Centres of teaching excellence could get less than half of the £2.5 million promised to each in the higher education white paper.
In a consultation paper, the Higher Education Funding Council for England says that plans to give each of 70 centres £500,000 for five years could "unbalance" the strategic direction of smaller institutions. It could also lead to "the creation of artificial collaborations to achieve threshold size".
Hefce would rather spread the funding more thinly, giving smaller centres £200,000 each a year for five years, but would fund more than 70 in total. The largest centres would still be able to bid for a maximum £500,000 a year.
The consultation paper says: "Our preference is to use a funding allocation model that allows institutions to bid at a level appropriate to their size and level of activity. The level of funding should have a significant impact but should not unbalance an institution's strategic direction."
Lecturers' union Natfhe, which opposes the plans for concentrating money on a handful of "star" teachers and departments instead of addressing across-the-board pay shortfalls, welcomed Hefce's backtracking. National official Liz Allen said: "Hefce has done its best to ameliorate the negative proposals, but its hands have been tied by government."
The consultation paper confirms that the centres, designed to reward good teachers with higher salaries and to develop good practice, will now be known officially as centres for excellence in teaching and learning (Cetls), with funding starting in 2005. On top of their annual recurrent funding, each centre will be able to bid for capital funding of between £800,000 and £2 million, according to their business plans.
In another departure from the white paper, theme-based regional consortia of universities, colleges or departments will be able to bid to become Cetls. The original plan was that the scheme should be open only to individual departments. Bidders will define "distinctive practice across a spectrum of learning and teaching activities", such as a specific form of teaching (for example, lecturing); a goal (such as employability); or a problem area (such as plagiarism).
Bids will be limited depending on the size of the institution. Institutions with fewer than 5,000 full-time students will be allowed only one bid, those with between 5,000 and 15,000, two bids and those with more than 15,000, three bids. Each institution will be able to make one more bid in collaboration with other institutions.
Bids will be peer-assessed by a sub-group of the Quality Assurance Learning and Teaching Committee. Bidders will have to produce a business model and demonstrate excellent teaching practice through external examiners' reports and Quality Assurance Agency inspections.
The consultation will end on October 24.