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March 2009/08
Core funding/operations
Allocation of funds

This report is for information

Recurrent grants for 2009-10

This document summarises our provisional allocations of recurrent funding to institutions for the academic year 2009-10. Final allocations are announced in HEFCE 2009/42.

To: Heads of HEFCE-funded higher education institutions
Heads of HEFCE-funded further education colleges
Heads of universities in Northern Ireland
Of interest to those responsible for: Finance, Planning
Reference: 2009/08
Publication date: March 2009
Enquiries to: HEFCE higher education policy advisers

Executive summary (read online)

Executive summary


1.   This document summarises our provisional allocations of recurrent funding to institutions for the academic year 2009-10.


2.   The overall 7,994 million represents a good settlement for higher education and provides 4 per cent additional funding compared to the funding announced for 2008-09.

3.   The unit of funding for teaching has increased by 2 per cent and its value has been maintained in real terms. Recurrent funding for research has increased by 7.7 per cent in cash terms (5.6 per cent in real terms).

4.   Funding is provided as a block grant which institutions can spend as they choose on teaching, research and related activities.

5.   There are variations in funding levels between institutions which arise for a variety of reasons, the results of the 2008 Research Assessment Exercise (RAE) being a significant factor. We are providing 24 million in moderation funding so no institution sees a reduction in cash terms compared with the equivalent unmoderated figure for 2008-09.

6.   There will be a growth in fully funded student numbers of 10,000, but these have already been committed. The Secretary of State for Innovation, Universities and Skills will review the availability of additional student numbers for 2010-11 later this year.

7.   We are allocating research funding selectively by reference to robust judgements of research quality. We are funding research of the highest quality wherever and in whatever discipline it is found.

8.   We are protecting the position of science subjects. In teaching, 25 million for very high cost laboratory-based subjects has become permanent as a recurrent targeted allocation from 2009-10. In research we are safeguarding the share of mainstream quality-related (QR) grant in science, engineering, medicine and mathematics. We are also providing transitional QR funding to help institutions manage the new funding levels with respect to different disciplines.

9.   Within the overall funding for teaching we are transferring 30 million from the funding currently related to improving retention to that for widening access. This will help to strengthen links between universities and schools.

10.   We are providing 1,154 million for capital funding for teaching and research. This figure has been boosted by 219 million in capital expenditure brought forward from later years to help combat the recession.

11.   We have reduced special funding from 411 million in 2008-09 to 316 million in 2009-10, representing a decline from 5.4 per cent to 4 per cent of total grant.

Key points

12.   The total HEFCE grant available for the 2009-10 academic year is 7,994 million. This represents an overall cash increase of 4 per cent compared with the equivalent figure for 2008 09. The total includes recurrent funding of 4,782 million for teaching (of which 143 million is for widening participation and 269 million for teaching enhancement and student success), 1,572 million for recurrent research and 134 million for business and community engagement. We are also providing some transitional allocations totalling 36 million to smooth changes in recurrent grants since last year. In addition, we are providing a further 1,154 million for earmarked capital grants and 316 million for special funding.

13.   In 2009-10 we will directly fund 130 higher education institutions and 124 further education colleges. The institutional allocations announced in this publication show an average 4.1 per cent increase in recurrent grant for the sector. We have provided a full uplift for inflation (at 2 per cent) to the main teaching grant allocation for each institution. Many institutions have gained additional funded student numbers. The total funding for widening participation and for teaching enhancement and student success is also being increased in line with inflation.

14.   Recurrent research funding has increased by 7.7 per cent, in keeping with the Government's commitment to enhance the research base through both sides of the dual-support system. The funding method for research has been developed to take account of the outcomes of the 2008 RAE.

15.   We are allocating a total of 1,154 million for earmarked capital grants. This includes 219 million which has been brought forward from 2010-11. The distribution of capital funding between institutions has been announced separately and is not included in this document (paragraph 97 provides further information).

16.   The allocations in this document are provisional: we will aim to finalise them in time for the funding agreements that are issued in July. Our grant letter from the Department for Innovation, Universities and Skills (DIUS) of 21 January 2009 did not confirm funding for the 2010-11 financial year. In order to announce funding for the 2009-10 academic year, which has a four-month overlap with the 2010-11 financial year, we have had to make assumptions about the funding we might expect to receive for 2010-11. These assumptions have been based on the information in our grant letter from DIUS of 18 January 2008. However if, before July 2009, we receive confirmation of our grant for 2010-11 and this differs significantly from the assumptions we have made, then we reserve the right to review all of our allocations for the 2009-10 academic year.

17.   On 29 October 2008, the Secretary of State wrote to the HEFCE Chair asking us to allocate no more than 10,000 additional (fully funded) student numbers for 2009-10. Our grant letter from the Secretary of State of 21 January 2009 provided further information on this and stated that 'any over-recruitment in the coming year could result in a transfer of HEFCE grant back to this Department in that or future years, in order to meet the consequent unanticipated student support costs'.

18.   Our allocations for 2009-10 make provision for growth in the sector that is consistent with the Government's plans. To help manage the risk of over-recruitment beyond the growth already planned and in the system, we asked institutions to review their planned recruitment for 2009-10 in order to avoid any further increase in full-time undergraduate and Postgraduate/Professional Graduate Certificate in Education (PGCE) entrants above the level of their actual admissions in 2008-09 plus any additional student numbers allocated to them for 2009-10 (HEFCE Circular letter 32/2008, 'Higher education finances for 2009-10 and 2010-11'). We expect institutions to recruit responsibly in 2009-10, but do not propose to introduce any new kind of funding agreement target this year. Nevertheless, we may wish to take further action if individual institutions, or the sector as a whole, significantly over-recruit in 2009-10, and if DIUS were to reduce HEFCE grant in order to meet its additional student support costs.


19.   The total recurrent funding for teaching that is available has increased by 2.5 per cent over the equivalent final allocation to the sector for 2008-09. This has allowed us to provide for 10,000 additional fully funded and over 7,000 employer co-funded full-time equivalent (FTE) student places, while providing an uplift for inflation to teaching grant. We have also provided an uplift for inflation for widening participation funding and for teaching enhancement and student success.

20.   The total of 4,782 million for teaching includes the following:

  1. 143 million to support widening participation for students from under-represented groups.
  2. 269 million to support teaching enhancement and student success.
  3. 64 million for additional funded places, mainly awarded following HEFCE Circular letter 05/2008, 'Allocation of funds for additional student numbers in 2009-10 and 2010-11'. This includes 47 million for fully funded places and 17 million for employer co-funded places.


21.   A total of 1,572 million is allocated for research. This is an increase of 7.7 per cent compared with the equivalent funding for 2008-09. Within this overall increase we have prioritised increases towards the mainstream QR allocations, although the budget for the charities element of QR has also increased slightly in real terms. The total is made up of the following elements:

  • 1,074 million for mainstream QR
  • 32 million for London weighting for mainstream QR
  • 203 million for the research degree programme supervision fund
  • 194 million for the charity support element
  • 63 million for the business research element
  • 6 million for national research libraries.

22.   The 2008 RAE took a different form to previous ones, the main difference being in the way quality ratings are reported. In previous RAEs, institutions received a single quality score for their research in a particular subject; for 2008, they received a profile showing the proportions of research activity in the subject that meet defined levels of quality. Our research funding has always been highly selective in being targeted at areas where there is evidence of the highest quality. However, the new quality profiles from the 2008 RAE enable us to target funding in a more fine-grained way, rewarding excellence wherever it is found.

23.   In addition to the recurrent research funding of 1,572 million, we are also providing 12 million as transitional QR funding for 2009-10 only. This is allocated to smooth some of the more significant changes in the rate of funding in the mainstream QR allocation for certain subject areas.

Higher Education Innovation Fund

24.   We are providing 134 million for the Higher Education Innovation Fund. The distribution of this funding between institutions was previously announced in 'Higher Education Innovation Fund round four outcomes' (HEFCE 2008/34).

Moderation of teaching and research

25.   We have continued our policy of phasing in changes by moderating the total allocations of teaching and research grant. In general, each institution's recurrent grant for teaching and research will be maintained in cash terms compared with the equivalent, unmoderated figure for 2008-09, but we will not provide moderation where it would amount to less than 100,000. The total funding for moderation in this March announcement is 24 million, but this figure may change as a result of subsequent changes to grant for individual institutions.

Non-recurrent funding

26.   Non-recurrent funding comprises special funding and earmarked capital. We are allocating a total of 1,154 million for earmarked capital grants. This includes 219 million which has been brought forward from 2010-11. The total of 316 million allocated as special funding has decreased from 411 million last year, representing a decline from 5.4 per cent to 4 per cent of total grant.

Action required

27.   No action is required in response to this document.