE-fundable and co-funded students starting FT UG or PGCE study in the academic year 2010-11 (the student number control).
  3. The institution does not deliver the growth expected in 2010-11 – arising from an award of mainstream ASNs or additional new entrant places through the UMF.
  4. The institution under-recruits against its CFTEs for medicine and dentistry.

5. In addition to the targets and monitoring arrangements that apply to our mainstream teaching grant, we also fund some student numbers outside our mainstream teaching allocations. These include allocations for co-funded employer engagement. These allocations are subject to separate arrangements for monitoring and grant adjustments.

6. In relation to paragraphs 4-5, before taking any action we will give institutions an opportunity to tell us about any material changes in definitions or mitigating factors that may have influenced the calculated level of grant adjustment.

7. We have allocated £4 million to support the movement of FT UG students to strategically important and vulnerable subjects in 2010-11. The subjects in question are certain science, technology, engineering and mathematics subjects and modern foreign languages. We reserve the right to withdraw funds in the event that the proposed movement of student numbers is not undertaken.

8. The Secretary of State's letter to HEFCE of 24 June 2010 required the higher education sector to deliver savings of £82 million in financial year 2010-11. The savings comprise a £30 million reduction to capital and a £52 million reduction to recurrent teaching grant, the latter affecting both 2009-10 and 2010-11 academic years.

9. The saving for the 2010-11 academic year has been applied as a reduction to total teaching grant of approximately 1.09 per cent. This saving has been applied pro rata to all elements of recurrent teaching grant, after incorporating other changes to the allocations since March. We will also apply the same saving to any grant adjustment (whether positive or negative) arising from data submitted by institutions to the 2010 Higher Education Students Early Statistics and Higher Education in Further Education: Student Survey, or any other separate monitoring (such as employer co-funded allocations, or following data audit or reconciliation), but with the exception of grant reductions relating to recruitment against the student number control limit. This is necessary to ensure the saving applies in equal measure to all institutions for the year, including where adjustments to teaching grant are subsequently necessary.

10. If an institution does not recruit any students in 2010-11 then all funding for teaching allocated for 2010-11 will be held back.

Action required

11. No response is required.

Date: 1 July 2010

Ref: HEFCE 2010/22

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

Of interest to those
responsible for:

Finance, Student data, Planning

Enquiries should be directed to:

By e-mail to or to HEFCE higher education policy advisers