Teaching funding and student number controls

To:

Heads of HEFCE-funded further education colleges, Heads of HEFCE-funded higher education institutions

Of interest to those responsible for:

Senior management, Finance, Governance

This is the first stage of a two-stage consultation seeking comments on proposed changes to the way we fund teaching and allocate student numbers. The changes proposed in this stage of the consultation would be implemented in academic year 2012-13.

Summary of responses, decisions made and invitation to bid for student places

Contents

• Executive summary
• Introduction
• Proposals for the phase-out of mainstream funding related to old-regime students
• Proposals relating to non-mainstream allocations
• Proposals for funding related to high-cost subjects in 2012-13
• Proposals for student number controls in 2012-13
• Possible approaches to funding for 2013-14 and beyond
• Probable use of data from 2013-14: implications for 2011-12 data returns
• Equality and diversity
• Responding to this consultation
• Annex A: Calculation of funding rates for the phase-out of grant
• Annex B: Indicative funding rates for the phase-out of mainstream and co-funded grant
• Annex C: AAB equivalences
• Annex D: Modelling of institutional impact of AAB proposal
• Annex E Consultation questions
• Annex F List of abbreviations

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Executive summary

Purpose

1. This is the first stage of a two-stage consultation about the way higher education teaching is funded and student numbers are allocated in England, in the policy context set by the Government’s White Paper on the future of higher education: 'Students at the Heart of the System'. It seeks comments on proposed changes to these funding methods. The changes proposed in this stage of the consultation would be implemented in academic year 2012-13.

Background

2. The Government has decided, with the aims of increasing student choice and supporting a more diverse sector, that in future more public funding will be provided directly to students, as up-front tuition loans, and less funding will be provided to institutions as teaching grants. This means that a high proportion of public funding for teaching will be channelled through the Student Loans Company, and HEFCE will have substantially less funding available to support teaching.

Key points

3. In 2012-13, most students will have entered higher education under the old fees regime. We propose to phase out the mainstream funding associated with these students in a way that reflects student numbers, and historic grant levels, at each institution.

4. We propose to discontinue certain non-mainstream teaching allocations, typically because they were originally intended as short-term measures, or because they reflect previous priorities. Others will continue at roughly their present levels in 2012-13 while their long-term future is reviewed.

5. For those students who enter higher education in 2012-13, and are thus subject to the new funding and graduate contribution regime, we intend to introduce an interim system of funding to support teaching that will fund provision in price groups A and B only, at a reduced rate relative to that currently in place¹. In 2012-13 provision in price groups C and D will not receive the main element of HEFCE teaching funding, but will still count towards some targeted allocations such as that for widening participation.

6. We intend, as an interim measure in 2012-13, to continue the student number control² in broadly its current form. However, as requested by the Government, we propose how we will introduce measures to increase dynamism and competition in the distribution of a proportion of student numbers, so supporting greater student choice.

7. This document also provides early indication of various possible changes in 2013-14, including a new approach to funding to support teaching, and changes to the data returns expected from institutions. These changes will be developed and considered in more detail, and comments invited, in the second stage of the consultation, which we expect to publish in winter 2011-12.

Action required

8. Responses should be made by Friday 2 September 2011 using the online form that can be accessed alongside this document.

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Notes

1. For full details of how we currently calculate teaching funding, see 'Guide to funding: How HEFCE allocates its funds' (HEFCE 2010/24), available on the HEFCE web-site. Price groups are explained in paragraph 74 of HEFCE 2010/24.
2. For an explanation of the student number control see 'New student number control for 2010-11' (HEFCE Electronic publication 02/2010), available on the HEFCE web-site.

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