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HEFCE closed at the end of March 2018. The information on this website is historical and is no longer maintained.

Many of HEFCE's functions will be continued by the Office for Students, the new regulator of higher education in England, and Research England, the new council within UK Research and Innovation.

The HEFCE domain - - will continue to function until September 2018. At this point we will close the site entirely and all its information will only be available from the National Web Archive.


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Dear Vice-Chancellor or Principal

Higher Education Innovation Fund: Additional funding for knowledge exchange to deliver the Industrial Strategy

1. This letter describes how we are allocating an additional £40 million, provided by the Government for knowledge exchange (KE) through the Higher Education Innovation Fund (HEIF), to support delivery of the Industrial Strategy in 2017-18. This is as follows:

  1. £15 million is being allocated as a further one-off 10 per cent uplift to the main 2017-18 HEIF allocations announced in April 2017.
  2. In addition to the April allocations a further £25 million is being allocated through the operation of the established main HEIF formula method. Subject to spending review plans and outcomes, this is intended to continue in subsequent years.

2. Institutional allocations are given in Annex A (which also repeats institutional allocations of Connecting Capability Fund (CCF) formula funding, previously set out in 2017-18 grant tables but provided again to give a complete picture of KE funding in 2017-18).

3. As part of our monitoring activity this autumn, we will ask higher education institutions (HEIs) in receipt of HEIF 2017-18 allocations to provide us with additional information on of their use of HEIF (including the uplift set out in this letter), which will supplement the previously approved institutional strategies.


4. In recognition of the balanced funding principles set out in section 103(4) of the Higher Education and Research Act 2017, the Government has provided us with additional funding for HEIF, to support and incentivise high and improving performance in knowledge exchange. The £40 million must be used by HEIs to deliver the objectives of the Government’s Industrial Strategy as this is the reason for the balanced funding uplift.

5. We are allocating the sum in two elements. The first (£15 million) will apply for 2017-18 only, and the second (£25 million) is a recurrent baseline uplift (subject to spending review plans and outcomes).

6. We have allocated the first element using the method adopted for 2017-18 CCF formula funding: a 10 per cent addition to the institution’s previously announced main HEIF allocation. Institutional allocations are given in Annex A. In 2017-18 there will therefore be a total of 20 per cent (£30 million) available to institutions as a one-off allocation.

7. The second element (£25 million) of the balanced funding uplift is being allocated using the established HEIF method. The allocations are presented at Annex A. The HEIF method is summarised at Annex B, and was previously set out in ‘Higher Education Innovation Funding: Institutional five-year knowledge exchange strategies’ (HEFCE 2016/16). We applied the method to the total funding of £175 million now available through the main formula, including the £150 million previously announced. We have also made the following changes to the method in line with the increased level of funding:

  1. We have increased the top cap to allocations from £2,850,000 to £3,325,000.
  2. We have relaxed the annual modifier from +10 per cent change allowable year on year, to +30 per cent, for one year only.

All other elements of the formula remain the same, and are summarised at Annex B. For completeness Annex A includes allocations previously given in ‘Recurrent grants for 2017-18’ (HEFCE 2017/05).

8. In using all HEIF allocations, HEIs should take account of our policies, terms and conditions for KE funding, as set out in HEFCE 2016/16.

9. The Government has provided us with additional funding for HEIF to achieve specific objectives, as identified in its Industrial Strategy. We will therefore be asking all HEIs in receipt of HEIF formula allocations in 2017-18 to provide us with a plan for HEIF, with additional information related to the industrial strategy. This should build on the information presented in the institutional strategies submitted and approved in response to HEFCE 2016/16. This will also include showing that CCF formula allocations have been used to meet the objectives for strategic inter-institutional collaboration set out in ‘Higher Education Innovation Funding: Connecting Capability Fund’ (HEFCE 2017/03).

10. We will issue a template to collect the additional information as part of our monitoring cycle this autumn, which will be timed to enable HEIs to take account of further developments in the Government’s finalisation of its Industrial Strategy. HEIF allocations for 2018-19 onwards will be conditional on our approval of each institution’s plan for HEIF.

11. Institutions that are now in receipt of a HEIF allocation for 2017-18 but have not completed an institutional strategy will be contacted about this shortly by the Knowledge Exchange Policy team.

UK Research and Innovation: Research England funding

12. From 1 April 2018, HEFCE’s research and KE functions will transfer to Research England in UK Research and Innovation. This also applies to the funding set out in this letter as it is from the science and research budget. We will then provide information on the approach to be taken by Research England to allocating these HEIF funds from 2018-19 onwards.

Further information

13. If you have any queries about this funding, contact

Yours sincerely

Professor Madeleine Atkins

Chief Executive

Date: 20 July 2017

Ref: Circular letter 25/2017

To: Heads of HEFCE-funded higher education institutions

Of interest to those
responsible for:

Technology transfer, Research commercialisation, University-business links, Strategic planning, Regional economic development, Knowledge exchange

Enquiries should be directed to:

Hamish McAlpine, tel 0117 9317293, email  

Rachel Tyrrell, tel 0117 9317463, email