The Strategic Priority Grant (SPG), put as plainly as possible, is the money that the Office for Students is given by the government to distribute to the sector.
It is best known in the sector as allocations for high-cost subjects, student access and success, and specialist providers: but it also provides the cash for other things OfS might get up to at the direction of government or of its own volition.
The amount and proposed use of the SPG is confirmed each year in guidance to the Office for Students from the minister. This isn’t the only note OfS gets from the minister each year – there’s been three since the last SPG letter, covering things like dental school expansion, defence skills programmes, and freedom of speech. Under previous governments, OfS received any number of letters from ministers, covering anything and everything the minister happened to be concerned about.
The last SPG letter arrived on 19 May 2025, covering allocations for the 2025-26 academic year. It is fair to assume the next letter will be along by the end of the month. And the sector is worried. Universities UK has said:
We also fear that DFE is about to cut grant funding to English universities to support the cost of wider teaching. They should not do that.
By the numbers
For 2025-26 the total SPG allocation came to just over £1.3bn pounds. It included £956m for high-cost courses – a strategic priority that dwarfs all others.
On the face of it this is a bit mad. The language of strategic priorities suggests an element of picking winners: a little bit of an economic planning counterbalance to the aggregate preferences of 17 year olds which we use to allocate the majority of higher education funding in the UK. The funding allocated by OfS tops up this allocation by adding additional funds to support the preference of 17 year olds that have chosen courses that the regulator reckons might be a bit more costly to run. Those subjects are within four price groups:
- A: clinical study, which covers the clinical years of medicine, dentistry, veterinary, dental hygiene, and dental therapy courses
- B: Laboratory based sciences, engineering, and technology subjects – plus some healthcare courses (but not nursing)
- C1.1: Intermediate cost subjects: computing, information technology, archeology, nursing
- C1.2 Intermediate cost subjects in the performing arts, but media studies doesn’t get any funding
The full-time equivalent number of OfS fundable students (basically those able to access a fee loan) at each OfS registered (Approved (fee cap)) provider is used to determine the grant for that year based on a specific rate of funding per FTE as follows:
- A: £11,580
- B: £1,737
- C1.1: £289.50
- C1.2: £130.54
This bucket also contains a nursing premium, an allocation for very high-cost subjects within price group B, and funding for staff costs relating to medical and dental staff.
Then there was £273m for student access and success. The brief description would be that this is funding to cover the cost of supporting non-traditional students to succeed in higher education. It includes the Disabled Students Allowance premium (based on the number of students at a provider that have declared a disability). Access initiatives, like UniConnect, also sit in this bucket, as does the money allocated to supporting student mental health.
But the primary use of this stream is the so-called student premium (calculated separately for full and part time students using a formula based on a risk of non-continuation using three aspects: age (mature students are more at risk), qualification aim (undergraduate provision other than a first degree is more at risk), and entry qualification (the highest risk here is having a BTEC).
Jim Dickinson memorably described this allocation as the “magic money twig”: nominally meant to be used for student academic support, during the pandemic this allocation was devoted entirely to student hardship funds. In the absence of any meaningful attempts to address student poverty, it became the default answer to any parliamentary questions around student hardship.
We also saw £57.4m allocated to “world class” specialist providers – a group of 20 providers judged to be world-leading within their specific specialism based on a bidding round where they had to set out precisely how excellent they were.
Here’s how that works out at provider level using OfS’ latest – May 2026 – reckoning. This data gets updated as providers leave or join the register and student numbers are refined.
Everything else
And we should note a further £24m of SPG for national facilities (Jisc and the Janet network, the national student survey, and various regulatory initiatives and funding competition). If you are wondering why OfS has to pay for Jisc rather than Research England, given that the super-capable network and various other bits of infrastructure are focused largely on research needs, this is a historic anomaly that nobody has ever been bothered enough about to address.
This total of about £1.3bn pounds doesn’t feel like a lot compared to the £46bn of income generated in total by the sector (of which just under £25bn came from tuition fees of various sorts, with £13bn of that sum coming (largely via Student Finance England) from fees paid by or on behalf of UK domiciled students).
Even outside of tuition fee income SPG is not the only grant given to the sector by the government: Research England grants (supporting research and innovation activity) totalled around £2bn, and there are also allocations from the Department of Health (for healthcare course) and the bit of the Department for Education that deals with training teachers. Beyond that we get into government research grants for specific funded projects, resources, and activities.
Last year’s cut
Last year’s guidance letter – the first from the new government – represented a £108m cut in SPG funding. It included the end of high cost funding for media studies, journalism, publishing, and information services, and the end of a number of older funding streams linked to the strategic priorities of the previous government: the accelerated courses supplement, degree apprentices supplements, level 4 and 5 skills supplements, and postgraduate taught course supplements.
The big move, however, was the end of any student premium funding related to students studying via franchise and partnership agreements (except where the provider they were being taught at was registered in the Approved (fee cap) category).
And we add to this the sheer numeric imperative of there being less fundable students in the system than originally expected. As so much of the SPG is allocated via formulae that includes a measure of student numbers, changing patterns of recruitment will have an impact.
All this wasn’t as big a news story as it could have been because these cuts were already expected. The older streams were explicitly time-limited, the media studies move was the last stage in operationalising a Gavin Williamson era decision, and anyone who wasn’t expecting a franchising hit clearly hadn’t been following the news.
How to fund SPG
The money available for the Office for Students to use (for SPG and other things) is decided in broad terms via the parliamentary Estimates system based largely on an envelope set via the most recent spending review. The Estimates process is complex – but the main Estimates are generally published in April and voted on in July.
These set out the amount of money that would need to be allocated to departments in order to deliver their “ambit” – which can change from year to year. For example, for 2024-25 DfE’s ambit included setting up Skills England and running the Education and Skills Funding Agency. The former now sits in another department (the Department for Work and Pensions), the latter has closed: with administrative costs for doing the work ESFA used to do moved elsewhere in DfE.
For reasons like this, comparing estimates for different years is very complicated. For example in the 2026-27 DfE estimates we can see that the Higher Education (arms’ length bodies) resource DEL estimate is £1,643m – up from £1,610 last year (a 3 per cent increase). That’s subhead L, which covers OfS and the Student Loans Company.
But what gets confusing is that last year’s subhead L was £1,653m – so are we looking at a £10m cut or a £33m (broadly inflationary, to be fair) increase? Such is the confusion of the Estimates system – the difference is that the figure for last year’s spending in this year’s Estimates is restated based on what actually happened: it is, if you will, no longer an estimate.
Estimates, then, are not infallible – and the mechanism for updating them is the supplementary estimates process. All kinds of additional costs can crop up: it occurs, for example, that somehow OfS is going to have to find money to pay the University of Sussex’s costs (likely fairly substantial) after the recent high court judgement.
This year’s cut?
But it isn’t just higher education specific movements that can require changes. If you think about DfE spending as a whole you can spot one large recent spending increase (teachers’ pay) and one pending shift (changes to special education needs funding). And while Estimates nominally represents parliament signing off on spending (it has done so without protest since 1921!) the real agreement is with the Treasury.
It is possible that treasury officials, spooked by future commitments like those above, may want to see some restraint in other areas of spending. Traditionally departments offer up rather nebulous “efficiency savings” rather than cutting spending on stuff that people notice, but with a promise of significant efficiencies already baked into spending plans the next lines to face cuts would be those less likely to be noticed by the general public. And SPG fits neatly in that bracket – despite the likely impact on an already struggling sector.
Universities UK has argued (with support from London Economics analysis) that the government is currently making a historically low level of contribution to the costs of teaching – it calculates that just 23 per cent of these costs were covered by the government (via fee loan write-offs and SPG) for home undergraduate students starting their study in 2025-26, compared to a 2012 aspiration to cover 54 per cent.
This low level of investment means that further SPG cuts would have an outside impact on this figure, having an impact on an overall income per student that has already been affected by higher rates of inflation in recent years.
Such arguments do not, of course, have an impact on the availability of spending capacity within the government – there are many examples in recent years of governments forced to make unwise (long term) cuts in spending by extreme (short term) spending pressures. But it has to be said that higher education, quietly, has had rather a rough time of things.
