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Executive summary

Purpose

1. This document provides both a quantitative and qualitative analysis of the responses we received on the ‘Financial memorandum: Conditions of grant payments to institutions: Consultation on arrangements for 2014-15 onwards’ (HEFCE 2013/21).  It also sets out how we have taken those responses into account in finalising the memorandum which is now entitled ‘Memorandum of assurance and accountability’.

Key points

2. There were 98 responses to, and a large measure of support for, the proposals set out in the consultation document. In a number of cases that support was qualified, and a range of comments provided.

3. The extent of the support from respondents reflects the value of the dialogue and engagement we had with a range of bodies in drafting the consultation document.  

4. We have set out an analysis of the responses under each of the consultation questions, along with how those responses have informed the final document and the decisions made.

5.The main changes and decisions taken in light of the consultation are as follows.

  1. The name of the document will be the Memorandum of assurance and accountability, as this more clearly reflects its contents.
  2. The future arrangements in terms of financial commitments will be as follows. 
    1. There will be one threshold, with higher education institutions required to notify HEFCE of any intention to exceed that threshold, and to secure our agreement to a higher threshold.
    2. The threshold will be a multiple of earnings before interest, taxation, depreciation and amortisation, and will include all financial commitments with no distinction based on timescales for repayment.
    3. Financial commitments will be those on the balance sheet, recognising that these will increase from 2015-16 with the adoption of Financial Reporting Standard 102. All such financial commitments will be included, whatever their length or repayment terms.
    4. HEFCE will assess whether the proposed level of financial commitment increases the risk to the public or the collective student interest; if so, the institution will be required to take action to reduce that risk.
    5. The information requested through the annual accountability returns will include details of all financial commitments, whether accounted for on or off the balance sheet. 
  3. We have taken account of the concerns about how entries to the register of higher education providers would be made, specifically that there would be prior discussions with institutions.
  4. The requirement to subscribe to Jisc for the three years from 1 August 2014 to 31 July 2017 is confirmed.
  5. The Audit Code of Practice is largely as set out in the consultation, but we have included a number of comments to improve clarity.
  6. The definition of the second trigger for repayment of Exchequer interest will be based on the total of HEFCE grant and Student Loans Company payments.
  7. The number and subject of the annexes to the memorandum of assurance and accountability will remain as set out in the consultation document. We have included most of the suggested textual changes.

Action required

6. This document is for information only. 

Date: 2 May 2014

Ref: HEFCE 2014/09

To: Heads of HEFCE-funded further education colleges, Heads of HEFCE-funded higher education institutions
Key stakeholders with an interest or involvement in the regulation of higher education

Of interest to those
responsible for:

Vice-chancellors and principals, Governing bodies, Senior management, Finance, Audit, Providers of capital, Student representatives, Other beneficiaries of regulatory assurance 

Enquiries should be directed to:

Ian Lewis, e-mail i.lewis@hefce.ac.uk