Breakdown of the cash

March 6, 1998

The Higher Education Funding Council for England has allocated Pounds 3,867million to institutions this year - representing a 2.7 per cent increase of public money in cash terms but a real-terms reduction of just under 1 per cent, taking into account changes in volume.

This year's allocations are based on a new funding methodology for teaching. Shifts in funding caused by the 1996 research assessment exercise are still filtering through.

They also reflect the government's decision to charge tuition fees. The council has an extra Pounds 125 million to distribute as a result. Tuition fees will no longer be charged at varying rates for different subjects, so the funding council has had to compensate some institutions for this, through the grant.

Hefce is also providing a supplement to cover the collection of fees, bad debt and other administration connected with the changes.

This rules out direct comparisons with last year. HEFCE has instead decided to show comparisons in terms of grant and fees together. It has also done this in calculating safety net money.


The maximum number of home or EU students who receive local education authority awards or are, in principle, eligible for means-tested support for these awards. The distinction is made this year because wealthier students will no longer have their fees paid by local authorities although they remain eligible for maintenance loans.

MASNs cover higher education students at institutions funded by Hefce and the Teacher Training Agency. They do not include about 8,500 extra places available this year under a bidding system which will be allocated later in the month.


The fine imposed for recruiting below or above MASN. Fewer institutions have been fined this year because Hefce has relaxed the rules to allow universities and colleges to vire their allocated places between subjects and between part-time and full-time students.


Hefce's new funding method for teaching aims to fund similar activities at similar rates, with consistent grounds for any variation. It also allows institutions to bid for extra student numbers.

Of the Pounds 2,694 million for teaching this year, Pounds 198 million is to compensate for the loss of different fee levels, Pounds 3 million is for restructuring following changes to initial teacher training and Pounds 9 million is for adjustment to the new method.

It also includes Pounds 26 million for extra places allocated through bids.

Hefce now calculates a standard level of funding for teaching at each institution, based on its type of students and covering both grant and tuition fees. Students are weighted according to four price groups reflecting the cost of different subjects, with extra weighting if they are part-time, mature entrants or on long courses. Other weightings reflect extra costs of provision in London or specialist institutions and pension scheme differences.

For each institution Hefce compares the calculated average level of funding with the actual level of Hefce grant plus student fees. Where the difference is more than plus or minus 5 per cent it adjusts the grant or student numbers so they move within that figure over a certain period.


last September the government announced that medical and dental students from year five and all student nurses, midwives and others in professions allied to medicine will have their tuition fees paid by the Department of Health. Negotiations are still taking place. Once complete, Hefce will reduce grants to reflect the transfers.


Hefce has set aside Pounds 6.5 million of the Pounds 829.5 million research budget towards Pounds 8 million of project funding for arts and humanities.

Pounds 803 million will be distributed according to quality as assessed by the 1996 RAE. It includes Pounds 3.5 million for research into teaching and Pounds 64 million for postgraduate students previously funded through the teaching grant. In 1998-99, second and third-year postgraduates will be funded only in departments which rated above 3b in the RAE.

It also includes Pounds 25 million London weighting. Pounds 20 million will go for generic research which encourages collaboration with industry, distributed in proportion to the sums received from industry.


Hefce has continued its policy of smoothing funding differences caused by the RAE by moderating allocations, so that no institution receives a cut of more than 1 per cent in real terms or a 1.75 per cent increase in cash terms. In 1997-98, this money, amounting to Pounds 7 million, was taken away from institutions which had done particularly well out of research. This year it has been reduced to Pounds 4 million and comes from the funding council's Pounds 10 million contingency fund.

Special funding

Previously called non-formula funding, special funding this year amounts to Pounds 334 million. It includes Pounds 16.3 million to promote collaborative research projects. The rest covers areas such as technology, libraries, access and continuing education. Allocations already finalised amount to Pounds 48 million.

Regulated fee income

ThE total amount of publicly supported fees institutions receive, including contributions from students entitled to a loan and/or to LEA-supported tuition fees. It does not include fees from postgraduates or part-time students.

Total grant

This includes money for capital projects, which was previously top-sliced from the overall budget.

Total resource

This is the first time Hefce has measured the total resource. It includes the total grant plus fee income from students eligible for public support.

Register to continue

Why register?

  • Registration is free and only takes a moment
  • Once registered, you can read 3 articles a month
  • Sign up for our newsletter
Please Login or Register to read this article.


Featured jobs