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:

Student data, planning, finance

Dear Vice-Chancellor or Principal

Advance notification of changes to HESES and HEIFES for 2011-12

1.   This circular letter notifies institutions of changes that we intend to incorporate in the Higher Education Students Early Statistics (HESES) and Higher Education in Further Education: Students (HEIFES) surveys for the 2011-12 academic year. It also explains how we propose to use the new data that we are collecting to inform the calculation of funding from 2012-13. The consultation on our method for funding teaching has just been published, and this will have an impact on these issues. We do not require a reply to this circular letter.

2.   As in previous years, we will use HESES and HEIFES data for 2011-12 both to review our allocations of funding for 2011-12 and to inform initial funding allocations for 2012-13. The phased change to the higher education (HE) finance regime in England from 2012-13 (when more funding will be routed to institutions via the student loans system) means that we need to collect additional data in HESES11 and HEIFES11. 'Teaching funding and student number controls: consultation on changes to be implemented in 2012-13', HEFCE 2011/20, sets out our proposals on teaching funding for 2012-13, and this circular letter should be read alongside that consultation.

3.   We intend to make the following four main changes to the HESES11 and HEIFES11 surveys:

1. The way students on non-standard years of study are recorded (those that span two academic years) is to change for Tables 1 to 5. In HESES10 and HEIFES10, these were recorded in the academic year in which the year of study ended. From HESES11 and HEIFES11 they should be recorded in the academic year in which the year of study begins. This change will make the recording of such students more consistent with Table 6.
2. We will no longer disaggregate HEFCE-fundable students between HEFCE-funded and independently funded.
3. Table 4 (the Home and EU fees table) is to be disaggregated between each of the different price groups. This will enable us to calculate more accurately average rates of 2011-12 HEFCE funding for each 'funding cell' (that is, a combination of price group x mode of study x level of study).
4. A new Table 7 will ask institutions to forecast the numbers of HEFCE-fundable countable years and full-time equivalents (FTEs) they expect to have in 2012-13 by price group, mode and level, and disaggregated between:
   • students that would be treated as continuing under the current fees and funding regime, and
   • students that would be treated for funding purposes as subject to the new fees and funding regime being introduced from 2012-13.

Although no changes to the higher education finance regime in Northern Ireland have, as yet, been advised, universities there will be required to complete the expanded Table 4 and follow the revised guidance on the recording of non-standard years of study. However, they are not required to complete the new Table 7, nor (as last year) Table 6.

4.   Annex A to this letter provides draft guidance on the recording of standard and non-standard years of study and the completion of the new Table 7. Annex B provides specimen copies of Table 7 and the expanded Table 4 mentioned in paragraph 3c. Final guidance will be confirmed in HESES11 and HEIFES11 this autumn and may incorporate any further amendments that we consider necessary for clarity or to better reflect the forthcoming student support regulations for 2012-13.

How we will use the data in Tables 4 and 7 to inform 2012-13 funding allocations

5.   HEFCE 2011/20 explains our proposed approach to teaching funding for 2012-13, the first year of the new regulated fee regime. From that year, there will be two distinct groups of students in English higher education:

• those subject to the current funding and fee regime ('old-regime' students)
• those subject to the new funding and fee regime ('new-regime' students).

From 2012-13 we will phase out the mainstream teaching funding for old-regime students and introduce any funding for new-regime students that are in high cost subjects. As is current practice, these funding methods will apply irrespective of whether individual students that we count for funding purposes are subject to the regulated undergraduate fee regime. So, for example, current mainstream teaching funding in respect of postgraduate taught (PGT) students will similarly be phased out and new funding phased in for eligible PGT students from 2012-13. This means that our terms 'old regime' and 'new regime' are not defined solely in terms of students subject to the regulated fees and student support arrangements, and this reflects the way our funding is being reduced by the Government.

6.   This categorisation of students into old regime and new regime for HESES and HEIFES purposes is designed to be largely consistent with the distinction we expect in the forthcoming Education (Student Support) Regulations 2011 between those students on designated courses that come under the fee regimes that have applied up to 2011-12 and the new fee regime that is being introduced from 1 September 2012. However, for important policy reasons there are some differences, which are necessary to reflect HEFCE's funding responsibilities. Institutions should ensure they follow the guidance in HESES11 and HEIFES11, to be published in autumn 2011, in determining whether a student is reported as subject to the old regime or the new regime in data returns used for HEFCE funding. The main differences we expect compared to the student support regulations are:

1. HEFCE funds teaching activity whether or not students are subject to the regulated fee regime. This means that, whereas the forthcoming Education (Student Support) Regulations 2011 will apply only to those students who are subject to the regulated fees and support regime, our concepts of 'old regime' and 'new regime' apply also to those Home and EU students on courses that are not designated for student support purposes, such as most postgraduate taught students and part-time students on low intensity courses.
2. The Education (Student Support) Regulations 2011 are expected to identify categories of student on designated courses who are to be treated as subject to the current fee regime, even though they may be starting new courses in 2012-13. They include:
   • students doing 'end-on' courses – for example, topping up in the same mode of study and without interruption from a foundation degree commenced before September 2012 to a first degree with honours
   • students transferring courses.

   Draft HESES/HEIFES guidance on such categories of student is at Annex A. The guidance on end-on courses is intended to be consistent with what we expect in the forthcoming student support regulations. We expect the regulations to allow students to be treated as on an end-on course in 2012-13, and therefore subject to the old fee and funding regime, only in limited circumstances. We would encourage institutions to help their students make informed choices about their qualification aims in 2011-12 and 2012-13, in full awareness of the effects these choices may have on the fees they may be charged and their entitlement to student support. Annex A also provides guidance on when a student who interrupts study, or changes course, may be treated as continuing, rather than subject to the new regime. This guidance is solely for our data collection and funding purposes, and may not reflect the regulations and guidance that govern student support.

7.   We will calculate 2012-13 funding for old-regime students as a combination of student FTEs x institutional funding rate x a scaling factor. These calculations will be performed separately for each funding cell:

1. Initially, the student FTEs will be based on institutions' own forecasts of old-regime students in 2012-13 reported in the new HESES11 and HEIFES11 Table 7: these will help to determine grant payments between August 2012 and January 2013. However, the student FTEs will then be revised to reflect those reported in Tables 1 to 3 of HESES12 and HEIFES12, and our allocations for the year recalculated accordingly. Our grant payments to institutions between April and July 2013 will reflect these recalculations, including correcting for any over- or under-payment made between August 2012 and January 2013. We expect every institution will see a revised allocation as a result of their HESES12 or HEIFES12 data, because there will be no tolerance band to moderate funding changes and because we wish to ensure that individual institutions do not benefit at the expense of others, where their forecasts in HESES11 and HEIFES11 turn out not to reflect the actual student FTEs in 2012-13. Finally, we will review our allocations for 2012-13 using the final Higher Education Statistics Agency (HESA) and individualised learner record (ILR) data for the year: we would expect to implement any consequent corrections to 2012-13 funding during 2013-14.
2. The institutional funding rateswill be calculated to reflect the notional grant per FTE in 2011-12 in each funding cell. These calculations will be based initially on the 2011-12 student FTEs in HESES11 and HEIFES11 Tables 1 to 4 and the mainstream teaching grant for the year, after adjustments to reflect compliance with funding agreement targets other than the student number control. The rates will be subject to review in light of the final HESA and ILR data for 2011-12. These institutional funding rates will vary according to institutions’ positions in or outside the ±5 per cent tolerance band, and the variable weightings for London weighting and partial completions. Details of their calculation are provided in Annex A of HEFCE 2011/20. We will use the expanded Table 4 data in HESES11 and HEIFES11 to identify more accurately the average assumed fee rates for each funding cell and thus the notional rates of funding that we provide, which we calculate as standard resource minus assumed fee. The disaggregation is necessary because some categories of student are subject to special fee rates, but these are not evenly distributed between funding cells. For example:
   1. Most postgraduate taught students are subject to a fee assumption equal to the 'base price' in our mainstream teaching funding method. However, full-time students aiming for a PGCE and some full-time architecture students are subject to regulated fees for which we assume a fee of £1,345 for 2011-12. These exceptional regulated fees will generally arise only among PGT students in price group C.
   2. ii. Most full-time undergraduate students are subject to a fee assumption of £1,345 per FTE (the ‘basic amount' permitted in legislation for 2011-12). However, students on an Erasmus study year abroad in 2011-12 are subject to a zero fee, and for those on other study years abroad we assume a fee of £665. These students may be reported in any price group, although will most commonly be in price group C (the price group that includes modern foreign languages).
3. The scaling factor will be applied to ensure that our total allocations for the phase-out of mainstream teaching funding remain within the budget we have available for this purpose. Note that this scaling factor may be adjusted if our grant is reduced to meet unplanned student support and tuition fee loan costs, or as a result of significant changes in the student FTEs that we count with successive data returns.

Reporting of students on non-standard years of study

8.   From 2007-08, we standardised reporting arrangements for all higher education institutions (HEIs) so that non-standard years of study were recorded in the academic year in which they ended¹. This method had previously applied only to a minority of HEIs and all further education colleges (FECs). We now need to change these arrangements for all institutions, for the reasons set out in paragraph 11. The change means that the non-standard years countable in HESES11 and HEIFES 11 will be those starting during the 2011-12 academic year, instead of those starting during the 2010-11 academic year.

9.   We do not expect this change to have adverse funding consequences for any institution. We fund institutions, not students themselves: we choose to count students in our block grant funding method merely as a proxy measure for the teaching and related activity that we are responsible for funding at institutions. The change means we will be counting one cohort of students rather than another: for an institution in steady state, we would not expect any change to the total student volume that we count, and, therefore, to its ability to meet its funding agreement targets for 2011-12 (particularly given the flexibility afforded to institutions by the ±5 per cent tolerance band). Nevertheless, where institutions provide sufficient evidence that the change in reporting arrangements has had an adverse effect on their ability to meet their 2011-12 funding agreement targets (other than the student number control), we will expect to accept an appeal for mitigation of any resulting grant adjustments. The evidence we will look for is a sufficiently detailed summary of the difference in student volume arising from the changed reporting of non-standard years. To assess changes in contract range holdback, or its recovery, this information will need to be disaggregated by price group, mode and level, so that we can recalculate standard and assumed resource accordingly.

10.   There is no change to the way we count students towards the student number control limit (reported in HESES/HEIFES Table 6) and therefore any grant adjustments for exceeding the limit will not be affected.

11.   The main reason for the change in the reporting of non-standard years is to avoid a discontinuity in funding arising from the new funding and fee regime that will apply from 1 September 2012. Funding is being withdrawn from HEFCE reflecting that, from September 2012, new entrants will generally be subject to higher tuition fees. This withdrawal of funding applies equally to 2012-13 funding in relation to students on non-standard years as those on standard years of instance. By changing the reporting of non-standard years in 2011-12, we ensure consistency in the counting of students for the transition from the 2011-12 to the 2012-13 funding regime. Final 2011-12 mainstream teaching grant and the 2011-12 funding rates calculated from it, which will inform the subsequent phase-out of funding, will be based on the same counting method as applies to the numbers of old-regime students that we will count from 2012-13. Most of the students on non-standard years are taking PGT masters courses. The change ensures equity of treatment for institutions in relation to, for example, a student starting a masters course on a non-standard year in October and a student starting a postgraduate diploma on a standard year in October. This change also provides greater consistency with when students are counted towards the student number control (although some differences will remain).

Ending the disaggregation of HEFCE-fundable students between HEFCE-funded and independently funded

12.   We will no longer disaggregate HEFCE-fundable students between HEFCE-funded and independently funded. The latter category has always been an optional one within HEFCE-fundable, used by institutions to help them avoid moving below the tolerance band. As was the case for 2010-11, we have suspended the conditions that apply to the lower limit of the tolerance band in order to accommodate student places allocated through the University Modernisation Fund. From 2012-13, we intend to calculate teaching funding, including for the phase-out of mainstream grant, for all HEFCE-fundable students. We do not therefore see a need to collect information separately on HEFCE-funded and independently funded students.

13.   We expect the effects of this change in 2011-12 to be small. Independently funded students are already counted towards the student number control and achievement of additional student number targets, and we would not expect an institution at risk of contract range holdback to have chosen to identify any students as independently funded. The change will mean that students who might otherwise have been recorded as independently funded will count towards variable targeted teaching allocations for 2012-13 , but in practice few of them will be eligible, for the following reasons:

1. Almost all independently funded students in HESES10/HEIFES10 are postgraduates, and therefore did not count towards the 2011-12 part-time undergraduate, widening access and improving retention allocations.
2. Some two-thirds of independently funded students in HESES10/HEIFES10 are postgraduates within price groups A or D and therefore did not count towards the other 2011-12 variable targeted allocation for accelerated and intensive provision.

Format of the HESES and HEIFES workbooks

14.   We stated last year that we intended to create future HESES and HEIFES survey workbooks (including HESES11 and HEIFES11) in Excel 2007 format (file extension .xlsx). We no longer believe that this will be possible in time for the HESES11 and HEIFES11 surveys, and therefore these will continue to use Excel 2003 format (file extension .xls).

Foundation years and other 'Level 0' provision

15.   We confirm that – as previously announced in paragraph 15 of HEFCE Circular letter 10/2010, 'Advance notification of changes to HESES and HEIFES for 2010-11 and later years' – from 2011-12, foundation years and other provision commonly referred to as 'Level 0', will be classed as part of a 'recognised HE course' only if they are an integrated part of a recognised HE qualification, such that:

• students are already registered for the recognised HE qualification at the same institution, and
• progression to the recognised HE qualification is guaranteed, subject to satisfactory completion of the foundation year.

16.   Free-standing foundation years and other free-standing Level 0 provision are not recognised HE courses. The requirement that students are already registered for the recognised HE qualification at the same institution means that where teaching of the foundation year is undertaken by a different institution, this will be treated as integrated – and therefore within the HESES and HEIFES population – only if it is done under a franchise arrangement from the institution offering the HE qualification.

Implications for data collection in future years

17.   Annex A provides draft guidance on the recording of standard and non-standard years of study and completion of the new Table 7 for HESES11 and HEIFES11. In addition, we expect that from HESES12/HEIFES12, we will:

1. No longer ask for foundation degree students to be separately identified from other undergraduates in the main HESES/HEIFES Tables 1 to 3. They will, however, still be separately identified in Table 5.
2. Update the mapping of cost centres to price groups to reflect the new cost centre structure that is being introduced by HESA for 2012-13. This change will only affect HESES.

18.   Further changes for HESES12/HEIFES12 may also be made, as we consider further the data required to calculate teaching funding for 2013-14 and beyond. We will notify institutions promptly of any such further changes.

Further information

19.   Questions about our data requirements in HESES11 and HEIFES11 should be sent to heses@hefce.ac.uk (for higher education institutions) or heifes@hefce.ac.uk (for further education colleges). Questions about changes to our teaching funding method for 2012-13, as proposed in HEFCE 2011/20, should be addressed to HEFCE institutional teams.

Yours sincerely

Sir Alan Langlands
Chief Executive

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