Higher Education Funding Council for England
Title Funding for universities and colleges in 2002-03
To Heads of HEFCE-funded institutions Heads of universities in
Of interest to those responsible for Funding, finance, planning
Reference EP 02/02
Date 23 January 2002
Enquiries to Institutional enquiries to Regional consultants and higher
General enquiries to Mario Ferelli e-mail [log in to unmask]
Funding for universities and colleges in 2002-03
This statement follows on from the HEFCE announcement on 14 December 2001
(available on the HEFCE web-site www.hefce.ac.uk under 'News and events') of
funding decisions made at the last Board meeting.
The HEFCE Board agreed at its meeting today (23 January) to advise the
Secretary of State for Education and Skills that the mechanism to control
student numbers - known as the maximum student number (MaSN) - should end.
The Board decided to advise that the MaSN should be removed from 2002-03,
but that the control could be reintroduced later if it proved to be
necessary. Penalties would still be imposed on institutions that have
recruited above their MaSN limit in 2001-02, as previously announced.
The MaSN control was introduced in 1994 as a means of controlling public
expenditure on student support. In December 2000 the Board raised the
question whether the MaSN should continue.
The HEFCE has sought the sector's views on the future of the MaSN as part of
a wider consultation on supply and demand in higher education. The
overwhelming majority of institutions felt that the MaSN no longer served a
The Board agreed that the funding method for teaching, which involves
contractual agreements with institutions, should provide sufficient control
over student numbers. The HEFCE would continue to monitor closely the
application of the funding method in relation to growth in student numbers
to ensure that the unit of resource was maintained.
The Board was told that, according to the returns from higher education
institutions and further education colleges offering HE courses, the total
(headcount) student numbers in 2001-02 were projected to grow by
approximately 37,700, which is close to the Government's planned growth of
41,000. The Board welcomed this encouraging out-turn.
Research funding in 2002-03
The Board welcomed the extra £30 million being made available for one year
only to universities and colleges by the Department for Education and Skills
to help fund high quality research identified in last year's Research
The extra resources will be targeted at departments rated 5, representing
the second highest rating in the exercise. The HEFCE Board announced in
December that it would maintain the average unit of funding for 5*
departments in real terms.
The Board at its December meeting also agreed to provide some funding for
3-rated departments. At today's meeting members decided to provide £20
million to 3a-rated departments only through the QR funding formula in
The Board also discussed alternative options for the distribution of this
£20 million, which involved targeting certain subjects where there was a
need to develop research capacity. While members saw advantages in this
additional targeting, they agreed to return to this following the outcome of
the 2002 Spending Review and the completion of various reviews on research.
The reinstatement of reductions in the unit of resource for 5 and 4-rated
departments will be a priority for any funding increase secured in the 2002
Other funding decisions
The Board also made the following decisions in relation to other areas of
funding in 2002-03:
- the special funding for the academic year 2002-03 should total £745
million (special funding of £443 million and earmarked capital of £302
million). The figure is £12 million higher than the provisional sum
announced following the December Board meeting, resulting from the timing of
£24 million additional funding from other funding partners, offset by £12
million in savings. This will enable funding for teaching to increase by £12
- institutions that have not delivered the expected number of additional
full-time equivalent (FTE) students should have funds held back, as notified
in their funding agreements for 2001-02
- institutions should be advised that as previously notified we will fund
growth in 2002-03 that makes good their shortfall in student numbers against
additional places awarded for 2001-02
- holdback in funding for failure to remain within the contract range should
be applied as previously notified to institutions
- the Chief Executive should be given delegated authority to mitigate
holdback in funding in individual cases
- in future, moderation funding would be calculated against the unmoderated
funding received by an institution in the previous year.
Final funding decisions
At its next meeting on Wednesday 27 February 2002, the Board will make final
decisions on funding allocations for 2002-03. Institutions will receive
their Grant letters on Wednesday 6 March.
HEFCE, Northavon House, Coldharbour Lane, BRISTOL, BS16 1QD
Tel 0117 931 7317, Fax 0117 931 7203, E-mail [log in to unmask]