Teaching funding and student number controls consultation (Summer 2011)

1. Why is the consultation in two stages?

In the short term, there is a need for arrangements for funding in 2012-13 to be in place so that the sector can plan appropriately. However, the Government's long-term approach to higher education (HE) funding is still being finalised through consultation, clarification and legislation. Until this process is complete it is impossible for us to be certain that such arrangements will be fit for purpose in the long term. Because of this, we consulted in summer 2011 on policies for implementation in academic year 2012-13, and will consult over the coming winter on proposed changes for 2013-14 and subsequent years.

More information is available in paragraphs 21 to 27 of the consultation document.

2. How will old-regime students be funded in 2012-13?

Students who started studying for their current courses in 2011-12 or before will continue to be subject to the overall funding arrangements which were in place when they started their course. We refer to these students as 'old-regime students' in the consultation. In 2012-13 we propose to begin phasing out the mainstream funding associated with these students as their numbers decrease. Our policies aim to minimise the amount of change that institutions will have to deal with, and to provide as much stability and predictability as we can during this transition year.

More information is available in paragraphs 31 to 61 of the consultation document.

3. How will old-regime funding be phased out?

In 2012-13 we will begin phasing out the mainstream funding associated with old-regime students. We will do this by calculating funding rates for each institution that reflect its student population in 2011-12 and its position in the tolerance band. These funding rates, subject to a scaling factor reflecting HEFCE's available grant, will continue to apply to those old-regime students remaining at the institution during the current spending review period. There will be no tolerance band.

Our initial grant announcements will be highly provisional, because they will be based largely on forecast student numbers. As more robust and reliable data become available, grants will be adjusted, with the final allocation for 2012-13 confirmed in 2014.

More information is available in paragraphs 34 to 61 of the consultation document.

4. How will new-regime students be funded in 2012-13?

We refer to students starting their courses in 2012-13 as 'new-regime students' in the consultation.

While the majority of public funding for teaching will be distributed through student loans, the Government has specified that we should continue to provide some funding for higher-cost subjects in future. In 2012-13 we propose to provide additional funding relating to new-regime students who are studying subjects that are presently in price groups A and B. On the basis that higher-cost subjects should not need to charge higher fees than lower-cost subjects in order to maintain reasonable resource levels, this funding will reflect the price group A and B funding rates for 2011-12, reduced by the rate for price group C during the same year. We estimate that in 2012-13 we will provide £10,000 for price band A provision and £1,500 for price band B provision.

We will not provide any mainstream funding relating to new-regime students who are studying subjects presently in price groups C and D, although they may be counted for purposes of our non-mainstream targeted allocations. HEFCE grant will be reduced or removed for low-intensity part-time provision and postgraduate taught courses that are not subject to regulated fees.

More information is available in paragraphs 94 to 108 of the consultation document.

5. How will student numbers be controlled in 2012-13?

The Government intends to free up student number controls, while ensuring that overall costs are managed. This is intended to increase competition between institutions, and also to maximise the choice available to students.

For 2012-13, the Government requested that we no longer place number controls on the recruitment of students who have achieved grades of AAB, or above, at A-level . The Government also asked us to consult on the implementation of a 'core and margin' model involving the reallocation of up to 20,000 places to institutions that have a net average full-time fee of £7,500 or less and can clearly demonstrate the quality of their provision.

More information is available in paragraphs 109 to 141 of the consultation document and 'Student number controls for 2012-13: invitation to bid for additional places'.

6. Will Strategically Important and Vulnerable Subjects (SIVS) be protected?

Following the first stage of the consultation there was some concern over SIVS and suggestions that they should be protected. We have decided, for 2012-13, to exclude numbers associated with currently identified non AAB+ SIVS from the cut to create the margin on condition that institutions maintain at least their entrant levels to SIVS courses. SIVS entrants will still count against institutional number control limits. This protection will necessitate a marginally higher percentage cut across all institutions (9 rather than 8 per cent) from the residual population to create the margin.

We will carefully monitor the effect of the new fee and funding arrangements on SIVS.

7. When calculating the core/margin cut, what subjects will be classified as SIVS and therefore protected from the cut?

We will use the Joint Academic Coding System (JACS) codes for HEIs to determine the list of subjects that will be counted as SIVS for the purposes of the core/margin protection (see Excel file below). For FECs, learndirect codes will be used and can be found in Annex B of HEFCE Circular letter 06/2010. The definition of SIVS as shown in these attachments is consistent with our current SIVS policy.

8. What data will be used to identify SIVS entrants?

We will use HESA 2010-11 data to identify how many new entrants within the student number control cohort who held qualifications on entry that are not AAB+ or equivalent were in SIVS.

9. When we apply the protection of SIVS places to the student number control, will it be per student or per FTE?

The students will be counted in terms of headcount, not FTE. For a student to be countable towards SIVS at least 50 per cent of their overall activity must be in one or more of the eligible SIVS. We will use this headcount number of SIVS students to calculate the proportion of non-AAB+ students to be removed from the institution's student number control ahead of the core/margin cut.

10. Will specialist institutions in the performing and creative arts have an opportunity to opt out of the AAB+ and core/margin processes?

Yes. Those institutions that recruit primarily on (i) the basis of performance or portfolio and (ii) have more than 60 per cent of their provision in HESA cost centres 30 (media studies) and 33 (design and creative arts), will be able to opt out of the AAB+ and core-margin provisions, subject to agreement of an evidence statement they will need to submit.

More information is available in paragraphs 50 to 54 of 'Student number controls for 2012-13: Invitation to bid for student places'.

11. How will the bidding process for the margin work?

All HEIs and FECs are eligible to bid if they will have an average full-time fee of £7,500 or less, net of tuition fee waivers, for the duration of the courses taken by all students at the institution starting in academic year 2012-13 who are subject to the new full-time regulated fee regime. This includes FECs that do not currently have a funding agreement with us, perhaps because their existing prescribed HE provision is indirectly funded through another institution, or because they do not currently have any prescribed HE provision.

Responses to the bidding process are invited by Friday 11 November 2011, from institutions that:

• are eligible and wish to bid for a share of up to 20,000 places to be included within their student number control limit for 2012-13
• specialise in the performing or creative arts, recruit predominantly on the basis of audition or portfolio, and wish to opt out of both the AAB+ and core/margin elements of the student number control process.

Responses should be made electronically using the template at Annex B and the spreadsheet at Annex C of the publication: 'Student number controls for 2012-13: invitation to bid for additional places'.

12. Is there a minimum number of places that an institution can bid for?

The minimum number of new entrant places that can be bid for per institution is 25. There is no maximum, but we reserve the right to adjust an institution's allocation if the numbers requested are disproportionately larger than their current student entrant number.

13. Can you clarify paragraph 117 on recruitment and student number control?

The third sentence of paragraph 117 reads:

'All institutions will then be able to recruit freely from the AAB+ equivalent population, up to their student number control total and, separately, up to their medicine and dentistry control limits.'

This sentence is ambiguous as it stands. It refers to three separate avenues for recruitment. First, institutions will be able to recruit freely from the AAB+ equivalent population. Second, they will be able to recruit up to their student number control total (reduced from the previous year to take account of removal of AAB+ equivalent students and to create the 20,000 margin). Third, they will be able to recruit up to their medicine and dentistry control limits.

14. Do the changes in student number controls apply to postgraduate students?

Paragraph 110 of our consultation indicates that student number controls will continue to apply to full-time undergraduate students and those studying for a PGCE. Postgraduate students other than those aiming for a PGCE are not subject to student number controls, so will be unaffected by these changes.

Our list of AAB equivalencies includes both first degrees and postgraduate degrees. These equivalencies will only apply to the recruitment of students onto undergraduate courses (also see question 30). That is, PGCE students will remain subject to student number controls.

15. How will an institution's recruitment position in 2011-12 affect the funding calculation for 2012-13? What will be the consequence if an institution over-recruits in 2011-12?

As detailed in paragraphs 39 to 44 of the consultation document, funding for old-regime students in 2012-13 and beyond will be based on an institution's position in or outside the tolerance band in 2011-12. If an institution over-recruits, there will still be scope for HEFCE to hold grant back in future years.

All relevant students will count when we calculate the funding rate for old-regime students in 2012-13, and all old-regime students will continue to be counted when we calculate the grants.

16. What happens if not all of the 20,000 flexible margin places are awarded or recruited?

If fewer than 20,000 places are allocated to institutions, then the cuts made to the core places across the sector will be correspondingly fewer. No places will be cut from the core and then remain unallocated.

If not all of the 20,000 places allocated are then filled, then we will seek to recycle the unfilled places to the sector in accordance with our policy objectives.

17. How will the average fee of £7,500 for the 20,000 flexible margin places be calculated?

When institutions calculate their average fee levels, the fees should:

• be per FTE for the whole institution for each year of active study for the 2012-13 cohort (that is, not based on OFFA's calculation of their average fee, which is based on the first year of study only)
• be net of fee waivers (tuition fee waivers provided from funding made available through the National Scholarship Programme may be included).
• be based on full-time undergraduate study only, rather than part-time, postgraduate and PGCE provision
• be based only on provision fundable by HEFCE - so, for example, not provision funded by the NHS and TDA
• include all franchised-out provision, (that is, included in the franchiser's average fee calculation, not the franchisee's)
• include sandwich courses and Erasmus, both at 0.5 FTE, and on the basis of the fee charged to the student or paid in the form of a grant on behalf of the student
• treat students taking accelerated full-time undergraduate programmes, such as bachelors degrees taught over two years rather than three, in the same way as any other full-time undergraduate. Institutions are not permitted to charge fees to such students above the usual maxima set out in legislation, and the FTE value of such students should not exceed one in any year.

OFFA has confirmed that institutions may apply to revise their existing access agreement, or for a new agreement if they do not currently have one in order to take account of our proposals for the calculation of the average fee and to be eligible to bid for flexible margin numbers. OFFA may require submissions of revised or new agreements as early as 4 November 2011 (this timetable is subject to confirmation by OFFA).

18. Can FECs which do not currently have directly funded provision bid for numbers in 2012-13?

Yes. FECs which do not currently have directly funded provision can bid for numbers in 2012-13. If FECs which plan to bid intend to charge fees higher than £6,000 they will need an access agreement, and should discuss this with OFFA at the earliest opportunity. If an FEC is successful in bidding for numbers, it will become subject to the obligations attached to this, including reporting through HEIFES, student number control, the provision of Teaching Quality Information data, and audit by the Quality Assurance Agency.

19. Can private providers bid for numbers in 2012-13?

No. We are not at present empowered to fund private universities and colleges, nor are they part of our student number control. We do not expect this to change before the 2012-13 academic year.

20. How will HEFCE deal with private providers and FECs who recruit large numbers of students outside the student number controls in 2012-13?

Private providers are not subject to HEFCE student number control at present, nor will they be in 2012-13. Student number controls are not applied directly to indirectly funded FECs, although such a college's students will fall under the controls exercised on their franchise partner. If FECs apply for direct funding status they will form part of the number control and can apply for the 20,000 places. We would encourage indirectly funded FECs wishing to grow their HE provision to do this.

From 2013-14, it is likely that alternative providers will form part of the HEFCE number control, and it is unlikely we will be able to continue to support unrestrained growth in 2012-13, so providers may wish to exercise caution in recruiting student numbers in 2012-13 that may not be sustained in future years.

21. Does the AAB threshold include general studies A-levels?

Yes. Our list of AAB+ equivalencies does not exclude any particular A level subjects.

22. How do Scottish Advanced Highers and Irish Leaving Certificates relate to the AAB threshold?

Both of these classes of qualification are included within the A-level group by the Higher Education Statistics Agency and UCAS. Their exact interaction with the other qualifications in this group will be determined as part of our consultation process, and will be clarified in the outcomes. We welcome responses to the consultation on the appropriate equivalency levels.

23. Will the Welsh Baccalaureate be considered as an AAB+ equivalent?

The Welsh Baccalaureate is currently excluded from the list of equivalent qualifications detailed in Annex C of the first phase of the consultation. We do not believe that currently available data supports the addition of such a qualification. In particular the Welsh Baccalaureate where offered runs alongside and complements other qualifications such as A-levels and therefore could represent a complex and uncontrollable number of students.

However, we will continue collaboration with UCAS in further developing realistic AAB+ equivalences.

24. What equivalent qualifications from other EU countries are acceptable as part of the AAB threshold?

The AAB+ policy is based on the fact that UK students achieving AAB at A-Level are a relatively stable and predictable population to remove from the student number controls. This group also has a high level of participation in UK HE, meaning that there is little risk of escalation of costs through exempting these student numbers. Our list of AAB+ equivalencies is based on qualifications which are in the UCAS tariff. If we were to extend our criteria to include all potentially equivalent European qualifications, a much larger population would become eligible, the vast majority of whom do not currently take HE courses in the UK. The potential call on public money would thus become much more difficult to predict and control.

If a persuasive case emerged for the inclusion of other qualifications which could be reliably demonstrated to be equivalent to AAB, we will take this into account. However, there is a clear need to balance issues of fair treatment of EU students with those of controlling the costs to student finance.

25. In calculating how many AAB+ students an institution currently has, how is HEFCE dealing with entrants whose qualifications were recorded by the institution as 'unknown'?

We are working with UCAS and institutions to increase the number of known qualifications. Where an institution has large numbers of students with unknown qualifications we will make assumptions about the number of qualifications likely to be AAB+ equivalent and remove these from the institution's core number control.

26. What is happening with non-mainstream funding allocations?

Some of these allocations will be phased out over two years. Others will be continued as an interim measure in 2012-13, prior to review. This relates to both old-regime and new-regime students.

More information is available in paragraphs 62 to 93 of the consultation document.

27. What is happening with widening participation funding?

Funding for widening participation in 2012-13 is being protected. This includes the allocation for widening access for people from disadvantaged backgrounds, the allocation for widening access and improving provision for disabled students, and the component of the teaching enhancement and student success targeted allocation relating to improving retention. Widening participation funding from 2013-14 will form part of stage two of our consultation.

More information is available in paragraphs 84 to 86 of the consultation document.

28. What is happening to the institution-specific targeted allocation?

We will retain the institution-specific targeted allocation (previously the allocation for small or specialist institutions) in 2012-13. We will continue to keep the funding levels and recipients under review.

More information is available at paragraphs 154 to 155 of the consultation document.

29. What is happening with Erasmus funding?

We will establish a new stream of funding to allocate Erasmus fee compensation in 2012-13 and 2013-14 that reflects current arrangements. Its level will reflect the level of fee that would otherwise have been chargeable to old-regime students for a year abroad. We will consider in the second stage of our consultation what might happen to this funding from 2014-15 onwards.

More information is available in paragraphs 89 to 93 of the consultation document.

30. What is happening with the teaching enhancement and student success allocations?

We are withdrawing the elements of the teaching enhancement and student success allocation relating to research-informed teaching and institutional learning and teaching strategies. This funding was not intended as a long-term initiative. The element relating to improving retention will remain as part of our widening participation funding.

More information is available in paragraphs 77 to 79 and 84 to 86 of the consultation document.

31. What is happening with the temporary targeted allocations relating to the ELQ policy?

The allocations to protect strategically important and vulnerable subjects and part-time provision from the impact of the ELQ policy were always intended to be temporary measures. We will reduce these allocations in 2012-13, and withdraw them entirely from 2013-14.

More information is available in paragraphs 72 to 76 of the consultation document.

32. What is happening with the London weighting?

We are committed to reviewing London weighting in the second phase of our teaching funding consultation and in light of the responses to the consultation we have received, we recommend that we should avoid overall reductions in London weighting for old and new regime students in 2012-13. Pending a full review of London weighting in the second phase of our teaching funding consultation, we intend to introduce, as a temporary measure for 2012-13 an allocation to ensure that institutions do not see a reduction in London weighting for old and new regime students compared to 2011-12.

33. What provision is being made to support strategically important and vulnerable subjects (SIVS)?

See Question 7 above.

The phasing-out of the £28.3 million targeted allocation to maintain capacity in strategically important and vulnerable subjects (SIVS), mentioned in paragraph 67 of the consultation document, does not represent the bulk of HEFCE's support for SIVS. This allocation was introduced in 2008-09 to mitigate the effects of the equivalent and lower qualifications (ELQ) policy, and was guaranteed only until 2010-11, at which point it was to be reviewed.

The targeted allocation of £22.9 million to support very high-cost and vulnerable science subjects is not being withdrawn.

Information about our approach to supporting SIVS in the future is available in paragraphs 160 to 163 of the consultation document.

34. What data are being used to calculate the grant for 2012-13?

To ensure fairness and accuracy, the process for allocating the grant for 2012-13 will take place in three stages, and will take into account data from the HE students early statistics survey, the HE in further education student survey, the HE Statistics Agency and individualised learner records. Final allocations for 2012-13 will not be confirmed until 2014.

The funding that we allocate through this process will directly relate to student numbers. Although a tolerance band will not be directly applied, the funding rates that we use during the phase-out period will reflect institutions' position in or outside the tolerance band in 2011-12.

More information is available in paragraphs 34 to 61 of the consultation document.

35. Has the policy on equivalent and lower qualifications changed? How does this interact with the new funding and student number control policies?

HEFCE's implementation of the Government's policy on equivalent and lower qualifications (ELQs) is unchanged in 2012-13, and the current exemptions from the policy continue to stand. At present there are no plans to change this in 2013-14 and beyond.

In future, students who have an existing undergraduate degree will fall within the uncontrolled AAB+ equivalent population.

36. Are there plans to revise the definitions of high-cost subjects currently reflected in the price groups?

We will be reviewing the current system of price groups as part of the next stage of our consultation.

37. Will the price group A and B weightings remain the same in future?

So we can ensure that the transparent approach to costing for teaching (TRAC(T)) data continues to be an adequate basis for our weightings for band A subjects, we are conducting a review of clinical subject weightings during 2011. This will be guided by a steering group of experts drawn from the sector, and will involve working with stakeholders to ensure that the data they submit are robust and reliable. We need to make sure our limited funding is used in the most efficient way, and the review will help us assess the appropriate level of funding for clinical subjects. We expect this review to inform the clinical subject weightings we use in 2013-14.

More information is available in paragraph 150 of the consultation document.

38. Will there be an impact on the sign-off of annual accounts by auditors, given that the final confirmation of funding for old-regime students won't take place until 2014?

We are aware that the final teaching grant allocations for 2012-13 will not be announced until March 2014, over 3 months after financial statements for 2012-13 will need to be signed off by external auditors. As part of our consultation process we have spoken to external audit firms in the sector to gauge whether the delay in finalising teaching grant allocations is likely to be problematic.

The general consensus is that sufficient information will be available about the 2012-13 grant allocations to enable institutions and external auditors to sign off financial statements. Changes to the 2012-13 grant allocations after November 2013 are not expected to be material in the context of institutions' financial statements. However we will continue to engage with external audit firms to monitor this situation.

39. Can institutions appeal against cuts to their student number controls on the basis that 2010-11 was an exceptional year?

Yes, there will be provision for such appeals to be made.

40. Can institutions review or resubmit their access agreements in view of the new student number control proposals?

OFFA has confirmed that institutions may apply to revise their existing access agreement, or for a new agreement if they do not currently have one. OFFA may require submissions of revised or new agreements as early as 4 November 2011 (this timetable is subject to confirmation by OFFA).