Small and Specialist Institutions

B8/08

Agenda item 10

24 January 2008

Issue

1. A group of small and specialist institutions currently receive additional HEFCE

funding through the allocation of an institutional premium. As part of the latest review of

the funding method for teaching it was agreed that we should move from this system of

institutional premiums to targeted allocations. To assist in developing this approach the

advice of an advisory group has been sought on the underlying principles that should

inform the provision of a targeted allocation for these institutions together with funding

implications. This paper presents the recommendations following advice from the Small

and Specialist Institutions Review (SSIRG).

Recommendation(s)

2. The Board is invited to agree:

a. To remove the category of specialist institution from HEFCE’s approach

to the funding of teaching;

b. To fund those specialist institutions currently in receipt of an institutional

premium of up to 10 per cent by moving this funding into their mainstream

grant;

c. That for those institutions in receipt of institutional premiums in excess of

10 per cent should be converted to targeted allocation for 2008 – 09;

d. That HEFCE continue to develop the initial work on public interest and

public value with a view to having a model applicable across the sector by

2010;

e. That the small institution premium for six institutions in paragraph 30 be

provided as part of mainstream grant;

f. That the small institution premium provided to Oxford and Cambridge be

converted to a specific targeted allocation and reviewed in the light of any

review of fees post 2009;

g. That HEFCE require each institution in receipt of a targeted allocation

provide an indication of how they will address both the general and

specific public interest issues;

h. That funding for additional student places in these institutions should be

provided at standard levels of HEFCE funding;

i. That HEFCE undertake to review targeted allocations discussed in this

paper at least every five years;

j. That HEFCE keep the land based studies area of provision under review.

Timing for decisions

3. Agreement of the general approach and principles at this Board meeting will allow

the funding implications for 2008 – 09 to be implemented as part of the general funding

round work for next year.

Further information

4. Liz Beaty (0117 931 7062, l.beaty@hefce.ac.uk) or Derek Hicks (0117 931 7460,

d.hicks@hefce.ac.uk).

2

Background

5. We consulted the sector on a new approach to the funding of teaching where part

of the funding available to institutions would be through a specific targeted allocation.

Such allocations would have specific purposes and be outside of the tolerance band. The

consultation showed strong support for this general approach.

6. As part of the ongoing work to develop fully the targeted allocation approach, a

review of the special funding that is attributed to small and to specialist institutions has

been undertaken. Specifically, an advisory group chaired by Dame Janet Ritterman has

been established to develop recommendations about the best way of moving from the

allocation of an institutional premium as a generalised way of supporting small and

specialist institutions towards a system of targeted allocations. The membership and

terms of reference are attached at Annex A.

7. In developing their recommendations the SSIRG has drawn on the previous work

on specialist institutions such as the Sutherland, Hosier and Ralph reviews, together with

the views of the small and specialist institutions in response to a letter sent to each of

them in August (a copy of this letter is attached at Annex B). The SSIRG has also been

keen to work with the grain of HEFCE’s general approach to the funding of teaching, with

the block grant and the autonomy of institutions seen as vital elements in supporting a

vibrant, diverse and sustainable sector. Additionally, the SSIRG has been conscious of

the major changes in the general funding environment, and has taken the need to

provide some measure of stability, where appropriate, to institutional funding as an

important objective of their work.

8. Five other factors have also been significant influences in shaping the

recommendations made by the SSIRG:

a. That the small and specialist institutions are a vital part of the overall HE

ecology in England, providing important elements of diversity for students,

employers and staff;

b. That the evidence of previous reviews and some of the emerging TRAC data

demonstrate that there are significant additional costs being incurred in many of

these institutions;

c. That HEFCE funding should not provide disincentives to institutions seeking

other sources of income to support their teaching activities, nor to developing

relationships up to and including merger with other HEIs;

d. That providing a targeted allocation to support the small or specialist

institutions should be seen as an exceptional approach, adopted where other

approaches are judged to be unlikely to secure the benefits required;

e. That all of the SSIRG funding recommendations may well need to be

revisited after 2009 in the light of any more general review of fees.

3

Discussion

9. The discussion and recommendations below will focus first on the specialist

institution premium and then on the small institution premium.

Specialist institutions

10. There have been significant changes to the institutions comprising the specialist

institutions group, with a number joining the HEFCE sector since 1998 (Arts Institute

Bournemouth, Birmingham College of Food, Courtauld Institute, Guildhall School of

Music & Drama, Heythrop College, Institute of Cancer Research, Royal Agricultural

College). In addition, we have seen the creation of new institutions through merger such

as the University College for the Creative Arts bringing together Kent and Surrey

Institutes of Art, and a brand new institution, the Conservatoire for Dance and Drama.

Finally, four institutions have or are scheduled to merge during 2007 or 2008 (Cumbria

Institute of Art, Dartington College of Arts, RCN Institute, St Martin’s College), so have

not been considered as part of this review. (The current list of specialist institutions and

an indication of the premium they receive - both percentage and funding - is at Annex C).

In addition, other exercises have been undertaken to look at the funding of various areas

of provision such as education, sports science, psychology and media studies ( subject

areas common in many of the specialist institutions), and this work has led to funding

changes which have removed the need for a premium for some of those institutions.

11. Another important development that the SSIRG has taken into account has been

the transfer of funding responsibility from HEFCE to the Teacher Training Agency – now

the Teacher Development Agency – for Initial Teacher Training (TDA), and to the NHS

for nursing and other professions allied to health since the specialist institution category

was established in 1998. This has seen major shifts in funding routes as many of the

specialist institutions have very significant elements of one or both of these areas. The

effect of this is that HEFCE provision often forms only a part, and sometimes a minority

part, of provision and funding at some of these institutions.

12. The factors outlined above have led the Group to consider whether the whole

specialist institution category is still useful as part of a new funding model. They

concluded that it is not. In coming to this view, the SSIRG has taken particular note of the

original Sutherland Report recommendation concerning the provision of an institutional

premium only where the institution would move significantly above the +5 per cent level

without one. This approach has meant that currently around a third of such institutions

receive no premium at all, and a further 20 per cent or so a relatively small percentage of

between 10 per cent (the vast majority) and 20 per cent. The SSIRG has also noted that

the impact of the premium is often simply to move the institutions within the contract

range. Taking all this into account, the SSIRG believe that a new approach is now

required.

4

A new approach

13. As a first step in a new approach the SSIRG believe, given the factors noted

above, the specialist institution category has now served its purpose and should be

abandoned.

Recommendation: To remove the specialist institution category from HEFCE’s

approach to funding.

14. If we remove the specialist institution category then plainly a new way of dealing

with the funding of this group of institutions obviously needs to be developed. In the view

of the SSIRG, the best way forward would be to split the specialist institutions into those

receiving high or relatively high levels of funding through the institutional premium route

from those receiving lower levels or no premium at all.

Institutions receiving an institutional premium up to 10 per cent

15. Of the 40 institutions included in the remit of the SSIRG, it can be seen (at

Annex C) that 20 are in receipt of either a small premium of up to 10 per cent, or no

premium at all. Many of these institutions have characteristics in common such as

significant proportions of initial teacher training (ITT) or a history of mixed FE and HE

provision and funding. It is also the case that despite major changes to funding sources

these institutions have been generally stable over the last five or six years, despite the

major changes to funding mentioned above.

16. With almost 10 years’ of funding experience under the current approach there is

no clear evidence to suggest that a substantial increase in funding is required to ensure

the long term sustainability of any of these 20 specialist institutions. However, the SSIRG

believes that these institutions provide a very important contribution to a diverse HE

sector, and that broad stability in actual funding levels is particularly important at this

time. Their view is that HEFCE should continue to provide this funding, not as a targeted

allocation but as a part of the mainstream grant for those institutions currently in receipt

of this institutional premium. The total sum involved here would be in the order of £12.2

million, but this approach does not require any additional funding to be made available.

The main impact would be to affect institutions’ positions within the contract range. The

implications of such an approach would require a small number of institutions to recruit

more students in order to come back within the tolerance band. The impact of this

approach (based on 2006 – 07 figures) is outlined in Annex D.

Recommendation: To move the funding provided via the 10 per cent institutional

premium into mainstream funding for each institution.

5

Institutions receiving a higher level of premium – next steps

17. If we deal with the institutions in receipt of premiums of up to 10 per cent as

outlined above, we are left with 20 institutions (assuming Dartington College of Arts

merges during 2008) in receipt of premiums ranging from 20 per cent to 305 per cent,

totalling around £46 million. Almost all of these 20 institutions are very highly specialized,

often with only one subject area of provision. They also include some of the most highly

regarded institutions in their particular areas of specialism, many having extremely close

relationships with the employment sector that they serve, and many also playing major

national and international roles in the HE sector. The SSIRG understands and accepts

the importance of the roles being fulfilled by these institutions for the HE sector and for

the country.

18. In addition, a significant number of these institutions have been subject to

detailed review to identify the scale and nature of additional costs incurred in delivering

their particular areas of provision. Based on this information, and coupled with the

knowledge of the SSIRG, there is no reason to question either that substantial additional

costs are incurred, nor that reducing funding would, in most, but importantly not all, cases

have a major negative impact on the institutions and the provision offered. Equally,

drawing on the same evidence base, the SSIRG is clear that there is no strong case for

increasing the general level of HEFCE funding to this group of institutions at this time.

19. The SSIRG view is that standard HEFCE funding would not be sufficient to allow

these institutions to deliver their provision in the way and at the quality they currently

offer. As has also been noted, there is good evidence to support the fact that significant

additional costs are necessarily being incurred by many of the specialist institutions under

review. It is also clear that for many of these institutions the current levels of funding are

of such significance that major reductions would damage their viability, especially whilst

the general HE market is still developing. Each of these factors plays out in an

environment where the HE sector in general is undergoing some major changes in terms

of funding, in particular with the introduction of variable fees for full time undergraduate

provision.

20. Whilst short term stability is seen as important, the SSIRG has been giving

considerable thought to the basis on which any additional HEFCE funding might be made

available to this group of institutions in the longer run. Here major themes have been

public interest and public value. Whilst this group of institutions shares many general

characteristics, they are very diverse in the areas of provision covered and their particular

types of provision. Some are wholly postgraduate, some have four year undergraduate

programmes, some are very active in research, and some have major sources of funding

other than HEFCE. Despite this varied set of institutions, the SSIRG has developed

some initial thoughts around how public interest and public value tests might be used at a

strategic level to inform funding decisions, but it has not so far been possible to develop a

simple model that could drive funding for such a diverse set of institutions.

6

21. Given these circumstances, the SSIRG believes that short term stability of

funding should be a priority for this group of 20 institutions. Our view is that the best way

to deliver this stability in the short term is simply to convert current specialist institution

premiums into targeted allocations for 2008 – 09 with a view to undertaking further work

that could result in funding changes in later years.

Recommendation: That for those institutions in receipt of institutional premiums

in excess of 10 per cent should be converted to targeted allocation for 2008 – 09.

22. In addition to the varied and complex issues relating to the group of small and

specialist institutions within the remit of the SSIRG, based on their work to date it is

equally clear that the public interest and public value issue would have significant

implications for HEFCE funding beyond this particular group. If public interest and public

value is to form a significant part of a HEFCE funding approach to teaching, we believe

that there is a need for further work to be undertaken to develop these ideas in the

context of the sector as a whole rather than simply focusing on this group of 20

institutions.

Recommendation: That HEFCE continue to develop the initial work on public

interest and public value with a view to having a model applicable across the

sector by 2010.

The Small Institution Premium

23. ln addition to the specialist institution question, the SSIRG was asked to consider

the small institution premium. This affects only eight institutions (see Annex E), and is

only really significant for Oxford and Cambridge where it is an integral part of the

settlement reached in respect of the withdrawal by the Department for Education and

Skills (as was) of funding for college fees. The total value of funding involved is around

£9.1 million with around £7.82 million going to Oxford and Cambridge.

24. The SSIRG was persuaded that for the very small institutions, this premium plays

an important part in supporting them as part of a diverse sector. In these cases the

SSIRG view was that the funding should continue to be provided. However, the SSIRG

also noted that there was a very wide difference in scale both of the premiums paid and

the institutions involved, in particular Oxford and Cambridge. Here they accepted that the

small institution premium played an important part in supporting the college system at

Oxford and Cambridge in the current funding environment. So, whilst persuaded that

overall there was a case for this funding to continue, the SSIRG made two observations.

First, that HEFCE should give close consideration as to whether this funding was

providing institutions with an incentive not to address issues of sustainability. Second,

with reference to Oxford and Cambridge, that this funding stream, and its relationship to

the overall settlement relating to college fees, should be reconsidered in the light of any

review of tuition fees.

7

25. The SSIRG’s view was that the small institution premium simply be converted to

a specific targeted allocation. However, we have considered this approach and believe

that the sums involved for six of these institutions (Bishop Grosseteste University

College, Norwich School of Art and Design, School of Pharmacy, Ravensbourne College,

Royal Veterinary College, Writtle College) would be better handled by adopting the same

approach as for the 10 per cent specialist institution premium i.e. providing it as part of

their mainstream grant. The combined impact of mainstreaming the small and specialist

institutional premiums is outlined in Annex F.

Recommendation: That the small institution premium for Bishop Grosseteste

University College, Norwich School of Art and Design, School of Pharmacy,

Ravensbourne College, Royal Veterinary College and Writtle College be provided

as part of mainstream grant.

26. The exceptions to this approach, primarily because they are of a much more

significant scale, would be Oxford and Cambridge, where moving the premiums into a

targeted allocation would be a more appropriate approach. In taking this line, we do

accept the comment of the SSIRG about the importance of reviewing this strand of

funding in the light of any future review of undergraduate fees.

Recommendation: That the small institution premium provided to Oxford and

Cambridge be converted to a specific targeted allocation and reviewed in the light

of any review of fees post 2009.

General issues

27. In developing their thinking around a public interest approach, the SSIRG has

emphasised that the targeted allocation should be regarded being provided to secure

both general, in terms of the HE sector, and specific, in terms of that institution, aspects

of public interest and public value. As such, it would expect any institutions in receipt of

such funding to be clear both about the specific public interest areas that they were

addressing, and the general public interest issues including factors such as widening

participation, student satisfaction, employment rates, quality of provision, and the national

and international roles played by many of these institutions. The SSIRG would expect an

explicit undertaking from institutions receiving the targeted allocation confirming that they

would exercise their best efforts in relation both to the specific and general public interest

aspects.

Recommendation: That HEFCE should require each institution in receipt of a

targeted allocation provide an indication of how they will address both the general

and specific public interest issues.

8

28. There is a further important assumption implicit in the approach to targeted

allocations that the SSIRG is taking, and that relates to growth. The SSIRG does not

believe that there is a strong or clear case for providing further HEFCE funds to support

an increase in the types of provision offered by many of the institutions covered by this

review, particularly in respect of the highly vocational performing arts provision such as

acting, and dance. There is no evidence that employers in the sectors served by these

institutions are demanding more graduates; their concern is more focused on the type of

graduate and their range of skills. Overall, the SSIRG believes that supply and demand

for graduates in the areas covered by the specialists is broadly in balance. However, this

was not specifically a part of the SSIRG’s remit and there may be a need for further work

in this area.

29. The SSIRG has concerns about another issue related to growth. Under the

current institutional premium arrangements additional student numbers allocated to HEIs

in receipt of a premium also attract premium funding. In general, the targeted allocation is

seen as a specific addition to institutional funding to support the existing levels of activity.

Given the points noted above about the overall level of some types of provision, the

SSIRG suggested that HEFCE give serious consideration as to whether funding for ASNs

should automatically include a targeted allocation element and we endorse this

suggestion.

Recommendation: That funding for additional student places in these institutions

should be provided at standard levels of HEFCE funding.

30. In making recommendations for targeted allocations, the SSIRG is aware that a

balance needs to be struck between providing some stability in the general funding

environment, and ensuring that there is scope to respond to changing circumstances.

The targeted allocation approach is predicated on such allocations being essentially

strategic in nature. With this in mind, the SSIRG would expect the Funding Council to

review each institution’s targeted allocation on a regular basis, and at least every five

years, to ensure that they are still serving the purpose for which they were provided.

Recommendation: That HEFCE undertake to review targeted allocations

discussed in this paper at least every five years.

31. The SSIRG has paid close attention to the possible impact of these

recommendations on the land based institutions. They have also taken account of the

Land Based Studies Review published in the Spring of 2007, and the very full responses

of these institutions provided to the SSIRG. Taking all these factors into account, the

SSIRG does not see a strong case for significant changes to funding via the targeted

allocation route at this stage, but would ask HEFCE to keep the position of this important

area of provision under review to ensure that steps could be taken if there were a major

threat to the sustainability of the provision.

Recommendation: That HEFCE keep the land based studies area of provision

under review.

9

Financial implications

32. There are no major financial implications to implementing these

recommendations as the majority of the funding is already provided via a small or

specialist institution premium. It is also important to note that moving to a targeted

allocation approach allows for much greater dynamism in the HEFCE funding approach,

with the ability to respond more directly to a changing HE environment.

Risk implications

33. One risk associated with the recommendations about the future funding approach

for institutions currently in receipt of an institutional premium of 10 per cent or less and/or

a small institution premium is that some of them will be required to recruit additional

students in order to come back within the contract range. We can mitigate this risk

through adopting a flexible approach as to timescales over which the institutions need to

return within the tolerance band. We have also already been in discussion informally with

many of the institutions affected to test out their reactions, and generally it has been

positive.

34. A further risk which is inherent in the whole targeted allocation approach is that it

is potentially more dynamic in funding terms. As the basis on which we provide these

targeted allocations becomes tied more closely to securing a public interest, changes in

the external environment can be more easily reflected in these allocations. This could

lead to more funding turbulence, but in many ways such a dynamic environment is one of

the aims of the whole targeted allocation approach. To mitigate this risk we can adopt a

flexible approach as to how we might implement any funding changes, either in terms of

timescale or through identifying other sources of funding.

Sector impact

35. A full sector impact assessment has been carried out as part of the overall

Teaching Funding Review work and there are no major negative implications for

institutions or the sector arising from this work.

Public presentation

36. Should these recommendations be agreed we will need to communicate directly

with the institutions concerned and the sector more generally. However, without the

funding implications communication at this stage might not be very helpful. In view of this

a general message will be sent indicating that in broad terms funding stability will be

maintained, and that the detailed funding implications will be provided after the February

HEFCE Board meeting. In addition, a formal report from the SSIRG will be made

available to the sector by March 2008.

10

Annex A

Small and Specialist Institution Review Group (SSIRG)

We are presently reviewing the nature of our support for small and specialist institutions.

This review will be overseen by an expert panel, chaired by Dame Janet Ritterman. The

panel will review current definitions of small and specialist institutions and advise on the

features of institutions and provision that should be recognised through targeted

allocations. In undertaking this work, the panel will be in touch with every institution that

presently receives the small or specialist premium. We expect the panel to report to the

HEFCE Board by January 2008, in order to inform funding for 2008-09.

SSIRG Panel Terms of Reference.

The role of the SSIRG panel will be to;

! Review current definitions of small and specialist institutions.

! Advise on the features of institutions and provision that should be funded

higher than the standard HEFCE rate through targeted allocations.

! Make recommendations to the HEFCE Board in the light of the review concerning;

o The institutions to be included for targeted allocations;

o The funding criteria for targeted allocations to small and specialist

institutions;

o The funding levels for targeted allocations to small and specialist

institutions.

SSIRG members

Dame Janet Ritterman Chair

Professor Les Ebdon University of Bedfordshire

Lesley Morris Design Council

Linda Holbeche Work Foundation

Professor David Green University of Worcester

Rev Dr Richard Ralph Independent Consultant

For further information please contact Derek Hicks: d.hicks@hefce.ac.uk, 01179 7460 or

Sandy Jones: s.jones@hefce.ac.uk, 01179 31 7379

Annex B

Dear

Small and Specialist Institutions Review

As you may know, within HEFCE’s review of the teaching funding method there is

provision for a review of the special funding that is attributed to small and to specialist

institutions. Following an earlier consultation, HEFCE plans to move from the allocation of

an institutional premium as a generalised way of supporting small and specialist

institutions towards a system of targeted allocations. I have been asked to chair the Small

and Specialist Institutions Review Group (SSIRG), an advisory panel established to make

recommendations to the HEFCE Board about how to implement the targeted allocation

approach. You will find information on the Small and Specialist Institutions Review Group,

and on the whole teaching funding review, on the HEFCE website -

http://www.hefce.ac.uk/learning/funding/review/ssirg/.

The key purpose of this part of the review is to recommend a basis and an allocation

method for these targeted allocations. In conducting this review the SSIRG plans to draw

on previous work undertaken – where the focus was significantly around identifying areas

of additional cost (e.g. as described in the Sutherland, Hosier and Ralph Reports) –

together with other existing information, such as HESA data. It is therefore not anticipated

that further detailed work on costs of provision will be needed on this occasion.

Instead the Review Group will focus mainly on the identification of key principles to

underpin a funding approach. Among the main issues to be explored will be that of ‘public

interest’, as it relates, for example, to the maintenance of a diverse sector, or of expertise

in areas of strategic importance where the market alone is unlikely to provide sufficient

funding for their long term sustainability.

On these, and related issues, your advice will be most welcome. Therefore, as part of the

interaction with institutions, you are invited to send comments on the following:

! What is your view on the aspects of a small or a specialist institution that should

attract public funds over and above that provided through the mainstream HEFCE

grant?

! What is your institution’s position as a small or a specialist institution within the

higher education sector, and what are the specific aspects that you believe should

receive additional public funds over and above that provided through the mainstream

HEFCE grant?

! Do you have any further comments for the small and specialist review group

regarding the small and specialist premium allocations?

On 6th

August will send you by email a document on which you are invited to respond

with your comments. It would be helpful to receive these by 18th

September 2007.

The Review Group will use the comments and information that are collected during this

exercise to help develop its thinking about criteria that could be used to determine how

the targeted allocation approach is implemented.

Members of the panel may wish to have further discussions with some institutions.

Please indicate when emailing your comments whether you are willing to volunteer for

this.

HEFCE has been providing a range of briefings to institutions over the past few months

to outline the general approach to the new teaching funding methodology. However, you

may wish to clarify some points or have further questions. The HEFCE staff working on

this are arranging a series of telephone surgeries for this purpose, so if you wish to book

a time to speak with the team at HEFCE, please contact Sandy Jones on 01179 31 7379,

s.jones@hefce.ac.uk.

Yours sincerely,

Dame Janet Ritterman

Annex C

Specialist Institutions 2007 - 08

Institution

%tage

specialist

institution

premium

Specialist

institution

premium £

Guildhall School of Music & Drama 0.00% 0

Heythrop College 0.00% 0

Newman College of Higher Education 0.00% 0

School of Pharmacy 0.00% 0

Royal Veterinary College 0.00% 0

St George's Hospital Medical School 0.00% 0

College of St Mark & St John 0.00% 0

St Martin's College 0.00% 0

Trinity & All Saints 0.00% 0

Birmingham College 0.00% 0

School of Pharmacy 0.0% 0

Royal Veterinary College 0.0% 0

Writtle College 0.0% 0

Arts Institute at Bournemouth 10.0% 921,837

University College for the Creative Arts 10.0% 2,366,954

University College Falmouth 10.0% 1,057,793

University of the Arts London 10.0% 5,152,779

London Sch of Economics & Political Sci 10.0% 1,479,845

Norwich School of Art & Design 10.0% 595,073

Ravensbourne College 10.0% 630,682

School of Oriental and African Studies 13.0% 1,182,097

Harper Adams University College 20.0% 1,768,048

Leeds College of Music 23.0% 697,414

London Business School 25.0% 553,409

Institute of Cancer Research 27.0% 256,658

London Sch. of Hygiene & Tropical Med. 27.0% 889,294

Liverpool Institute for Performing Arts 30.0% 788,946

Rose Bruford College 35.0% 1,104,901

Royal Agricultural College 40.0% 1,440,441

Central School of Speech and Drama 60.0% 1,982,044

Institute of Education 65.0% 3,087,328

Courtauld Institute of Art 75.0% 758,819

Royal Academy of Music 125.0% 2,572,441

Royal College of Music 130.8% 2,958,999

Conservatoire for Dance and Drama 134.0% 5,807,762

Trinity Laban 140.0% 5,001,835

Royal Northern College of Music 150.0% 4,047,380

Cranfield University 155.0% 8,464,836

Royal College of Art 260.0% 8,501,594

University of London 305.0% 1,391,187

65,460,396

Annex D

Specialist institutions with a 10% institution-specific premium

Source: 2007-08 individual grant tables (from InfoBase), institution-specific premium on Table G set to 0.

Institution

Current

percentage

difference

Funding relating

to the institution-

specific

premium

Percentage difference

without the premium

(assumed resource

stays the same) Notes

H-0197 Arts Institute at Bournemouth -1.9% 921,837 7.7%

H-0206 University College for the Creative Arts -1.2% 2,366,954 8.5%

H-0017 University College Falmouth -5.6% 1,057,793 3.6%

Due to merge with Dartington in January 2008 and

will no longer have a 10% premium (likely to be

around 18%)

H-0024 University of the Arts London -2.9% 5,152,779 5.7%

H-0137 London School of Economic and Political Science -6.9% 1,479,845 1.1%

H-0190 Norwich School of Art and Design 1.1% 595,073 10.4%

H-0030 Ravensbourne College -5.2% 625,699 3.0%

Annex E

Small institutions and premium 2007 - 08

Institution

Funding relating

to the small

institution

premium

Bishop Grosseteste University College 107,899

University of Cambridge 3,025,579

Norwich School of Art & Design 99,275

University of Oxford 4,796,616

School of Pharmacy 225,572

Ravensbourne College 357,887

Royal Veterinary College 414,692

Writtle College 113,112

9,140,632

Annex F

Change to percentage differences after setting the institution-specific and small institutions premiums to zero

Original 2007-

08

percentage

difference

(October)

Funding relating

to the institution-

specific premium

Funding relating

to the small

institution

premium

Percentage

difference after

removing the

institution-specific

premium

Percentage difference

after removing the

institution-specific and

small institution

premium

Bishop Grosseteste University College -5.0% 0 107,899 -5.0% -2.8%

Norwich School of Art & Design 1.1% 595,073 99,275 10.4% 12.2%

School of Pharmacy 1.3% 0 225,572 1.3% 5.8%

Ravensbourne College -5.1% 630,682 357,887 3.2% 8.5%

Royal Veterinary College -5.1% 0 414,692 -5.1% -3.3%

Writtle College 4.6% 0 113,112 4.6% 6.8%

Outcomes of the Small and Specialist Institution Review

1. This document sets out the outcomes of HEFCE’s review of funding for small and

specialist institutions. These outcomes are informed by the advice of the Small and

Specialist Institution Review Group (SSIRG) in consultation with small and specialist

institutions and other stakeholders. It concludes that HEFCE funding plays an important

role in protecting certain forms of provision but that additional funding is not required by

all small and specialist institutions. It is for information only.

Background

2. In early 2007, HEFCE began a review of the additional funding received by small

and specialist institutions. This took place within the context of HEFCE’s more general

review of funding for teaching, described in HEFCE 2005/41 and HEFCE 2007/02.

3. The Small and Specialist Institution Review Group (SSIRG) was established in

April 2007 to advise HEFCE in this process. The role of the SSIRG was to:

a. Review current definitions of small and specialist institutions.

b. Advise on the features of institutions and provision that should be funded

higher than the standard HEFCE rate through targeted allocations.

c. Make recommendations to the HEFCE Board in the light of the review

concerning:

i. The institutions to be included for targeted allocations

ii. The funding criteria for targeted allocations to small and specialist

institutions

iii. The funding levels for targeted allocations to small and specialist

institutions.

4. The SSIRG was chaired by Dame Janet Ritterman. Full terms of reference of the

group, and its membership, can be viewed on the HEFCE web-site at

www.hefce.ac.uk/learning/funding/review/ssirg/.

Consultation

5. In August 2007, the Chair of the SSIRG wrote to small and specialist institutions

and other stakeholders, inviting them to comment on the following questions:

a. What is your view on the aspects of a small or a specialist institution that

should attract public funds over and above those provided through the

mainstream HEFCE grant?

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b. What is your institution’s position as a small or a specialist institution

within the higher education sector, and what are the specific aspects that you

believe should receive additional public funds over and above those provided

through the mainstream HEFCE grant?

c. Do you have any further comments for the small and specialist review

group regarding the small and specialist premium allocations?

6. Thirty-three institutions responded to these questions. Many of these responses

discussed the additional costs that are incurred by small and specialist institutions. For

instance, a number of respondents suggested that the provision offered by small and

specialists is particularly expensive due to low student-staff ratios, or the use of top-of-

the-range technology. Some conservatoires highlighted the additional costs involved in

auditioning students and in maintaining performance spaces that are open to the public.

Other respondents noted that their costs are increased by the need to recruit staff with

particular experience, and to work closely with small and medium-sized enterprises

(SMEs).

7. Respondents also discussed the particular role of small and specialist institutions

in the HE sector. Here various claims were made: some respondents argued that small

and specialist institutions provide a particular type of environment for students because

of their teaching style; their existence therefore protects student choice. Others argued

that some small and specialist institutions contribute to innovation in the sector, and may

be centres for excellence, nationally and internationally. Some respondents commented

that many small and specialist institutions provide highly tailored provision, which

produces graduates equipped to work in a variety of settings, including SMEs.

Outcomes of the Small and Specialist Review

8. In its deliberations, the SSIRG acknowledged that HEFCE funding plays an

important role in protecting certain forms of provision. However, such additional funding

is not required by all small and specialist institutions – in many cases, standard HEFCE

funding is sufficient to enable them to deliver their aims. The group also agreed that there

is a need to make any additional HEFCE funding transparent, and to ensure that it is

more explicitly tied to the public value delivered by institutions in receipt of this funding.

9. The SSIRG invited the HEFCE Board to agree:

a. To remove the category of specialist institution from HEFCE’s approach to

the funding of teaching, on the grounds that specialism, per se, is not sufficient

grounds for the award of additional funding.

b. That where an institution is in receipt of a specialist premium of 10 per cent,

or less, this funding should be retained in their mainstream teaching grant. This will

not reduce funding for these institutions. Depending on their position in the

tolerance band it may, however, require the recruitment of additional students.

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c. That where an institution is in receipt of a specialist premium in excess of 10

per cent, this should be converted to an institutional targeted allocation for 2008 –

09.

d. That HEFCE continues to develop the initial work on public interest and

public value with a view to having a model applicable across the sector by 2010.

e. That the small institution premium provided to Oxford and Cambridge be

converted to a specific targeted allocation and reviewed in the light of any review of

fees post 2009.

f. That other small institution premiums be provided as part of mainstream

grant.

g. That HEFCE requires each institution in receipt of a targeted allocation to

provide an indication of how they will address the general and specific public

interest issues.

h. That funding for additional student places in these institutions should be

provided at standard levels of HEFCE funding.

i. That HEFCE undertakes to review targeted allocations discussed in this

paper at least every five years.

j. That HEFCE keeps the land-based studies area of provision under review.

10. These recommendations were accepted by the HEFCE Board in January 2008.

The Board also requested that HEFCE should proceed immediately to examine the

additional funding that will be awarded through the targeted allocations. The Board paper

and minutes can be viewed on HEFCE’s web-site at

www.hefce.ac.uk/pubs/board/2008/118/.

Future work

11. In February 2008, HEFCE began a review of exceptional funding for institutions

(REFI). The aim of this review is to consider the circumstances in which institutions may

be eligible for funding that falls outside HEFCE’s usual formulaic approach, focusing on

those institutions that will receive an institution-specific targeted allocation in 2008-09

(listed in Annex A). A group formed on the basis of the SSIRG, and augmented by

additional members, will advise the REFI. The terms of reference of this group can be

found on the HEFCE web-site at www.hefce.ac.uk/learning/funding/review/refi.

Further information

12. Further information is available from Anna Sherratt, e-mail a.sherratt@hefce.ac.uk,

tel 0117 931 7236, or Sandy Jones, e-mail s.jones@hefce.ac.uk, tel 0117 9317379.

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Annex A

Institutions to receive an institutional targeted allocations in 2008-09

Central School of Speech and Drama

Conservatoire for Dance and Drama

Courtauld Institute of Art

Cranfield University

Harper Adams University College

Institute of Cancer Research

Institute of Education

Leeds College of Music

Liverpool Institute for Performing Arts

London Business School

London School. of Hygiene & Tropical Medicine.

Rose Bruford College

Royal Academy of Music

Royal Agricultural College

Royal College of Art

Royal College of Music

Royal Northern College of Music

School of Oriental and African Studies

Trinity Laban

University College Falmouth

University of Cambridge

University of London

University of Oxford

Institutions whose premium will be added to their mainstream teaching grant

Arts Institute at Bournemouth

University College Birmingham

Bishop Grosseteste University College

University College Plymouth, St Mark & St John

Cumbria Institute of the Arts (Now included in the University of Cumbria)

Guildhall School of Music & Drama

Heythrop College

London School of Economics & Political Science

Newman University College

Norwich School of Art & Design

Ravensbourne College

RCN Institute

Royal Veterinary College

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School of Pharmacy

St George's Hospital Medical School

St Martin's College (Now included in the University of Cumbria)

Trinity & All Saints

University College Falmouth

University College for the Creative Arts

University of the Arts London

Writtle College

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