1. The funding context Julian Gravatt, Assistant Chief Executive AoC 2016 Higher education conference, 3 March 2016 (updated on 8 March 2016 with info on HEFCE letter)

2. UK government and HE Longer-term government objectives A strong (“world class”) university system “Teaching excellence, social mobility, student choice” Sustainable public finances Conservative party manifesto promises More of the same on funding Student choice (with no cap on recruitment) Teaching excellence framework “3 million apprenticeships, 2 million jobs”

3. HE spending decisions this decade Spending decisions 2011 to 2015 HEFCE grant DOWN £5 bil to £2 bil Student loans UP £7 bil to £13 bil Total govt HE outlays UP 28% Spending decisions 2015 to 2019 End of HE maintenance grants (saves £2 bil) More student loans (mtce, postgrad, nurses, PT HE, FE) Mechanism for fee cap to rise above £9k (via TEF ) Cuts to HEFCE grant Protection for high-cost teaching; cuts elsewhere

4. BIS revenue spending Notes Much smaller cut than expected (“17% in real-terms”) £2 bil HE maintenance grant cut biggest change Restructuring. More student loans. The levy. Devolution BIS RDEL (£bil)2015-162016-172017-182018-192019-20 Science 4.6?5.2 HE 3.3Grants go Core adult skills 1.5 Devo1.5 Other FE/skills 0.5 19+ apprentices 0.70.9Levy1.21,4 Other BIS 2.2? BIS RDEL 12.913.414.513.413.2

5. Education funding landscape 16-18 Education Apprenticeship vouchers (16+) Apprenticeship vouchers (16+) FE Loans Adult Skills (devolved) Adult Skills (devolved) HE Loans Fees, Contracts and International High Needs HE Teaching Dedicated School Grant (centralised)

6. Student loans Doubling down on student loans… Major student loans extension in 2016 (outlays up 60% in 4 years) Repayment threshold fixed at £21,000 Government’s write off (“RAB charge”) now c20% Focus on repayment of student loans will continue TEF may increase focus on destinations / graduate earnings Student loans2015-162016-172017-182018-192019-20 Outlays (UK)13.315.417.619.821.5 Repayments (UK)(2.2)(2.6)(2.8)(2.9)(2.8)

7. HEFCE spending & grant letter £ mil2014-152015-162016-172017-18 Research & HEIF 1,8321,6861,6951,716 Research Capital 280303338203 Teaching Revenue 1,5551,6711,5391,457 Teaching Capital 167300140100 National initiatives 141? HEFCE admin 22? Notes Figures for 2014-15 from HEFCE financial statements Figures for 2015-16 were the baseline, before the£150 mil cut in July Unclear if national initiative spending is now within other allocations HEFCE expected to provide nursing funding from 2017-18 onwards

8. Student opportunity funding Now £380 mil in 2015-16 12% goes to Colleges Formula 73% for retention Student, ward and DSA characteristics What next? Need a 50% saving Switch to a bid system? Priority is POLAR Q1 applications Also part-time, cold spots Late to make a 2016-17 cut OFFA 2017 deadline 27 April 2016

9. Higher education green paper What the green paper proposed TEF to start in 2016 on basis of QAA reviews + data Level 1 TEF award -> higher fees (£9k+RPI) for 2017-18 More sophisticated TEF for 2017 and after % POLAR Q1 in HE from 18% (2014) to 27% (2020) HEFCE to become Office for Students New single gateway for new providers What next? Legislation possible in Queen’s speech (not late June 2016) Reform could happen in stages

10. Higher education rules of the game Not for amateurs… Courses need to be validated (unis, Pearson, TDAP etc) Fees over £6,000 need Offa approval (15 months in advance) Admissions of full-timers dominated by UCAS Quality assessment via QAA (possible HEFCE & TEF reforms) Complaints regulated OIA Consumer protection regulated by CMA Access to student loans managed by HEFCE Loan & grant payments managed by SLC HE-compliant data collection via ILR

11. College HE trends and data Key trends for colleges 117,000 students (-11% in 5 years; there are fewer part-timers) Employer-led, technical, niche 50% full-time, 50% part-time Most apply for just one institution; 70% live within 25 miles 77 colleges > 500 students, 72 have 250-499, 107 <250 Entry at 18 reaching a peak (5 year demographic dip) Entry rate for 18/19 year olds at record high (c42%) 1% fall in number of English 18 year olds applicants (2016)

12. College HE strategies The fundamentals A longer-term HE plan owned by governors and SMT Validation Compliance (HEFCE, QAA, CMA, OFFA etc) Think about your students Access in – which Level 3 courses? are they changing? Progression out – where? what will the TEF data show? Changes in the environment – the levy, university competition How is your HE offer distinctive? How does it add value?