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HEFCE statement following the Secretary of State's letter of 6 May

The HEFCE Board at its meeting on 7 May considered the implications for universities and colleges of the Secretary of State’s letter of 6 May.

The Board appreciated the early notice of changes to funding for 2010-11 and welcomed:

  • the strong commitment to the autonomy of institutions
  • the support for the principle of block grant
  • the emphasis on protecting and enhancing the quality of teaching and research
  • the continued recognition of the importance of the dual support system for research funding.

The Board agreed to examine in more detail at its next meeting the issues raised by the Secretary of State in paragraphs 9 to 12 of his letter, including looking critically at the funding which HEFCE provides for bodies that do not directly deliver teaching and research. We also look forward to working with the Secretary of State on the Government's proposed framework for higher education.

The Board noted that growth in additional student numbers (ASNs) for 2010-11 is confirmed at 10,000. Around 4,000 of the ASNs have already been committed, so there are a further 6,000 ASNs still to allocate. The Board will review the priorities for allocating these ASNs by the end of September 2009.

The Board also noted that efficiency savings of £180 million were required to be delivered by higher education as part of the additional efficiencies required in 2010-11 as set out in the 2008 Pre-Budget Report.

When we announced the provisional funding allocations for 2009-10 in March we stated that if, before July 2009, we received confirmation of our grant for 2010-11 and this differed significantly from the assumptions we had made, then we reserved the right to review all of our allocations for the 2009-10 academic year. This is because of the four month overlap of the 2010-11 financial year and the 2009-10 academic year (April to July 2010).

Implications for 2009-10

In light of the Secretary of State's letter and his request that the efficiency savings should be managed by institutions in a way which protects the quality of teaching and research, the Board has concluded that it is necessary to review the allocations for the 2009-10 academic year.

  • The Board agreed that, as a contribution to the overall efficiency saving of £180 million required in the 2010-11 financial year, a £65 million saving would be applied to teaching grant in the 2009-10 academic year. This represents less than 1.4 per cent of the total teaching budget of £4,782 million announced in March.
  • Research allocations will be unaffected in 2009-10.
  • The £65 million saving is less than would be required to reflect fully the changes in the funding allocations because we have moderated the amounts between years.
  • The final allocations to institutions for 2009-10 will be agreed at the Board meeting on 2 July and announced following the meeting as part of institutions' funding agreements.

Implications for 2010-11

The Secretary of State's letter made it clear that the efficiency savings for 2010-11 should be spread across the whole range of recurrent funding. This will be reflected in our funding decisions for the 2010-11 academic year.

The Board has provisionally agreed that £16 million of efficiency savings will be sought from the quality-related (QR) element of research funding in 2010-11.

Decisions about funding for 2010-11 will be confirmed in the usual way once the grant letter for that year has been received.