HE sector – Reductions in public funding for 2010/11

On 22 December 2009, Lord Mandelson, Secretary of State for Business, Innovation & Skills, wrote to the Higher Education Funding Council for England (HEFCE) with details of the HE sector’s funding for 2010/11.

In addition to the £180m efficiency savings announced in the 2009 Budget, the grant letter announced a further reduction of £135m in funding for HE.

The reason given for this further reduction is that the costs of funding student support during an economic downturn have been higher than expected.

HEFCE has been instructed to make this saving by reducing its capital budget by £84 million and its teaching budget by £51 million.

The HEFCE Board will meet on 28 January 2010 and 4 March 2010 to consider the implications of the grant letter and how it will pass these reductions onto the sector. These Board meetings are scheduled with a view to providing individual institutions with their recurrent grant letters on 17 March 2010 (some three weeks later than the usual publication date).

Until we receive our recurrent grant letter in March, we cannot be sure what the impact will be on our own institutional funding for next year.

We have already made provision in our financial forecasts for reductions in the ‘premium’ funding associated with Foundation Degrees and Price Group D postgraduate programmes, and for a reduction in our QR (Quality Research) funding, particularly the loss of the ‘safety-net’ component.

Our assumptions for next year have been prudent and we have no reason to believe, on the basis of the Secretary of State's letter, that we will be significantly adrift when we receive our recurrent grant letter from HEFCE.

However, we do not yet know how the factors that HEFCE will be taking into account when making individual institutional allocations will play out in practice. There is considerably greater uncertainty over our recurrent funding for next session than in previous years.

The Secretary of State’s letter also highlighted that there will be a £3,700 penalty for every student recruited in 2009-10 above the ‘permitted’ intake (adjusted for Additional Student Numbers). At the moment, we are still not clear what measure HEFCE will use to determine our ‘permitted’ intake so we do not know if we will incur any penalty.

The Secretary of State sought support from HEFCE to:

  • increase the number of two-year programmes offered by the sector (Foundation Degrees and fast-track degrees)
  • re-deploy funding, on a competitive basis, for institutions expanding or developing programmes to develop higher skills for the workforce
  •  concentrate research funding, especially in high cost scientific disciplines from 2010/11
  • encourage the sector to publish new performance measures (eg preparation for employment, opportunities for international experience and use of new technologies) to inform recruitment for 2011/12
  • widen participation, particularly in highly selective universities.

We are awaiting notification from HEFCE on how it will respond to these priorities.

Further updates will be provided as details of funding allocations are published.

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