CEO Blog: The much anticipated grant letter - a small success but tough hand dealt to HEFCE

11 Feb 2014

The government needs to see higher education as a long term investment that helps the UK to grow, not as a cost to be constantly cut.

It’s not often that a 10% cut in funding feels like a success. After prolonged speculation that funding to support disadvantaged students was going to be slashed or abolished altogether from HEFCE’s budget, the confirmation in the grant letter that HEFCE should continue its (so far excellent) efforts to support widening participation is a welcome relief. However, despite the restated commitment from the government to improve access to higher education, it has dealt HEFCE a very tough hand.

The Access for Learning Fund, previously administered by institutions, is to be merged into the current Student Opportunity Allocation, but without its own stream of funding (£37m in last year’s grant letter). HEFCE is seeing a cut of around £125m for recurrent teaching funding, but has been asked to manage this while keeping in mind the key priorities of: high cost subjects, STEM, widening participation and ‘small and specialist’ institutions. Essentially, it is being asked to do at least the same, but for less. This is, of course, impossible. Something will have to give, and HEFCE now has the extremely difficult task of working out how to balance, for example, the needs of institutions teaching STEM with the needs of the poorest students at universities (notwithstanding the fact that these two groups may well overlap).

HEFCE has a reputation for successful navigation of tricky waters. It will take all of its requisite skills and experience to keep everyone on board this time. More than ever it needs to work with OFFA and collaboratively with universities to ensure that the valuable gains in widening access and participation over the last decade are not lost.

There is still much to do to expand the opportunities that higher education brings to students from a wide range of backgrounds. This cut in funding will surely have an impact on this and so the challenge now is to reduce the impact as much as possible. The grant letter confirms investment from 2015-16 of £185m over four years to increase the unit of funding for high quality STEM provision. Is this something HEFCE will bear in mind when considering how to manage the reductions announced this year?

In a more positive – and let’s face it, wholly expected – development, the ring-fence for science and research investment has been maintained by the Government. This is in acknowledgment of a long-standing commitment to invest in research. Research capital has received a boost in funding, as has teaching capital, with the indicative figures for both in 2015-16 showing another increase. As it is, the investment is a reduction in real terms as inflation chips away at the value of the recurrent funding for research. However none of this resolves the crucial question as to how translational research which is just as important to economic growth, will be funded in the future.

As the general election approaches it will be interesting to see how the political parties propose to balance these competing commitments when faced with the pressure to reduce funding even further.

Follow Pam on Twitter @millionplusCEO