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1 February 2011

Decisions on HEFCE funding for higher education 2012-13

The Higher Education Funding Council for England (HEFCE) today announces its funding decisions for higher education in England following the annual grant letter (Note 1) from the Department for Business Innovation and Skills (BIS) and subsequent decisions by the HEFCE Board. This announcement covers HEFCE funding for the academic year 2012-13 (Note 2).

The overall level of government support for teaching in universities and colleges is set to increase over the next few years as a result of higher tuition fee loans under the Government’s new finance arrangements for higher education. HEFCE’s grant will reduce accordingly, but our commitment to supporting high-cost and strategically important subjects, widening participation and smaller specialist institutions will be maintained.

HEFCE will invest in the interests of students and for wider public benefit. Our funding will support home and EU students in all years of study. Funding for students already in higher education will remain broadly as before. For new entrants, our funding will increasingly be focused on those costs incurred by universities and colleges which cannot be met entirely by tuition fees. We recognise the importance of postgraduate provision, and we are therefore providing additional funding for taught postgraduate students, who are not eligible for publicly funded tuition fee loans.

HEFCE is committed to ensuring a smooth transition to the new funding arrangements for higher education.

The total amount the HEFCE Board agreed for distribution for the 2012-13 academic year is £5,311 million. A breakdown is provided below.

Main funding elements

Funding for the 2012-13 academic year is distributed across the core higher education activities (Note 3):

  • £3,213 million for teaching.

    Funding for students who entered higher education before 2012-13 will continue in broadly the same way as for the current academic year. New funding arrangements for universities and colleges will begin for the new intake of students in 2012-13. HEFCE funding for teaching will start to decrease and universities and colleges will be more dependent on funding from tuition fees from publicly funded student loans, with no requirement for students to pay up-front.
  • £1,558 million for research.

    The ring-fenced settlement for science and research means that we will be able to maintain overall funding, in cash terms, until 2014-15. As previously announced, research activity assessed as 2* in the 2008 Research Assessment Exercise will no longer be counted in our quality-related research funding method and we will fund 3* and 4* research in a ratio of 1:3. HEFCE continues to be the single biggest funder of research in higher education institutions, and we will continue to sustain and strengthen the research base by allocating funding through the dual-support system.
  • £150 million for knowledge exchange for economic and social benefit.

    We support this activity through Higher Education Innovation Funding (HEIF). This has been maintained in cash terms.
  • £390 million in non-recurrent funds.

    This comprises £265 million in capital grants (for teaching and research), and £125 million in special funding for national programmes and facilities such as the Joint Information Systems Committee (JISC), university museums and galleries, and support for improving sustainability through the Revolving Green Fund. We plan to announce a new fund which will act as a catalyst to help manage the transition to the new funding arrangements and support new initiatives which will strengthen the economic impact of higher education.

Funding for teaching

Taking account of previous decisions on funding for 2012-13 and student data from institutions, the Board has made the following decisions:

  • HEFCE funding will support high-cost subjects. The rates of funding per full-time equivalent (FTE) student in high-cost subjects starting to study from 1 September 2012 will be £9,804 for price group A (medicine and dentistry) and £1,483 for price group B (science, engineering and technology). We will also continue to provide £23 million additional funding for the highest cost price group B subjects (Note 4). As previously agreed, for undergraduate provision, we will not allocate funding for students in price group C (subjects with a studio, laboratory or fieldwork element) or price group D (all other subjects).
  • As a first step for 2012-13, we will provide additional funding of £1,100 per FTE student for those starting postgraduate taught courses in 2012-13. This will apply to students in price groups A, B and C and is additional to any funding previously agreed for such students in price groups A and B. We will consult on continuing support for postgraduate taught students from 2013-14 in the second stage of our teaching funding review.
  • A 1% scaling factor applied to other elements of the teaching grant. This recognises the possibility of a reduction in HEFCE teaching funding in the financial year April 2013 to March 2014, affecting HEFCE funding to institutions in academic year August 2012 to July 2013. The sum required to cover the overlap period of April to July 2013 is in the region of £30 million across the sector as a whole.

A full breakdown of the elements of teaching funding is given in 'Funding for universities and colleges for 2012-13: Board decisions' (HEFCE Circular letter 03/2012).

Student number controls

We informed higher education institutions (HEIs) last week of their provisional student number control limits and the HEFCE Board has now agreed the distribution of places following the bidding process for the 20,000 ‘margin’. We expect to finalise the student number limits at the end of February on completion of the appeals process.

BIS continues to require HEFCE to play its part in the close control of student support costs. We will therefore adjust grants to HEIs at a rate of £3,800 per full-time undergraduate where there has been over-recruitment in 2011-12. The rate for over-recruitment in 2012-13 has not yet been announced, but universities and colleges should expect this to be at a level that represents a financial disincentive to over-recruit.

Sir Alan Langlands, HEFCE’s Chief Executive, said:

'HEFCE will continue to support a high-quality experience for students, world-leading research and progress on knowledge exchange. During a period of transition to new funding arrangements for higher education, we are confident that universities and colleges will continue to provide high standards of teaching and research which are respected around the world.

'We will invest on behalf of students and the public to improve the quality and diversity of provision, including support for smaller, specialist institutions. We will continue to support strategically important and vulnerable subjects, and to contribute to widening participation initiatives, so that all those with the potential to participate in higher education have the opportunity to do so.

'We welcome the Government’s recognition of the importance of postgraduate provision. As the grant letter requests, we will review participation levels for this group of students as part of our wider remit to monitor the impact of the reforms. In the meantime, we will provide additional funding for teaching postgraduate students who commence their studies from September 2012.

'The grant letter from BIS asks HEFCE to ensure a smooth transition to the new arrangements. We aim to strike the right balance between continuity and change. We will limit financial volatility for institutions, and keep administrative burden to a minimum. We will continue to respect institutional autonomy, and we remain strongly committed to the principles of opportunity, choice and excellence.'


  1. The grant letter from BIS was issued to HEFCE on 25 January. The grant letter from BIS provides funding in financial years. HEFCE allocates funding in academic years, starting on 1 August each year. The HEFCE budget for the 2012-13 academic year is lower than the 2012-13 financial year total quoted in the BIS grant letter, because 40 per cent of academic year 2012-13 is in financial year 2013-14.
  2. Further details are given in 'Funding for universities and colleges for 2012-13: Board decisions' (HEFCE Circular letter 03/2012).
  3. We will announce the allocation of grants for teaching, research and other activities to individual universities and colleges on 22 March.
  4. These subjects are physics, chemistry, chemical engineering, and minerals, metallurgy and materials engineering.
  5. We will announce the outcome of the allocation of student places under the core and margin process at the beginning of next month.
  6. General information about the new funding arrangements for teaching is available on the HEFCE web-site.