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Universities UK response to HEFCE recurrent grants 2004-5

Universities UK Media Release, March 4, 2004:

Universities UK notes HEFCE’s headline figure of 5.6% for the increase in funding for teaching for 2004-5. However, once funding for additional student numbers and the uplift for inflation has been stripped away, the average increase is 2.8% - which is barely above inflation.

While we acknowledge that the Government has taken steps to halt a long decline in investment in higher education, funding for teaching clearly remains inadequate. The average 2.8% increase in the overall publicly-funded unit of resource for teaching means that, after allowing for inflation, the core funding per student that institutions receive will barely change next year. In fact, approximately a quarter of institutions will receive an increase of less than 2.5%, or less than inflation. 

We note also that funds for rewarding and developing staff have been consolidated into the teaching grant for next year. These funds are nevertheless earmarked for specific purposes; if they were therefore excluded from the teaching grant, the sector would be looking at a real terms cut in 2004-5. 

Universities UK has consistently argued for additional investment in teaching and learning, to counteract a long-term reduction in the unit of funding for all teaching and learning activities (1). Maintaining the unit of funding for teaching and learning is essential if the international reputation and high quality of the higher education sector is to be upheld in future. In our recent submission to the Government’s Spending Review (2) Universities UK called for the level of recurrent funding per student to be maintained at the baseline level of HEFCE’s 2002-03 allocations - a figure of £568m – over the period of the next Spending Review, as well as an additional £602m for human resources to deliver pay modernisation.

We note that the total of £3,826 million for teaching for 2004-5 includes a sum of £273m to support widening participation for students from under-represented groups or who are at greatest risk of not completing their studies. Again, Universities UK has consistently asked that the costs of provision for widening participation students be identified and fully funded as additional supplements – provided over and above the baseline funding for teaching and learning provision. We remain of the view that mainstream teaching should not suffer because of the costs of widening participation.

We are pleased to see the maintaining of the average unit of resource in real terms for departments that were rated 4 - in addition to those rated 5 and 5* - in the 2001 RAE. This is an encouraging response to the work commissioned by Universities UK from Evidence Ltd in 2003, which highlighted the damaging impact of further concentration of research funding.

We are also pleased to note the capital investment of £240m in teaching and learning and IT capital – this is a small but highly necessary step in the right direction towards the remedial capital investment need in this area, which we have revisited in our 2004 Spending Review submission. We also welcome a reduction in the number of separate funding streams and their incorporation into the teaching grant.

The provision for further expansion of 20,000 additional full-time equivalent places is welcome. However, we note that 5,000 places are to be allocated to Foundation degrees and we repeat our concern voiced in our response to the Government’s White Paper that expansion in this respect should be driven by student choice and market demand, rather than by direction of funding.

Diana Warwick, Chief Executive, Universities UK, said: “While we welcome the stabilising aims of the HEFCE allocations, funding for teaching remains under pressure in higher education. Teaching is at the heart of universities’ activities and must be properly funded if we are to maintain quality and give students the teaching and learning experience they deserve. Keeping to the status quo is not an option if we are to continue to provide a world class education.” 


1. HEFCE has estimated that the sector needs an operating surplus of at least 3 to 4% of income per year to provide a positive cash flow for reinvestment and to fund future developments. The most recent financial forecasts for English HEIs submitted to HEFCE showed that 50 institutions forecast operating deficits in 2002-03, with around one quarter to a third of the sector expecting to be operating in deficit over the remainder of the forecast period. 

2. Achieving our Vision, Universities UK’s 2004 Spending Review submission for England and Northern Ireland, is available from the Universities UK website on

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