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Dear Vice-Chancellor or Principal

Knowledge exchange: Formula funding 2015-16

1. This letter is to inform you of funding allocations to higher education institutions (HEIs) for knowledge exchange in 2015-16 through Higher Education Innovation Funding (HEIF).  Allocations to individual institutions will be confirmed in Annex B.  The action required of institutions receiving a HEIF allocation is set out in paragraphs 7 to 10.


2. In May 2011 we published ‘Higher Education Innovation Funding 2011-12 to 2014-15: Policy, final allocations and request for institutional strategies’ (HEFCE 2011/16), requesting institutional strategies for knowledge exchange (KE) and the use of HEIF. This included details of the method that would be used for making HEIF allocations. The 2015-16 allocation method is unchanged, and is summarised at Annex A.

3. In 2012, HEFCE’s Board agreed a strategy for HEFCE’s role in supporting higher education’s contribution to growth. As part of this the Board agreed a programme of investment, including a supplement to HEIF of £10 million for both 2013-14 and 2014-15, to enable existing KE strategies to be enhanced where there was evidence that the current cap on funding was a constraint to institutions supporting further economic growth.  The £10 million was split between the highest-performing HEIs, based on their shares of qualifying income (calculated according to the main HEIF allocation method set out in HEFCE 2011/16).  Individual institutions were notified of these additional allocations in their grant letters, and details were published on the HEFCE website (see ‘Knowledge Exchange funding: Additional allocations 2012 to 2015’).

Allocations for 2015-16

4. The HEFCE Board agreed in February 2015 that £150 million should be allocated for the main KE formula method for HEIF for 2015-16, and £10 million supplemental funding for the top performing institutions (‘top cap’ funding). Reflecting a request in the Government’s annual grant letter to HEFCE, the Board agreed in March 2015 to continue into 2015-16 the methods used from 2011 to 2015 for allocating main HEIF allocations and additional awards for institutions at the cap. 

5. Since HEIF allocations were fixed during the period from 2011 to 2015, HEIs have not been rewarded for improved performance in the last years. We have addressed this issue of dynamism by using up-to-date data to calculate the 2015-16 allocations. 

6. Annex B lists HEIF 2015-16 allocations to institutions. These have been calculated using the methods described at Annex A, and based on the last three years of Higher Education Statistics Agency data – for 2011-12, 2012-13 and 2013-14 – weighted at 1:2:7 respectively.

Action required

7. All HEIs receiving a HEIF allocation in 2015-16 will need to provide us with the following information by 1700 on Tuesday 26 May, to be submitted by email to KE‑HEIF2015‑

  1. For HEIs with a main 2011-15 HEIF allocation: either confirmation that their strategy submitted in 2011 will continue to guide the use of their 2015-16 allocation, or amendments to their strategy which will apply in this extra year.  
  2. For HEIs with an additional top cap allocation: either confirmation that these funds for 2015-16 will be used in line with plans submitted to us for the 2013-14 and 2014-15 additional allocations, or amendments to these previous plans.
  3. For HEIs that have an allocation in 2015-16 but did not receive one in 2011-15: submission of a one-year KE strategy.

8. Allocations are conditional on provision of the information set out in paragraph 7.  For the moment HEIs will not need to provide additional data beyond this. Information provided will be assessed internally in HEFCE to check that HEIs have in place a sound strategic approach to KE, and have provided us with assurance that their management of KE is robust and that HEIF will be spent in line with the overall objectives of the programme.  We will confirm receipt of submissions, but will contact HEIs further only if there is a query about the information they submit.

9. HEIs that have not previously received an allocation should take account of the guidance previously provided in HEFCE 2011/16. HEFCE colleagues will send an updated form to HEIs (via the Vice-Chancellors office) to be completed and submitted to HEFCE as set out in paragraph 7.  HEIs should note that the length of the strategy should be proportionate to the amount of the allocation.  

10. We will collect information on the use of allocations in our annual monitoring for autumn 2016.  We will provide further information on annual monitoring in due course.

Yours sincerely

Professor Madeleine Atkins

Date: 26 March 2015

Ref: Circular letter 05/2015

To: Heads of HEFCE-funded higher education institutions

Of interest to those
responsible for:

Knowledge exchange funding, finance and planning