A quiet delivery for the annual HEFCE Grant Letter


The annual HEFCE Grant Letter sidled out of BIS without much fanfare last Friday. We are not sure why it came out so quietly when there is so much to welcome in it: recognition that a successful university sector is vital to the economic prospects of the UK; excellent world-leading research should be funded wherever it is found; support for student opportunity funding; and a drive to improve our understanding of its impact and recognition of the value of the Higher Education Innovation Fund.

Here we pull out the key areas from each section of the letter.

Teaching and Learning

Student Opportunity Funding is the only funding that recognises the additional cost of supporting students from non-traditional backgrounds.  We are pleased that this will be protected and we will continue to work with HEFCE to develop further robust evidence to demonstrate its effectiveness.

We need to look harder at how we create progression routes for all – how we help students to develop the additional attributes, including social capital, they need to succeed at university, in the workplace and in later life. This means ensuring there is no cap on student numbers – poorer students will always be disadvantaged in a system that restricts places.

As the letter highlights, we need to ensure that teaching in universities remains relevant and useful to students and employers alike by removing ‘barriers for pedagogic innovation’. There is a lot that Alliance universities can offer to this, in particular their leading approach to delivering practise-based learning co-designed with employers as well as their leading entrepreneurship education.

University Alliance has long campaigned for a government-backed postgraduate loan system. We strongly support the Chancellor’s decision in last year’s Autumn Statement to develop this. ​ Postgraduate study is vital to ensure ​Britain develop​s​ and grow​s​ the global talent which will be key to our future success. The proportion of postgraduates in the economy is bound to become an increasingly important indicator of economic strength. Yet the UK has seen a fall in postgraduate study since the introduction of higher fees.

Alliance universities together have almost 80,000 students on postgraduate taught courses – 18 per cent of the UK total. In areas such as architecture, allied medicine and computer science our share is even higher with 29%, 26% and 23% respectively.


We are delighted that the Grant Letter clearly underlines (literally!) that research funding will be allocated to world-leading research wherever it is found.  This is a very important principle as it enables the UK to maximise the impact of limited public monies, drive innovation and secure the success of UK research. We believe it is right to continue focussing on 3* and 4* research in the current funding environment.

University Alliance performance in the REF demonstrated a significant and above-average increase in excellent research and in research power. Alliance research is especially geared towards industry and the professions, representing a significant proportion of the UK’s research power in healthcare, advanced engineering and art and design.

Research challenges are complex and increasingly require a multi-disciplinary approach. Alliance universities are sector-leading in their approach to partnership working. They are also rooted in their regions, providing economic leadership that drives growth and innovation. We will work closely with HEFCE to explore the importance of ‘place’ for ensuring that science and innovation investment has the greatest possible impact.

Knowledge exchange and economic growth

We are proud that Alliance universities consider knowledge exchange and innovation to be part of their core business and regularly share good practice in knowledge exchange across the higher education sector.

At £160 million the Higher Education Innovation Fund (HEIF) is a relatively small – but critical – stream of funding for knowledge exchange. Its impact far outweighs its size. For every £1 of HEIF investment, there is roughly £6 generated in gross additional knowledge exchange financial income. We encourage BIS to increase this fund to £250 million, as recommended by Sir Andrew Witty.

Reputation and Regulation

The reputation of the UK’s higher education sector is built on its quality. The growth of the higher education sector means we need to ensure the way it is regulated is fit for purpose. This is why we call for the introduction of new legislation on establishing a single regulatory body for HE providers in England via a HE Bill as soon as possible – this should be a priority for whatever government is in power after the General Election. We also want parity of information from different providers as soon as possible in order to avoid compromising quality assurance and enhance student choice. Legislation needs to also extend access to students in the great majority of alternative providers to external complaints moderation.

In summary

This is probably the last HEFCE grant letter before inevitably, BIS has to hand down some tough cuts in the next spending review. Of course, all bets are off with a change of Government but at least the final allocation of funding in this spending period has been done based on sound principles.

Further reading