The Higher Education Funding Council for Wales (HEFCW) has announced how it

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1 News release Date: Friday, 22 May 2015 Title: Funding for higher education in 2015/16 The Higher Education Funding Council for Wales (HEFCW) has announced how it will allocate 154 million of public funding for universities in the next academic year. This includes: 79 million for research, taking account for the first time of the outcomes of the 2014 Research Excellence Framework. 33 million for part-time courses at both undergraduate and postgraduate taught level. 15 million for higher cost full-time undergraduate courses. This is in addition to payments to Welsh universities through the Welsh Government s fee grant subsidy for students from Wales and the EU. These fee grants from Welsh Government are worth up to 5,190 per year for each eligible student. Paid to universities through the Student Loans Company, they subsidise the cost of full-time undergraduate tuition fees for students from Wales wherever they study in the UK. HEFCW s funding allocations continue to take account of recruitment numbers, the level and mode of students (full-time, part-time, undergraduate, postgraduate), 1

2 priorities such as the recruitment of Welsh medium students or students from disadvantaged areas, and subject mix. HEFCW also continues to provide additional contributions towards higher-cost courses in medicine, dentistry and the performing arts. HEFCW funding for universities and colleges The total funding to be allocated by HEFCW is 154 million in the following priority areas: 71 million for quality research at universities in Wales, of which the proportion allocated for Science, a Welsh government priority, has increased to over 70%. This is the first time that each university s share has been based on the outcomes of the 2014 Research Excellence Framework (REF2014), where almost a third of submitted research by Welsh universities was considered world-leading. Funding has been held at this level for four years. 15 million for higher-cost full-time undergraduate courses in medicine, dentistry and performing arts. The expensive subject premium for these courses continues to ensure HEFCW provides additional resources per student at similar levels to 2011/12, before the current fees and funding arrangements capped fees at 9,000 (after taking account of efficiency gain adjustments). 27 million to subsidise part-time undergraduate provision, which helps stabilise the cost of part-time courses, for many of which loans are made available by the Welsh Government. This includes premium (supplementary) funding to recognise universities success in recruiting and retaining students 2

3 from disadvantaged areas, disabled students and those receiving their tuition in Welsh. 6 million for part-time postgraduate teaching. This still includes premium funding to acknowledge universities successes in recruiting part-time, disabled and Welsh medium students within the overall allocation. 5 million for postgraduate research training a level maintained since 2012/13 - to develop highly skilled researchers and to support research and innovation in Wales. Other funding for higher education priorities The 154 million includes funding for a small number of targeted programmes, such as the Coleg Cymraeg Cenedlaethol and UHOVI (Universities Heads of the Valleys Institute). Research funding includes HEFCW s contribution to the Welsh Government s Sêr Cymru programme which is bringing research stars to Wales, and supporting three collaborative National Research Networks. All figures here are rounded to the nearest million. See table 1 in the annex for more details. 3

4 Dr David Blaney, Chief Executive of HEFCW, said: We have continued to target our funding for our universities in a way that supports innovation and growth and offers potential learners opportunities, regardless of their circumstances. Higher education creates new knowledge on which innovation and economic prosperity depend, and it provides citizens with the skills to contribute to future economic growth and to our society more generally. This contribution was clearly demonstrated in our publication Higher Education for the Nation: Universities for Wales. Government expenditure in higher education is not just a cost, it is an investment in the future of Wales and I am delighted to work in a country where the government clearly understands that strong universities are essential for a strong and prosperous nation. For the fourth year we have managed to maintain the overall level of funding for quality research at our universities. Research funding now accounts for more than half of our total allocation. As the single largest public investor in Welsh university 4

5 research, we were pleased to be able to distribute our funding based on the outcomes of the 2014 Research Excellence Framework. The REF determined that almost a third of our research is leading the way across the globe, with a further half held in high esteem internationally. Furthermore, half of the research submitted by Welsh universities was world-leading in terms of its impact on life beyond academia, making a real difference to the lives of citizens in Wales and across the world. This is a performance unmatched by anywhere else in the UK, and is an excellent demonstration of the contribution our universities make to society in return for this public investment. We are pleased that we can continue to provide universities with this critical research funding, which paves the way for employment, investment, innovation and capital developments. While funding for part-time undergraduate courses has reduced partly due to recruitment trends, we are optimistic that the decline in numbers is not as steep as previously feared, and has not decreased as severely as it has in some other areas of the UK. We need to ensure that pursuing these courses continues to be an attractive and accessible option for students whose circumstances are not suited to a full-time course. Universities in Wales have shown that students from Wales and beyond can be confident that they will continue to receive the quality student experience for which universities in Wales are renowned, given the ongoing commitment to public investment in higher education. Note. The fee income estimates that were included in last year s press release, from Welsh domiciled, EU and rest of the UK students studying in Wales, are not in this 5

6 year s press release. However, in June 2015 we plan to publish an analysis of universities income streams since Not included either is the estimated fee grant to be paid for Welsh domiciled students studying in Wales, or studying in the rest of the UK. This is because HEFCW no longer exercises any control over the payment of the fee grant, as it is now distributed by the Welsh Government. While HEFCW funds universities on an academic year basis, the Welsh Government funds us on a financial year basis. For the financial year, the Welsh Government expects fee grant payments to universities in Wales and in the rest of the UK to be somewhere in the region of 232 million to 237 million. Ends Tables below (extracted from full circular W15/09HE) Table 1 Overall funding allocations for 2015/16 Table 6 Funding comparison 2014/15 and 2015/16 Contact: Emma Rączka, Senior Communications Manager emma.raczka@hefcw.ac.uk Isod: Gwybodaeth o r cylchlythyr (W15/09HE) yn Saesneg yn unig. 6

7 Table 1: Overall Funding Allocations 2015/16 AY FY AY FY 2014/ / Grant-in-Aid FY allocation 361,723, ,723,000 Less - Fee grant transfer -234,000, ,850,000 Less - Running Costs -2,768,000-2,768,000 Less - Depreciation -82,000-82,000 Plus - Welsh Medium Scholarships , ,203, ,023,000 Available draw down from after 14/15 commitment established 103,203,000 40% of ,609, ,956, ,812,200 Miscellaneous Adjustments 2 15,964,137 18,026,205 Available Resource for Allocation 293,920, ,838,405 Fee Grant Payments 112,980,889 0 Non Fee-grant funding available for allocation 180,939, ,838,405 Research Quality Research (QR) 71,077,344 71,077,344 Postgraduate Research (PGR) 5,170,336 5,170,336 Sêr Cymru 3 1,838,946 3,160,929 Research Initiatives 578,781 15,000 78,665,407 79,423,609 Part-time undergraduate funding 4 PTUG Teaching 22,453,845 21,269,024 Part-time premium 2,218,747 0 Per capita 130, ,865 Welsh Medium premium 216, ,172 Access and retention premium 5,418,387 5,085,889 Disability premium 209, ,900 Total 30,647,102 26,824,850 Part-time Fee Waiver 205, ,000 Postgraduate Taught Funding 5 PGT Teaching PT 6,172,112 6,104,052 PGT Teaching FT 0 0 Part-time premium 617,211 0 Per capita PT 45,290 41,900 Per capita FT 19,085 18,090 Welsh Medium premium PT 14,802 10,504 Welsh Medium premium FT 25,210 0 Disability premium PT 60,600 57,300 Disability premium FT 58,500 0 Disability premium PGR 31,200 26,100 Total 7,044,010 6,257,946 FTUG/PGCE funding Per capita 327, ,095 Access and retention premium 0 0 Welsh medium premium 0 0 Disability premium 0 0 Expensive subjects premium 15,177,980 14,735,100 Priority subjects premium 0 0 Total 15,505,205 15,065,195 Strategy and Initiative Allocations including: 2 Welsh Medium Provision Fund 8,231,115 8,479,549 Strategic Development Fund 8,858,086 7,176,307 UHOVI 2,500,000 2,500,000 Jisc/JANET/PBSA 2,533,022 2,530,000 Reaching Wider 1,885,828 1,731,920 Learning and Teaching Fund 1,750,757 1,277,343 Medical Education - Graduate Entry Scheme transfer adjustment 2,300, ,000 Widening Access Fund 274,802 0 Mitigation funding 6 828,647 3,124,551 Other Strategy and Initiatives 2,488, ,544 HEI contribution to sector agency costs 7-3,415,765-3,399,174 Total 28,235,148 24,685,040 Innovation and Engagement GO Wales 4,907,676 2,044,047 GO Wales WEFO Match funding -4,134, ,973 Innovation and Engagement 1,588,344 0 Total 2,361,082 1,610,074 8 Total Allocations 162,663, ,206,714 Balance 18,276,205 14,631,691 7

8 Notes 1 Taken from remit letter (reduced by 540k to reflect Welsh Government adjustment) - estimated fee grant transfer of 234m (uprated by 2.5% in ) 2 Adjustments include carry forward from previous years and changes to reflect changes in patterns of draw down from Welsh Government 3 In 2015/16 includes proposed successor 4 PT credit based teaching funding reduced by 1.8% efficiency gain 5 FT PGT funding removed in 2014/15 and associated premiums removed in 2015/16 6 Mitigation funding (detailed in Table 6) 7 Sector agency contributions are for Equality Challenge Unit, Higher Education Academy, international activities, Jisc/Janet, Leadership Foundation, NCUB, NCCPE, NSS, PSBA, SPA, and RCUK Vitae and are charged against each institution proportionally based on their total teaching and research HEFCW funds (with some adjustment for the OU in Wales where funds are paid through the wider OU) /15 figures shown may contain a carry forward element from 2013/14 and so may not be the baseline figures FY: financial year AY: academic year PGR: postgraduate research PT: part-time FT: full time HEI: higher education institution FTUG: full time undergraduate 8

9 Table 6: Funding comparison 2014/15 and 2015/16 HE Institutions (HEIs) PT/PGT Teaching, per capita and premium (2) FT UG/PGCE per capita and premium (3) Allocations 2014/15 (1) ( ) Allocations 2015/16 (1) ( ) Change 2014/15 to QR PGR Mitigation Total (4) 2015/16 funding (5) ( ) Total (4) PT/PGT QR PGR Mitigation funding (5) Teaching, per capita and premium (2) FT UG/PGCE per capita and premium (3) University of South Wales 10,008,338 2,861,400 2,813, ,742 15,884,381 9,084,778 1,725,730 1,530, , ,872 13,501,723-2,382,657 Aberystwyth University 1,022,697 38,820 7,270, ,061 8,737, ,767 37,790 7,010, ,913 8,371, ,266 Bangor University 1,065,390 31,560 6,839, ,812 8,581, ,045 30,570 7,218, ,340 8,761, ,034 Cardiff University 3,796,800 9,767,035 40,352,474 2,857,294 56,773,603 3,367,184 10,591,615 39,796,996 2,868,360 56,624, ,448 University of Wales Trinity Saint 4,420,618 33, ,851 25,821 5,273,150 3,463,440 32, ,936 23, ,045 4,482, ,972 David Swansea University 1,705,728 2,723,635 11,499, ,195 16,850,971 1,537,898 2,596,545 13,749, ,038 18,822,564 1,971,593 Cardiff Metropolitan University 1,382,920 34,740 1,109, ,410 2,641,531 1,199,965 35,130 1,065, ,459 2,421, ,859 Glyndŵr University 4,449,153 11, ,460,818 3,705,929 12, ,955 11,054 3,944, ,223 Open University in Wales 9,328, ,647 10,157,117 8,450,553 1,466,634 9,917, ,930 Centre for Advanced Welsh and Celtic Studies 0 398, , , , ,867 Total (4) 37,180,113 15,502,715 71,077,344 5,170, , ,759,155 32,605,559 15,062,770 71,077,344 5,170,336 3,124, ,040,560-2,718,595 FE Institutions (FEIs) PT/PGT Teaching, per capita and premium (2) FT UG/PGCE per capita and premium (3) Allocations 2014/15 (1) ( ) Allocations 2015/16 (1) ( ) Change QR PGR Mitigation Total (4) 2014/15 to funding (5) 2015/16 ( ) Total (4) PT/PGT QR PGR Mitigation funding (5) Teaching, per capita and premium (2) FT UG/PGCE per capita and premium (3) Bridgend College Grŵp Llandrillo Menai 405,871 2, , ,023 2, ,253-19,897 Grŵp NPTC Group 63, ,870 58, ,962-4,908 Gower College Swansea 41, ,339 32, ,355-8,984 Total (4) 510,999 2, , ,235 2, ,660-33,829 Total HEIs and FEIs (4) 37,691,112 15,505,205 71,077,344 5,170, , ,272,644 33,082,794 15,065,195 71,077,344 5,170,336 3,124, ,520,220-2,752,424 9

10 (1) 2014/15 and 2015/16 allocations shown here place ITT (QTS) provision at the delivering institution. (2) Premiums for PT/PGT consist of the access and retention premium, the Welsh medium premium and the disability premium. (3) FT UG/PGCE premium allocation is the expensive subjects premium. (4) Totals may not sum exactly due to rounding. (5) Mitigation funding is allocated to the Open University in Wales because of its unique position in receiving part-time funding only and no income from increased full-time fees under the new regime. See paragraphs 63 to 67 of the circular text. Mitigation funding is also allocated to those institutions that received a decrease in funding of more than 15% (if that equates to more than 250k) compared to 2014/15. See paragraph 56 of the circular PG: postgraduate taught QR: quality research PGR: postgraduate research PT: part-time FT: full time ITT (QTS): initial teacher training, qualified teacher status 10

11 Contact: Emma Rączka Technical notes (for more see / Publications / Circulars) Funding allocations 1. Full allocations are on the HEFCW website under Publications Circulars HEFCW s Funding Allocations 2015/16 (Circular W15/09HE). 2. HEFCW s grant of 154 million to higher education institutions funding for teaching and research - continues to be committed according to Welsh Government priorities, and supports activities that a student-led teaching funding system alone would not necessarily deliver. The grant is established from the balance of resources from the Welsh Government s budget for higher education after its (estimated) fee grant payments have been allocated. HEFCW has continued to focus this funding on areas not covered by the full-time undergraduate tuition fees and funding framework, and on protecting parttime provision, rewarding excellence in research and recruiting and retaining students from low-participation backgrounds. 11

12 Key HEIs higher education institutions FTUG & PGCE full time undergraduate and Postgraduate Certificate in Education. PGT postgraduate taught UG - undergraduate The total distribution by HEFCW for AY 14/15 has been reduced compared to the funding circular last year (W14/18HE) because the tuition fee grant payments relating to the four months from 1 April to 31 July 2015 are now being paid directly by the Welsh government. It does not represent a reduction in overall Welsh government investment in higher education. 3. We continue to fund on the expectation that the decrease in our grant to the Welsh higher education sector will be offset by the additional tuition fee income from students from Wales and the EU (which includes the Welsh Government s tuition fee grant) and the rest of the UK. We estimate that there should be an increase in public and fee funding for HE providers in Wales between 2014/15 and 2015/16 of between 0% and 3%. This increase is lower than previous years as by 2014/15 most full time students had been recruited under the new fee regime with the exception of some studying courses with a duration of more than three years. In June 2015, we plan to publish an analysis of the income streams of universities since We estimate that, despite the overall pressure on public finances, overall university income, at sector level, is not expected to decline. 4. Allocations may be subject to in-year adjustments to our overall grant from the Welsh Government, which is provided on a financial year (FY) basis. We distribute funding, however, by academic year (AY). Funding Quality Research 5. The million for quality research (QR) takes account of the quality and volume of research in Wales, as reported in the 2014 Research Excellence Framework (REF). Taking account of the outcomes of a consultation last year, we have used a similar formula in 2015/16 as we had the year before, updated to take account of the new REF2014 outcomes. The change which we have made is: 12

13 Consistent with our policy of focusing funding on sustainable research excellence, we have adjusted upwards our sustainability threshold (the combined quality and volume threshold). Multiplying the volume of staff in each submission in the highest two REF categories by the QR quality weightings, we produced a single score for each submission to the REF2014. Our previous cut-off score of 3.5 has now increased to 6. There is more on research funding on our website: 6. The 2015/16 QR allocations by university are in Table 4 of the circular. We plan to carry out a more fundamental review of our research funding arrangements for subsequent years. 7. The Research Excellence Framework (REF2014) is the UK-wide system for assessing research in UK higher education institutions. It is carried out jointly by all four UK higher education funding bodies, and is managed on their behalf by the REF Team, based at the Higher Education Funding Council for England (HEFCE). The first REF was completed in 2014 (replacing the former Research Assessment Exercise (RAE)). Panels of experts in individual academic subject areas assessed the quality, impact and environment of institutions research submissions. Open University in Wales 8. HEFCW has monitored the overall impact on the Open University (OU) in Wales, given that the OU has no full-time undergraduate fee income to offset any reductions in other budget lines. In 2014/15, we awarded the OU a strategic, stand-alone payment to the value of the strategy funding they would have lost that year. We will make a similar payment this year. In addition to that payment in 2015/16, we are providing mitigation funding to compensate the OU for its loss in part-time premium funding. GDP deflator and efficiency gain 9. The implied efficiency gain between the and financial years, agreed by HEFCW s Council and around which the allocations have been calculated, is 13

14 1.8%. This is based on the financial year budgets published by the Welsh Government, less running costs. Funding priorities 10. HEFCW is particularly targeting funding in the following areas: Quality research (QR) funding, which focuses on supporting research at the highest levels of performance, in order to maintain Wales s competitiveness at the leading edge. The protection of part-time undergraduate teaching funding at a sector level, subject to applying an efficiency gain of 1.8%. HEFCW intends to continue to fund through the credit based funding method for part-time courses for the 2015/16 academic year. In 2015/16, HEFCW will continue to pay a higher rate expensive subject premium for full time undergraduate provision of clinical medicine/dentistry and conservatoire performing arts, in addition to the fees of 9,000 per student that institutions receive for these courses. The allocated resources per student are comparable to the amounts provided in 2011/12 (after taking account of efficiency gain adjustments) with the combination of 9,000 fees and expensive subject premium. This premium is the only remaining funding available for full-time undergraduate and PGCE students through HEFCW s grant allocations apart from per capita funding, which is allocated for every enrolled student. More information about HEFCW s priorities can be found in current and previous Remit Letters from the Welsh Government ( > About Higher Education in Wales > Welsh Government priorities > Annual remit letter to HEFCW) and in the HEFCW Corporate Strategy ( > publications > corporate documents > corporate strategy). Mitigation funding 11. Universities with funding reductions of more than 15% which also equates to more than 250k will receive one-off non-consolidated mitigation funding to ensure the year- 14

15 on-year funding difference is reduced to 15%. In 2015/16, this applies to the University of South Wales and the University of Wales Trinity Saint David. Fee grants for students 12. The fee grant is paid by the Welsh Government on behalf of students from Wales who are on full-time undergraduate and PGCE higher education courses at universities or colleges in Wales or in the rest of the UK. This comes from the Welsh Government s overall higher education budget, and used to be allocated by HEFCW. This accounts for the headline drop in funding to be allocated by HEFCW in 2015/ This time last year, HEFCW announced funds for distribution of (an estimated) 385 million from the Welsh Government s higher education budget for the 2014/15 academic year. For 2015/16, HEFCW will distribute only 154 million, because HEFCW no longer exercises any control over the payment of the fee grant as it is now distributed by the Welsh Government. While HEFCW funds universities on an academic year basis, the Welsh Government funds us on a financial year basis. For the financial year, the Welsh Government expects fee grant payments to universities in Wales and in the rest of the UK to be somewhere in the region of 232 million and 237 million. 14. The fee grant for each student is the difference between the tuition fee charged before the introduction of the current fees regime ( 3,810 in 2015/16, adjusted for inflation) and the new fees charged at their chosen institution in 2015/16 (up to 9,000). It also applies to EU students studying in Wales. A student eligible for a fee grant applies to the Student Loans Company for the grant to be paid. The Welsh Government passes this subsidy on to the Student Loans Company on behalf of the student, which in turn pays it to whichever institution in the UK the student attends. Non-HEFCW fees income for universities and colleges in Wales 15. As well as funding from HEFCW, the total injection of resources into the higher education sector in Wales in 2015/16 includes funding from: fees income from students from Wales and the EU fees income from students from the rest of the UK. 15

16 If full-time undergraduate recruitment to Welsh universities is buoyant, we can presume income to universities from the combination of higher fees and HEFCW grant will increase. Fees from full-time undergraduate and PGCE students how the funding flows Students from Wales and EU attending a university in Wales Welsh Government policy where students receive a non-repayable subsidy ( fee grant ) of up to 5,190 towards their tuition fees. Funding flows fee grant Welsh Government Student Loans Company universities and colleges in Wales Students from Wales attending a university in the rest of the UK Welsh Government policy where students receive a non-repayable subsidy ( fee grant ) of up to 5,190 towards their tuition fees. Funding flows fee grant Welsh Government Student Loans Company universities and colleges in rest of UK Students from the rest of the UK attending a university in Wales UK Government policy where students from England and Northern Ireland receive a repayable loan for tuition fees. Scottish Government policy where students from Scotland receive a repayable loan for tuition fees. Funding flows tuition fees loan Treasury Student Loans Company universities and colleges in Wales Maximum fee grant arrangements 16. As the tuition fee grant is now paid to universities directly by the Welsh Government, HEFCW no longer operates maximum fee grant arrangements, where 16

17 each higher education institution in Wales had a maximum total tuition fee grant which it could receive from HEFCW s overall funds. About HEFCW The Higher Education Funding Council for Wales HEFCW distributes resources for higher education (HE) provided by the Welsh Government. This includes: teaching, research and other funding to Welsh universities HE courses at further education colleges. HEFCW also supports the HE system in Wales in delivering Welsh Government priorities and accredits providers of initial teacher training for school teachers. HEFCW regulates fee levels at universities, ensures a framework is in place for assessing the quality of higher education and scrutinises the financial, governance and risk performance of universities. 17