Professor David Eastwood Unlocking the full potential of higher education: achievements, challenges and opportunities Chief Executive Higher Education Funding Council for England HEFCE Annual Conference 7 April 2008

The Funding Environment

Comprehensive Spending Review 2007 What we did get: A relatively good settlement Unit of funding maintained in real terms to Fully funded growth Real increase in QR Capital funding maintained in cash terms and permanent 60,000 Additional Student Numbers.

CSR 07 The outcome: Increase in core FTE student numbers of 60,000 to 1.2 million by ; plus 15,000 co-funded growth Commitment to maintain the unit of planned public funding in real terms: 2% annual average real terms increase for higher education and adult skills from £14.2 billion in to £16.4 billion by HEIF funding to reach £150 million a year by Increase in recurrent and capital research funding from £1,655 million in to £1,926 million by Total capital funding maintained in cash terms with focus on permanence and reinvestment for the future.

Main components of HEFCE recurrent grant for £ 7,476 millions

Recurrent grants for Cash increase of 3.3% compared with An uplift to the funding of teaching, WP and research Additional 24,000 full-time equivalent students Continuation of £25 million in additional funding for very high cost and vulnerable science subjects.

DIUS funding

FTE Planned student numbers DIUS Funding and Students

Research income from Funding Councils and Research Councils to Source: HESA finance record, HEFCE funded HEIs

Government’s policy priorities over CSR period Re-cycling the savings from ELQs Deliver the increase in student numbers Continue to accelerate progress towards a new relationship between employers and higher education Widen participation ensuring that HE is available locally across England.

Government’s policy priorities over CSR period - continued Continue to support excellent research and encourage innovation Contribution by HE to reducing greenhouse emissions - Revolving Green Fund Measuring institutional success within a diverse HE system Importance of STEM subjects across all areas of HEFCE activity and funding.

Capital investment framework Targeted at adequacy of capital investment for future needs Over 70% first time pass Incorporates environmental sustainability One system for research, teaching and supporting infrastructure Reduces accountability burden.

HEFCE sustains Science

HEFCE sustains science 2005 Roberts review: healthy and vibrant HE system Selective approach to strategically important and vulnerable subjects £250m programme of work tailored to the needs of each vulnerable discipline 2008 Follett review: reviewing progress and locating STEM within new policy environment of employer engagement Beyond 2008: addressing the Sainsbury issue of graduate supply and demand.

UCAS applications 2003 to 2007

HEFCE additional support for STEM Additional £75m for very high cost and vulnerable lab based subjects Over £15m to date for demand raising work in physics, chemistry, engineering and mathematics; integrated and embedded programme planned for 2009 £12.5m award for South East Physics Network (SEPNET).

Research capacity building and collaboration in STEM subjects Developing regional research capacity with RDAs £4m for Great Western Research; £4m for Midlands Physics; £10m for Birmingham & Warwick Science City Alliance Developing national research capacity with Research Councils £4m for integrative mammalian biology; £6m to date for engineering and physical sciences.

Research Excellence Framework

Research Excellence Framework (REF) The story so far: The Secretary of State has asked HEFCE to implement the new framework, working with the other funding bodies and in consultation with the sector We consulted widely on key elements in the proposals and received 274 responses (338 UK)

Responses: Key points (1) Strong support for the dual support system and QR Support for REF to focus on research excellence wherever it is found Recognition that bibliometrics can provide robust indicators, but will require more work Many – but not all – say that REF should capture user value and impact, but little consensus on how this can be done

Responses: Key points (2) Most respondents had strong concerns about two elements in the proposals: The proposed twin track assessment approach with two discrete subject blocks was considered too inflexible and potentially complex to operate. A more unified system, combining a range of metrics and with varying expert input as appropriate in different disciplines, would be preferred. The timetable for developing the framework is too tight, including in relation to the need for further consultation and to give due notice of what will be required from HEIs.

REF: what happens next? An early start on a pilot exercise in bibliometric analysis An early start to dialogue with the sector on developing light touch peer review and on choosing and using other metrics Further work on a number of other issues raised in the consultations We remain committed to full implementation of a new framework by 2014.

A New University Challenge

A new “university challenge” Programme announced on 3 March Plan to develop 20 new HE centres over the next 6 years Builds on HEFCE’s existing programme – £132 Million HEFCE expenditure in eight regions since 2004 Range from major transformational developments (University of Cumbria, Combined Universities in Cornwall), through to small feasibility studies, which have led to decisions not to proceed.

A new “university challenge” All projects have long gestation periods All involve bringing together a range of funding sources – HEFCE, RDA, LSC and others Complex negotiation processes Careful assessment All need to be sustainable and to take account of local demand and available provision.

So what’s new? No additional resources in this spending review Use of SDF – many other demands A number of projects are already in the pipeline No planning blight HEFCE to lead a debate Seek to develop broader and more explicit criteria Possible greater emphasis on regeneration as a strong focus.

Timetable Paper to HEFCE Board on 8 May Initial consultation June to end September Wider range of consultees than usual – RDAs, local authorities Assessment of consultation responses in the autumn Return to HEFCE Board in November Further debate on criteria – possible regional meetings Report back to Secretary of State Revised policy statement Spring 2009.

The certainty of uncertainty

Spending Review 2009 What? When? How? The fiscal climate? The political climate?

Fees Review 2009 In 2004 the Secretary of State for Education and Skills announced: An independent review, working with the Office For Fair Access, to report to the House, on all aspects of the new arrangements based on the first three years’ operation of the policy. This would include: – The impact of the new arrangements on higher education institutions – The impact of the new arrangements on students and prospective students – Future policy.

Challenges to the HE sector

Challenges to the HE Sector Aligning resources and academic priorities Clarity of mission – institutional distinctiveness Reviewing and re-engineering institutional business models Building on strengths Promoting quality Pay and pensions.

Pay and Pensions

Income and staff costs (HEFCE sector)

2009: A year of challenge Pension pressures Pay pressure HR modernisation and performance management Funding growth is slower - CSR Establishing appropriate mechanism(s) for resolution.

Development of year framework for higher education

Higher education intellectual property higher level skills and the relationship between HE and business demographic changes student experience widening participation international competitiveness measuring institutional success relationship between academics and policy makers Development of year framework for HE

Development of year framework for higher education – work strands Intellectual property (Professor Paul Wellings and Baroness Morgan) Higher level skills and the relationship between HE and business (Bill Rammell MP) Demographic changes (Universities UK) Student experience (Higher Education Academy). (Extract from speech by Secretary of State on 29/2/08).

Development of year framework for higher education - work strands continued Widening participation (NCEE and Professor Steve Smith) International competitiveness (Professor Drummond Bone) Measuring institutional success within a diverse higher education system (HEFCE) The relationship between academics and policy makers (Council for Science and Technology and Professor Janet Finch). (Extract from speech by Secretary of State on 29/2/08).

Challenges to the HEFCE

Development of HEFCE Strategic Plan

Some significant issues Next steps for widening participation T funding - stability or dynamism? Role of students in shaping HE Unlocking the full potential of HE to inspire creativity, innovation and enterprise Workforce development and skills International competitiveness and globalisation Risk and regulation Role of public funding. Towards a strategy for

April 2008 – HEFCE annual conference Summer 2008 – initial discussions with stakeholders Autumn 2008 – informal consultation February 2009 – formal consultation July 2009 – anticipated publication of strategic plan. Towards a strategy for Dialogue on key issues

The big conversation – is starting

Thank you Questions and answers