David Kernohan is an Associate Editor of Wonkhe

Though the January letter from Gavin Williamson defines the parameters these two new Office for Students consultations, on capital and recurrent funding, have been a long time brewing.

We were expecting something like this for most of last year. The pandemic threw most of OfS’s consultative plans up in the air, but of all the pieces we were waiting to see land these (and the quality and standards consultation) were the big ones. However, these deal only with the matter at hand – next year’s funding – and not the wider principles we were hoping for. But there are hints of longer term thinking in here.

What’s recurring?

The sector has until 6 May to feed back on proposed changes to 2021-22 recurrent funding from the OfS, bearing in mind that responses may also shape the Secretary of State’s mind in the possible use of section 77 powers for this financial year – we got a section 74 letter today on the allocation to specialist providers which means that the allocation for this year is equal to last years’ allocation plus £5m. OfS decisions will be made in June 2021 and will be published as quickly as possible. As a reminder – the state of play is as follows (as per the January guidance letter):

  • An increase in funding distributed through the high cost mechanism for healthcare related subjects: medicine, dentistry, veterinary science, nursing, and STEM subjects including computing and information technology.
  • Reductions in funding for the performing and creative arts, media studies, and archeology (but not footwear production)
  • Students from Crown Dependencies (like the Channel Islands and Isle of Man) included as OfS fundable students.
  • The demise of London weighting and linked allocations
  • £10m more for (some) specialist providers
  • A £20m cut to Uni Connect
  • An additional £5m for student hardship funds
  • £15m to support student transitions and mental health

As you’d expect, the overall amount of funding is not within the scope of the consultation. The unit of funding per fundable FTE will still be down nearly 20 per cent in real terms over 2018-19. And although the guidance letter may make you think that the shape of the funding model is a cut-and-dried case OfS notes that the letter is just one of many things it should “have regard” to in making these decisions.

The OfS’ own “policy priorities” will be familiar from the list above. It hopes to protect and enhance high-cost (and supplementary) funding, particularly for STEM and healthcare, it wants to see a funding enhancement for specialist providers, and to protect the total funding for improving access and supporting student success. You’ll note that this is translatable (and indeed, para 13 clearly translates these principles) to the list from the guidance letter. The only real additional OfS twiddle is that the reduction in high cost funding would now be for all non-STEM, non-healthcare subjects in the current C1 price groups. Which includes footwear production.

Clap for artists (and footwear designers)

The stem and healthcare priorities would be the beneficiaries of an increase in the high-cost funding budget from £744 to £756m – others subjects currently in receipt of funding will see cuts. OfS goes out of its way to praise the contribution of the creative and performing arts, archeology, and media studies to widening access and to the quality of our “society and culture”, our economy, and UK employment – here’s a taste:

Students studying design, and creative and performing arts have the highest proportion of any broad subject group to have a reported disability, with particularly high proportions in relation to cognitive or learning difficulties and mental health conditions. They also have a higher than average proportion coming from POLAR quintiles 1 and 2.

Students studying media, journalism and communications also have a higher proportion than average of students reporting a disability with relatively high proportions reporting mental health conditions. They also have a higher than average proportion coming from POLAR quintiles 1 and 2.

All these warm words do not disguise the fact that the high cost funding has been cut in half for these subject areas. It’s a big danger for a lot of providers, with specialists at a particular risk.

London specialisms

We then come to another exercise in arguing Gavin Williamson’s point for him – this time for the removal of all London weighting and premiums. Here, it is admitted that London is expensive, but that it is also a benefit for attracting international students. And participation is higher in London, particularly among mature students and minority ethnic groups. So that’s OK then. Apparently.

There’s a suggestion that providers will make some, but not all, of the loss back up with other allocations – though arts providers in London, of which so many joined the regulated sector following the 2017 Act, may be left wondering what hit them. There is, of course a new allocation for “world leading” specialist providers up  from £43m to £53m this-  but world leading is not defined by OfS. For the monent, there’s one last squeeze through the existing process – £48m committed to the 16 providers that already get specialist funding, and £5m held back to be distributed based on a review of the funding stream to conclude “well into” the 2021-22 academic year.

The basic parameters for the review expect that the “large majority” of specialist allocations will be distributed based on a competitive bidding process. For an old HEFCE hand, and veteran of the “better regulation” debates of the 00s, the sudden appearance of a new funding competition is a big surprise. Higher education provider leaders emphatically do not like the added uncertainty and bureaucratic burden of a round of bids – I can understand OfS wanting to be as transparent as possible, but we don’t get much detail on the criteria or time scales (other than well after the 2021-22 academic year has begun), and OfS do note that for some of the providers involved, this allocation involves a substantial slice of annual income.

Hardship times

The additional £5m for student hardship would split as follows: £775k to the disabled students’ premium, £3.75m through the full-time student premium, and £475k through the part time student premium – roughly the same proportions as the December £20m allocation was split by. Meanwhile the £15m for mental health and student transition is split between a formula fund (£12m, pro-rata by fundable FTE), and regulatory initiatives (£3m) – the later including additional money for the recent mental health competition run with the Department of Health, and a funded extension for student space.

Changes to the Disabled Students Premium were previously capped at no more than £200k extra compared to the previous year – this cap would go. And student completion status will be disregarded in the calculation of full-time and disabled student premiums, given data quality issues linked to the pandemic. Most other allocations in the system – including, notably, the overseas study allocation – remain as for 2020-21, though there is 14 per cent cut per FTE to the intensive postgraduate premium, and a 10 per cent cut to the payments for accelerated undergraduate degrees.

Why consult?

You might be wondering, given that this just operationalises the January Williamson letter, what benefit a response might bring. But OfS is keen to see other proposals, particularly those that are “able to present an overall package of measures that are (sic) similarly able to balance the varying competing needs of higher education within the fixed budget”. It has a duty under HERA section 2 to have regard to a whole variety of influences on the way funds are allocated – the responses to this consultation are very much part of the mix.

Institutional impacts

The regulator helpfully provides a set of indicative allocations based on the proposals in the consultation. I’ve visualised these for you here – starting with the overall change by provider.

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And here’s the detail – use the drop down menu to see the impact on your provider.

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That’s capital

Capital funding from England’s regulator is not as big a deal as it used to be, but we are still talking about a cool £150m – the allocation of £130m.

The priorities are facilities for high cost STEM subjects, and the development of flexible provision (including part-time, online, and blended study). There’s the over-riding provisio that expenditure should demonstrate value for money.

OfS would prefer all this went via a bidding process, in a change from the formula derived 2020-21 method. Assessors, not algorithms, seems to be the order of the day. There’s a hefty chunk about the potential for a formula allocation, but very much written in a way to emphasise problems with targeting and value for money.

We get a list of proposed assessment criteria – on relevance and value for money. The first sneaks in the enhancement of employability and skills needs of employers and industry, particularly at L4 and L5. The second is as you would expect, with the usual safeguards on the use of funding, project and risk management, and procurement rules. I’m still startled to see nothing about exchequer interest in these things – especially given the growth of the market for campuses and providers.

We even get information on the detailed assessment process that is proposed, I’d like to think Michael Barber had a hand in the use of a six point (0-5) rather than five point (1-5) grading rubric. Unused funding would be clawed back at the end of the financial year.

The deadline to respond on the capital consultation is 23 April.

3 responses to “OfS consults on capital and recurrent funding for 2021-22

  1. The effort involved in HEIs and within OFS in distributing such a small amount of capital funding seems very disproportionate, overly bureaucratic and an example where VFM of the process isn’t considered.

  2. On specialist institution funding, the introduction of a bidding competition is now new – it has operated for many funding rounds. It has been ostensibly a criteria-driven bidding process aligned with a review of the scheme and assessed by an independent panel (I was a member of it a couple of rounds ago) but always in the context of a funding envelope. The latest review process has been repeatedly delayed and the exact timing still seems uncertain. So, uncertainty for specialist institutions and the extra money will surely not compensate for lost OfS funding, especially for the specialist arts institutions in London who will be hit by a double whammy.

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