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Dear Vice-Chancellor or Principal

Non-mainstream allocations to support very high-cost STEM subjects: Recalculation of allocations using most recent data

1. This letter outlines arrangements for the additional funding of very high-cost science, technology, engineering and mathematics (STEM) subjects in 2013-14 and 2014-15, based on Higher Education Statistics Agency (HESA) student record data for 2010-11. No action is required at this stage.

2. Since 2007 HEFCE has provided funding to help secure the provision of four very high-cost STEM subjects (see Note 1):

  • chemistry
  • physics
  • chemical engineering
  • mineral, metallurgy and materials engineering.

3. In our new funding method from 2013-14, and in the context of our new policy approach to strategically important and vulnerable subjects, we will continue to provide additional, non-mainstream funding allocations for these subjects in recognition of their high delivery costs. These allocations will supplement the standard HEFCE high-cost funding for subjects in price group B.

4. Allocations for these subjects under this initiative have to date been based on the HESA student record data for 2005-06. We need to ensure that our funding more accurately reflects provision in these areas, and so we will be recalculating our funding based on more recent HESA data.

5. We will use HESA data from 2010-11 to calculate allocations under this initiative for 2013-14 and 2014-15. This covers the remainder of the spending review period. We are actively reviewing the impact of the fee and funding reforms on STEM, and during this period we will consider the future scope of this funding stream - in particular, looking at evidence to see whether other subject areas should in future be included in the allocation.

6. Allocations will be calculated using 2010-11 data because we believe that the more recent 2011-12 data may represent an untypical year in terms of recruitment, following the introduction of the new fee and funding regime from 2012-13.

7. Allocations based on the 2010-11 HESA data will be announced as part of the HEFCE grant announcement in March 2013.  

Method of allocation

8. In distributing this funding we will continue with the following principles, established at the outset of this funding initiative:

  1. Funding will be targeted at institutions which clearly offer significant, focused taught activity in the high-cost subject areas concerned.
  2. Funding will not be allocated on the basis of research activity, including postgraduate research student numbers.
  3. Allocations will be made on the basis of a formula informed by existing data sources, rather than a bidding exercise.
  4. Allocations for both years (2013-14 and 2014-15) will be calculated simultaneously on the basis of 2010-11 HESA data, and will not be subject to annual recalculation. However, funding will be reviewed to reflect institutions’ compliance with any associated terms and conditions, and to reflect any changes to the budget following the grant letters to HEFCE from the Department for Business, Innovation and Skills.

9. These principles are intended to ensure that the funding is targeted at those institutions where students are aiming for taught qualifications in the relevant subjects and are being taught in associated departments. They also aim to ensure that allocations are fair and that the accountability burden is kept to a minimum.

10. We will use HESA student record data for 2010-11 to inform the allocation of this funding. We will use a combination of the Joint Academic Coding System (JACS) code relating to a student’s qualification aim and the academic cost centre in which the student activity is reported. We have limited the full-time equivalent (FTE) student numbers that are initially counted for funding purposes to those students reported in the relevant subject cost centres who also have a relevant JACS code for the subject of their qualification aim.

11. As a result, no activity outside the four cost centres will count, and only activity undertaken by students who have a relevant JACS code within the four cost centres will be included. Further details of the allocation method are provided in Annex A.

12. We believe that this approach is the best means for identifying activity that is clearly focused on the four subject areas, based on the data available. Nevertheless, we acknowledge that there may be cases where this method might not capture eligible provision. For example, it would exclude students aiming for a qualification in chemical engineering who might be reported in the general engineering cost centre. Institutions which feel they have appropriate activity that has not been captured by our method can submit an appeal.

13. We have set a threshold criterion for the additional funding. Institutions with fewer than 30 FTEs in a cost centre will not receive a share of the funding for that cost centre.

14. Because of differences between the HESA student record and the Data Service’s individualised learner record (ILR) which further education colleges (FECs) complete, we cannot take the same formulaic approach across the two sectors. We have therefore not included FECs in our initial allocations of this funding, but they are eligible in principle if they can demonstrate that they meet the threshold criterion. Paragraph 18 sets out how to submit a case for funding.

Condition of grant

15. This additional funding is conditional on institutions continuing to maintain taught programmes in the very high-cost disciplines that this funding aims to sustain. Institutions that discontinue or substantially reduce their provision in any of these subjects during the period of this initiative (2013-14 and 2014-15, plus any period of extension beyond this) will lose their allocation of this funding and be required to repay all funding received during this new period of the initiative.

16. Institutions in receipt of this funding will be required to submit a short qualitative monitoring report as part of their annual monitoring statement. This will complement our monitoring of activity in these subjects through the HESA record. The monitoring statement should include details of the programmes offered in the four subject areas during the year, and the new entrants and total numbers of home and EU students for each.

Finalising allocations

17. We are continuing with the same method we have used previously for distributing this funding, which we believe is the most robust method given the data at our disposal. We fully accept that it might not capture all provision in these subject areas.

18. Institutions that believe they fulfil the criteria for this funding in any of the four subject areas but which do not get an allocation in the March 2013 grant announcement will have the opportunity to submit a case for funding. Details will be confirmed in the March 2013 grant letter, but submissions would need to include:

  1. Details of the provision concerned, including programme titles, content and resourcing in terms of staff, capital and financing. This might include any relevant current course or marketing material for the programmes.
  2. FTE student numbers involved, separated by mode and level. Institutions may not make submissions relating to a particular cost centre unless they can demonstrate from the 2010-11 HESA or ILR student record that they have at least 30 HEFCE-fundable FTE students in that cost centre.
  3. Details of how we can unambiguously identify the activity of these students on the 2010-11 HESA student record or the ILR.
  4. Confirmation that the provision is HEFCE-fundable – see Annex K of both ‘HEIFES12: Higher Education in Further Education: Students Survey 2012-13’ (HEFCE 2012/24) and ‘HESES12: Higher Education Students Early Statistics Survey 2012-13’ (HEFCE 2012/25).
  5. The relationship between the activity for which the institution is seeking funding, and the four subject areas that we are supporting. This may include structural arrangements at the institution, such as staffing within academic departments.

19. All submissions will be considered by the Council and our decisions reviewed by a senior independent adviser from within the sector. Decisions on submissions will be announced later in 2013 when we re-issue the recurrent grant tables.

20. We are supporting these four subject areas because our evidence demonstrates they are very high-cost, even when compared with other laboratory-based science and engineering disciplines. In making decisions on institutions’ submissions, we aim to ensure that this funding remains clearly targeted on the four subject areas concerned, and is not extended to other areas.

Yours sincerely

Sir Alan Langlands

Chief Executive



1. In each of the years 2007-08, 2008-09, 2009-10 and 2010-11 we provided £25 million for this purpose. In each of the years 2011-12 and 2012-13 we have provided £23 million. For 2013-14 we expect to provide approximately £23 million at 2012-13 prices, but this will be subject to confirmation of our budget.

Date: 21 January 2013

Ref: Circular letter 02/2013

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

Of interest to those
responsible for:

Student data, Planning, Finance

Enquiries should be directed to:

Lis Edwards, tel 0117 931 7222, e-mail