March 2006/12 (web only)
Core funding/operations
Report on outcomes

This report is for information only

Review of the teaching funding method

Outcomes of first cycle of consultation

This document sets out the decisions we have made following responses to the consultation announced in HEFCE 2005/41. It also summarises the responses we received to the consultation.

Executive summary (read on-line)

Executive summary

Purpose

1.    We are reviewing our funding method in order to ensure stability in funding in the short to medium term, while recognising the need for immediate change in some areas and the possibility of further change in the future. This document sets out the decisions made following responses to the consultation announced in HEFCE 2005/41, 'Review of the teaching funding method: consultation on changes to the method'.

2.    Annex A summarises the responses that we received to the consultation. An overview of decisions and next steps is also available.

Key points

3.    Many of the proposals received broad support from large elements of the sector. The following decisions are therefore broadly in line with the proposals in the consultation document:

1. To work with the sector to develop and implement a national framework for the costing of teaching based on the principles of the Transparent Approach to Costing (TRAC) methodology.

2. To agree that our price group weightings should remain unchanged in the short term, and in future to make use of robust TRAC data to inform both the price group weightings and the allocation of subjects to price groups.

3. To use the TRAC process to establish the full additional costs of widening participation and to enable institutions and HEFCE to better understand the broad range of factors associated with such additional costs.

4. To work with the sector to determine how a new system of allocations (replacing the existing premiums used in calculating teaching grant) might operate from 2008-09, and to make only minimal changes to the focus of these allocations for three years from their introduction in 2007-08.

5. To reiterate the Board's commitment to keep the funding of part-time provision under review in light of the introduction of variable fees for full-time undergraduate study.

4.    On other proposals, views were mixed and some respondents felt we should implement changes in a different way. We wish to explore these concerns further, to see how we might adapt our proposals to address them where possible. We have therefore decided:

1. Following further work and discussion with the sector, to make a final decision by December 2006 on increasing the fee assumption for full-time undergraduates in our calculation of teaching grant.

2. To continue to investigate ways to reduce the accountability burden on institutions arising from data returns, but to proceed with caution and to consult further with the sector on any moves towards funding solely on the basis of data from the Higher Education Statistics Agency and from the Learning and Skills Council's Individualised Learner Record (ILR).

3. That the earliest end-of-year data that we might consider as the sole basis for funding will be the 2008-09 HESA and ILR returns.

4. To encourage all higher education institutions in England to complete module information on the 2007-08 HESA student record, to enable us to take this information into account in the future distribution of funding.

5. To note the sector's preference for funding on the basis of credit completed rather than credit awarded.

5.    As planned, we will return to the sector with a further consultation, subsequent to decisions made at the end of 2006. This second consultation will cover the new funding method in more detail and in particular will focus on the move from premiums to allocations, the development of a national costing framework and how we will address the funding of students who only partially complete their studies.

Action required

6.    No action is required.