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HEFCE funding of nearly 6 billion provides stability to universities and colleges

Higher Education Funding Council for England press release, March 4, 2004

HEFCE announced today that it will distribute a 9 per cent cash increase in total grants, offering stability to universities and colleges for 2004-05. This builds on an increase of almost 8 per cent announced last year.

HEFCE will distribute 5,993 million in 2004-05, an increase of 9.3 per cent compared with 2003-04 (Note 1). Funding for teaching has increased by 5.6 per cent (just over 3 per cent in real terms), allowing provision for an additional 20,000 full-time equivalent student places for 2004-05, including 5,000 foundation degree places. Funding for research has increased by 3.9 per cent (in cash terms). In addition, there has been a 60 per cent increase in funding for capital, including support for research capital, to 584

The overall total comprises:

* 3,826 million for teaching
* 1,081 million for research
* 486 million for special funding
* 584 million for capital funding
* 16 million for transfers to other funding bodies (12M) and for flexibility and moderation (4M).

Sir Howard Newby, Chief Executive of HEFCE, said: "We are pleased to be able to allocate increases in funding above the rate of inflation, which will offer stability at a time of rapid change in higher education. These include a major boost for capital funding. Despite the significant funding total for higher education, there is still a need to increase the resources available so that universities and colleges can deliver the best teaching and carry out world-class research, and to address the previous under-investment in
the sector. We are pleased that foundation degrees have continued to develop, with a current total of 24,000 places and further growth in 2004-05."

Funding for teaching

Some previously separate streams of funding - for rewarding and developing staff (including golden hellos and Promising Researcher Fellowship Schemes), and for pension schemes - have been consolidated into teaching grant. This provides long-term stability for institutions and reduces bureaucracy.

The 3,826 million allocated for teaching includes:

* core funding - 3,448 million
* widening participation - 273 million
* additional funded places - 89 million

Widening participation

Following HEFCE's recent consultation, some changes have been made to the
funding for widening participation in HE. The new method of allocating funds
better reflects local circumstances. Total funding for widening
participation in 2004-05 has been increased by 2.5 per cent to 273 million,
and comprises:

* 37 million for widening access of full-time undergraduates
* 12 million for widening access of part-time undergraduates
* 159 million for improving retention of full-time undergraduates
* 54 million for improving retention of part-time students
* 10 million for students with disabilities.

Funding for research

Total recurrent funding for research is 1,081 million, an increase of 41
million (3.9 per cent) over 2003-04. In distributing this funding HEFCE

* maintain the average unit of resource in real terms for departments rated 5*, 5 and 4 in the 2001 RAE
* provide supplementary research funding of 24 million to the 'best 5*-rated' departments. These are departments that either:
- achieved a rating of 5* in both the 1996 and 2001 RAEs, or
- achieved a rating of 5* in 2001 while maintaining or increasing the numbers of staff submitted since the 1996 RAE (this is new for 2004-05 and doubled the number of 'best 5*-rated' departments to be funded to 207)
* continue to provide 17.5 million through a research capability fund, to support research in specific, emerging subject areas where the research base is not as strong as in more established subjects (Note 8)
* provide 2 million for veterinary research, through a joint initiative with the Department for Environment, Food and Rural Affairs.

For further information

Contact Philip Walker, Roger Grinyer, or Helen Cherns on 0117 931 7363, or 0117 931 7431, email

1. All years relate to academic years, 1 August to 31 July. References to percentage changes in real terms use a GDP uplift of 2.5 per cent on the equivalent figures for 2003-04.

2. 'Recurrent grants for 2004-05' (HEFCE 2004/12) is available on the HEFCE web-site ( The document summarises provisional allocations of recurrent funding to institutions for the academic year 2004-05. Final allocations will be announced in July.

3. The recurrent grant will be distributed to 131 higher education institutions and 159 further education colleges teaching higher education courses.

4. The increase of 5.6 per cent in HEFCE funding for teaching equates to an increase of 2.8 per cent in the average publicly-funded unit of resource (HEFCE grant plus regulated tuition fee income for full-time undergraduates) per full-time equivalent student.

5. As in previous years, HEFCE will moderate significant changes in funding by providing a safety net. Institutions will not receive a reduction in resource (teaching and research grant, plus regulated fee income) in real terms, compared with the equivalent figure for 2003-04. Moderation funding is a short-term measure enabling institutions to secure change and manage the transition to lower levels of funding. The funding released from
institutions whose funding has been reduced, for example due to under-recruitment, is re-cycled to other institutions.

6. Allocations of additional places for foundation degrees will be announced at the end of March. We will allocate 10,000 foundation degree places over the two years, 2004-05 and 2005-06.

7. The 'emerging' subjects are:
* Nursing
* Other studies and professions allied to medicine
* Social work
* Art & design
* Communication, cultural and media studies
* Dance, drama and performing arts
* Sports-related studies

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