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HEFCE will allocate £5.3 billion to 129 universities and higher education colleges and 186 directly funded further education colleges for the academic year 2012-13 (note 1).

This funding is allocated across the following key areas and activities:

• £3.2 billion for teaching
• £1.6 billion for research (note 2)
• £150 million for knowledge exchange (note 3)
• £265 million in capital grants
• £125 million in special funding.

Further details are given in 'Recurrent grants and student number controls for 2012-13' (HEFCE 2012/08).

HEFCE’s priorities for funding

• HEFCE funding will be invested to ensure a smooth transition to the new financial arrangements for higher education, maintaining excellence and diversity in learning and teaching for existing and future students and our commitment to world-class research and knowledge exchange.
• Teaching funding reflects the introduction of higher tuition fees for students entering higher education from September 2012 under the Government’s new financial arrangements. HEFCE will increasingly invest on behalf of students to meet the costs incurred by universities which cannot be covered by tuition fees alone: supporting widening participation and student retention, high-cost subjects, small specialist institutions, and strategically important and vulnerable subjects. Funding for students already in higher education will continue broadly as before.
• Science and research funding is maintained in cash terms. HEFCE will fund research selectively, focusing on world-leading and internationally excellent activity. Support for institutions undertaking research funded by charities, or business and industry, will also be maintained at current levels.
• Support for postgraduate students: an additional £39 million will be provided in support of students undertaking postgraduate taught programmes from 2012-13. Support for postgraduate research students through the research degree programme supervision fund will increase from £205 million to £240 million.
• Knowledge exchange between business and universities continues to make a significant contribution to economic recovery and growth. HEFCE’s funding for this activity through Higher Education Innovation Funding (HEIF) is particularly important during challenging financial times. HEIF has been maintained in cash terms, and will focus on the best-performing universities.
• HEFCE’s capital and special funding will support national programmes and facilities such as the Joint Information Systems Committee (JISC) and other national agencies, high-performance computing, environmental sustainability initiatives including the Revolving Green Fund, and museums and galleries.
• A new catalyst fund will drive excellence and improvement by funding initiatives that can transform ways of working in higher education and, where necessary, by supporting universities and colleges to manage the transition to the new funding arrangements.

The overall level of government support for higher education is forecast to increase through the combination of direct government grant funding and increased publicly funded student loans, which are being introduced as part of the new finance arrangements.

Student numbers

Institutions have been informed of their student number limits for 2012-13. The new limits reflect the policy of freeing up places for students with A-level grades of AAB+ or equivalent from the student number control and the redistribution of 20,000 places through the core and margin exercise. These government initiatives are intended to create greater choice, dynamism and competition in the higher education sector.

As a result of HEFCE’s consultation with the sector, the student number control policy for 2012-13 protects student numbers in strategically important and vulnerable subjects and in some specialist institutions. We have retained a 20 per cent minimum threshold student number control, to ensure that institutions with a high proportion of AAB+ students are able to meet their commitments to fair access (note 4).

HEFCE will continue to play its part in controlling student support costs, where necessary adjusting grants to institutions that over-recruit (note 5).

Sir Alan Langlands, Chief Executive of HEFCE, said:

'As a higher proportion of funding flows from publicly funded tuition fee loans, HEFCE will increasingly invest on behalf of students, supporting excellence and diversity in learning and teaching, and ensuring that people with the potential to benefit from participation in higher education have the opportunity to do so.

'Higher education changes lives. It is vital that all students – those already in higher education, and those embarking on their studies from September 2012 – benefit from high-quality learning and teaching. Our teaching funding is therefore directed towards activities that enrich the student experience and enhance higher education’s contribution to society.

'HEFCE's research funding will continue to play a crucial part in maintaining the strength and dynamism of the research base, supporting 'blue skies' research and encouraging programmes that impact positively on economic growth and social well-being. Funding for innovation and knowledge exchange will continue to drive economic development. Our capital and special funding supports key activities and partnerships, including JISC, which is vital to modern teaching and research, our long-term commitment to university-based museums and galleries, and continued funding for projects that improve environmental sustainability.

'HEFCE remains committed to promoting the creation, dissemination and application of knowledge, supporting successive generations of students, the wider academic community and the positive contribution that higher education makes to the economy and society.'

Notes

1. The Department for Business, Innovation and Skills (BIS) grant letter to HEFCE of 25 January 2012 sets out the total HEFCE grant for financial year (April to March) 2012-13 as £5.8 billion; plus additional ring-fenced allocations of £80 million and tuition fee loans (via BIS) of £3.6 billion. This gives a combined total of £9.5 billion for financial year 2012-13 and represents an increase of £200 million on the £9.3 billion for 2011-12. Funding allocated by HEFCE for the academic year (August to July) 2012-13 is £5.3 billion.
2. The BIS grant letter to HEFCE of 25 January 2012 confirms recurrent resources for research, and this enables us to maintain funding to the end of the spending review period (2014-15). As previously announced and in line with government guidance, HEFCE will no longer count activity rated 2* in the 2008 Research Assessment Exercise (RAE) in allocating this grant, and will take into account world-leading and internationally excellent (4* and 3*) research only, with weightings of 3:1. The remaining £35 million associated with 2* activity has been reallocated through the research degree programme (RDP) supervision fund following consultation with the sector: see ‘Consultation on allocation method for postgraduate research funding from 2012-13' (HEFCE 2011/09).
3. Following confirmation of funding levels in the grant letter from BIS on 25 January 2012, funding for knowledge exchange through HEIF is maintained in cash terms (at £150 million) during each year of the spending review period to 2014-15. The distribution of this funding was confirmed in 'Higher Education Innovation Funding 2011-12 to 2014-15: Policy, final allocations and request for institutional strategies' (HEFCE 2011/16).
4. In June 2011, HEFCE published the first stage of our consultation on proposals for implementing changes to funding methods and student numbers in 2012-13: see 'Teaching funding and student number controls: Consultation on changes to be implemented in 2012-13' (HEFCE 2011/20). The responses we received and the decisions subsequently made by HEFCE's Board are described in 'Teaching funding and student number controls from 2012-13: summary of responses to consultation and decisions made' (HEFCE Circular letter 26/2011). On 29 February 2012 HEFCE published the second phase of its consultation: see 'Student number controls and teaching funding: consultation on changes for 2013-14 and beyond' (HEFCE 2012/04).
5. The method for calculating student number controls for 2012-13 is set out in letters to institutions on 20 January 2012. BIS has asked HEFCE to make grant adjustments at a rate of £3,800 per full-time undergraduate for over-recruitment in 2011-12, and we will also be making adjustments to grants for institutions that over-recruited in earlier years and did not sufficiently offset that in 2011-12. The rate for over-recruitment in 2012-13 has not yet been confirmed.
6. A summary of 2012-13 grant tables is available.

   Summary of 2012-13 grant tables

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