Capital funding

Capital funding was provided by the government to support sustainable investment in higher education.

It supports capital expenditure – that is, money used to acquire or maintain fixed assets, such as land, buildings and equipment, which is normally capitalised in the provider’s audited annual accounts.

The capital funding available for distribution was specified in the guidance letter from the Secretary of State. For financial years 2022-23 to 2024-25, this sum is £450 million. We expect about £50 million (over the three financial years) will be required to meet existing commitments, support national facilities and regulatory initiatives, and fund the annual formula capital allocation to providers registered with the OfS in the Approved (fee cap) category.

For 2022-23, we introduced a new method of distributing capital funding. It was distributed primarily through a bidding competition, but we also made a small formulaic allocation to eligible providers in the Approved (fee cap) category.

Formula allocations 2022-23

The formula distributed funding to eligible providers whose allocation met a minimum threshold of £10,000 and was subject to a cap of £30,000 per provider.

How formula-based funding is calculated

Changes to the formula capital funding method compared to previous years were to reflect the different overall budget available, remove London weighting (in response to terms and conditions issued by the Secretary of State) and introduce a cap of £30,000 per provider.

We calculated capital funding using student numbers reported in the HESES21 survey. Students were counted in terms of student full-time equivalents (FTEs), which are a measure of how much a student studies over a year, compared with someone studying full-time. Providers receive a share of the budget available in proportion to weighted student FTEs.

We use providers' weighting factors that reflect those broad characteristics of their students which give rise to additional capital costs. Weighting factors include:

• course characteristics and associated teaching costs
• level of study (undergraduate or postgraduate)
• additional support for successful outcomes for disabled students
• higher costs faced by specialist institutions because of the nature of their provision.

Not all providers received a capital grant. We only gave a provider a capital allocation if their share would be more than £10,000.

Capital grants were made for (and had to be spent within) a specific financial year. For 2022-23, providers had to spend their whole allocation by the end of March 2023.

Bidding exercise 2022-23 to 2024-25

The competitive bidding exercise for 2022-23 to 2023-24 is ongoing. See full details on the Approach to capital funding webpage. 

Other capital grants

As noted above, the capital funding available for distribution for financial years 2022-23 to 2024-25 is £450 million. We expect about £50 million (over the three financial years) will be required to fund the annual formula capital allocation to providers registered with the OfS in the Approved (fee cap) category, and to meet previous commitments arising from the former Higher Education Funding Council for England’s catalyst fund. In addition, it will support national facilities and regulatory initiatives, including:

• capital funding for Jisc, which provides UK universities and colleges with shared digital infrastructure and services, such as the superfast Janet Network. The capital grant to Jisc is to support network upgrades, cybersecurity and learning analytics.
• development of Data Futures by the Designated Data Body.

Capital funding was provided by the government to support sustainable investment in higher education.

It supports capital expenditure – that is, money used to acquire or maintain fixed assets, such as land, buildings and equipment, which is normally capitalised in the provider’s audited annual accounts.

The capital funding available for distribution was specified in the guidance letter from the Secretary of State. For financial year 2021-22, this sum was £150 million. From this, we provided £19 million to meet existing commitments and support for national facilities and regulatory initiatives. The remaining balance in capital funding was allocated to providers registered with the OfS in the Approved (fee cap) category.

For 2021-22, we introduced a new method of distributing capital funding. It was distributed primarily through a bidding competition, but we also made a small formulaic allocation to eligible providers in the Approved (fee cap) category.

Formula allocations

The formula distributed funding to eligible providers whose allocation met a minimum threshold of £10,000 and was subject to a cap of £30,000 per provider.

How formula-based funding is calculated

Changes to the formula capital funding method compared to previous years were to reflect the different overall budget available, remove London weighting (in response to terms and conditions issued by the Secretary of State) and introduce a cap of £30,000 per provider.

We calculated capital funding using student numbers reported in the HESES20 survey. Students were counted in terms of student full-time equivalents (FTEs), which are a measure of how much a student studies over a year, compared with someone studying full-time. Providers receive a share of the budget available in proportion to weighted student FTEs.

We use providers' weighting factors that reflect those broad characteristics of their students which give rise to additional capital costs. Weighting factors include:

• course characteristics and associated teaching costs
• level of study (undergraduate or postgraduate)
• additional support for successful outcomes for disabled students
• higher costs faced by specialist institutions because of the nature of their provision.

Not all providers received a capital grant. We only gave a provider a capital allocation if their share would be more than £10,000.

Capital grants were made for (and had to be spent within) a specific financial year. For 2021-22, providers had to spend their whole allocation by the end of March 2022.

Bidding exercise

The remainder of the funding was distributed through a bidding competition open to all eligible providers (whether they have received a formula allocation or not).

Our aim in distributing capital funding for 2021-22 through a competitive exercise was to enhance the learning experience of higher education students at providers, and to prioritise in particular:

1. Facilities for high-cost science, technology, engineering and maths subjects, healthcare disciplines and other technical subjects that are designed to meet the specialist skills needs of industry and employers, including at Levels 4 and 5.
2. Facilities that will support the development of flexible provision and modes of delivery, including for part-time study, e-learning and blended learning.
3. Capital expenditure that will demonstrate value for money.

We believed these objectives would:

• promote choice and opportunities for students in relation to high-cost subject areas that require specialist teaching facilities
• support access to higher education for those who need more flexibility in how they study
• help to meet the skills needs of students and employers.

Capital funding for financial year 2021-22 provides further detail of the process and outcomes for the distribution of capital grant by the OfS for the financial year (April to March) 2021-22.

Other capital grants

We provided £10 million to Jisc, which provides UK universities and colleges with shared digital infrastructure and services, such as the superfast Janet Network. The capital grant to Jisc is to support network upgrades, cybersecurity and learning analytics.

£9 million was set aside as provision for the Higher Education Statistics Agency (HESA) Data Futures programme and previous commitments arising from the former Higher Education Funding Council for England’s catalyst fund.

Our capital funding supports sustainable investment in higher education learning and teaching.

For the financial year 2020-21 (1 April 2020 to 31 March 2021), we allocated £150 million in formula teaching capital funding.

We allocated up to £140 million of this funding to providers registered with the OfS in the ‘Approved (fee cap)’ category. We also provided £10 million for Jisc to support information technology infrastructure.

In March 2020, we announced allocations of £136 million, made to those providers that were registered in the ‘Approved (fee cap)’ category on 17 March 2020. The balance was set aside as provision for providers that joined the OfS register in this category before the end of the financial year (31 March 2021), and to support development costs for the Higher Education Statistics Agency (HESA) Data Futures programme.

Formula-based teaching capital

Capital grants were made to higher education providers registered with the OfS in the Approved (fee cap) category.

Teaching capital allocations were provided to enhance the learning experience of higher education students at providers, by helping raise the quality of their learning and teaching facilities. Providers might use their grants to invest in high-quality buildings, equipment or information technology and e-learning.

We calculated capital funding for 2020-21 using:

• Student numbers reported in the HESES19 survey. Students are counted in terms of student full-time equivalents (FTEs), which are a measure of how much a student studies over a year, compared with someone studying full-time
• Methods agreed by our board in March 2020.

Providers received a share of the £140 million budget in proportion to weighted student FTEs.

We used provider’s weighting factors that reflect those broad characteristics of their students which give rise to additional capital costs. Weighting factors included course characteristics and associated teaching costs, level of study (undergraduate or postgraduate), higher costs associated with students studying in London, additional support for successful outcomes for disabled students, and higher costs faced by specialist institutions because of the nature of their provision.

Not all providers received a capital grant. We only gave a provider a capital allocation if their share was more than £10,000.

Capital grants were made for (and had to be spent within) a specific financial year. So for 2020-21 providers had to completely spend their allocation by the end of March 2021.

Our 2020-21 capital allocations were announced in March 2020, and updated in October 2020 and February 2021. A list of these allocations can be found in ‘Formula capital funding for 2020-21' (OfS 2020.17).

Other capital grants 2020-21

Jisc

We provided £10 million to Jisc, which provides UK universities and colleges with shared digital infrastructure and services, such as the superfast Janet Network. The capital grant to Jisc was to support network upgrades, cybersecurity and learning analytics.

Additional capital grants for 2020‑21 distributed through a competition

In September 2020, the Department for Education made available up to £10 million in additional capital funding for the Office for Students to distribute to support increased student numbers in 2020‑21.

Following consultation, we distributed the additional capital funding through a bidding process to ensure the funding was targeted where it would add most value. The priorities for this funding were to support additional costs for providers that had increased student numbers in high-cost subject areas in 2020-21, in particular where those costs arose from the effects of the decision to revert to centre-assessed grades for A-levels and other Level 3 qualifications in summer 2020. The extra funds were to help providers with increased capacity and to ensure positive graduate outcomes.

Providers which submitted successful bids were notified of the additional capital funding in February 2021.

For the financial year 2019-20 (1 April 2019 to 31 March 2020), we allocated £90 million in formula teaching capital funding.

Teaching capital

Teaching capital grants were made to higher education providers registered with the OfS in the Approved (fee cap) category.

Teaching capital allocations were provided to enhance the learning experience of higher education students, by helping raise the quality of their learning and teaching facilities.

Providers could use their grants to invest in high-quality buildings, equipment or information technology.

Providers received a share of the £90 million budget in proportion to weighted student FTEs.

We used providers' weighting factors that reflected those broad characteristics of their students which give rise to additional capital costs, including:

• course characteristics and associated teaching costs
• level of study (undergraduate or postgraduate)
• higher costs associated with students studying in London
• additional support for successful outcomes for disabled students
• higher costs faced by specialist institutions because of the nature of their provision.

Not all providers received a capital grant. We only gave a provider a capital allocation if their share was more than £10,000.

Capital grants were made for (and had to be spent within) a specific financial year. For 2019-20, providers had to completely spend their allocation by the end of March 2020.

Our 2019-20 capital allocations were announced in March 2019, and subsequently updated in July 2019, October 2019 and March 2020.

A list of these allocations can be found in ‘Formula capital funding for 2019-20’.

Other capital grants

We also provided £10 million to Jisc to support network upgrades, cybersecurity and learning analytics

For the financial year 2018-19 (1 April 2018 to 31 March 2019), we allocated £150 million in capital funding.

Teaching capital

Teaching capital grants help providers develop and improve their higher education infrastructure.

Providers might use their grants to invest in high-quality buildings, equipment or information technology.

Providers received a share of the £104 million budget based on their share of teaching resource (which comprises our recurrent teaching grant and an assumption of their income from tuition fees). But providers only receive a capital grant if their share will be at least £10,000.

Capital grants are made for (and have to be spent within) a specific financial year. For 2018-19 providers will have to have completely spent their allocation by the end of March 2019.

Our 2018-19 capital allocations were announced in May 2018.

A list of these allocations can be found in ‘Recurrent and formula capital funding for 2018-19’. We published a revised version of Annex A to this document in October 2018 to show updated allocations for some providers (including to capital grants). Changes arose from amendments to their student data and for other reasons. 

Other capital grants

We also provided:

• £10 million to Jisc to support network upgrades, cybersecurity and learning analytics
• £36 million to meet the costs of commitments made by HEFCE that extend beyond March 2018.