Capital funding

Capital funding is additional funding 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. It does not include expenditure on rent, or hiring or leasing of equipment and facilities.

Our approach

Following consultation in 2021, we adopted a new approach whereby capital funding is distributed through two mechanisms:

• Firstly, a small annual formula allocation to all eligible providers
• Secondly, the majority of capital funding is allocated in response to bids in a competitive exercise.

We are continuing with this same approach for the financial year 2025-26.

The capital funding available for distribution is specified in the Guidance to the OfS from the Secretary of State for Education on Strategic Priorities Grant funding for the 2025-26 financial year and associated terms and conditions.

For the financial year 2025 to 2026, this sum is £84 million. We expect about £11 million will be required to support national facilities and regulatory initiatives, and to fund the annual formula capital allocation to providers registered with the OfS in the Approved (fee cap) category.

Following the completion of the new competitive bidding process in the early autumn, we will distribute funding of about £73 million over this financial year (1 April to 31 March) 2025 to 2026 to successful providers.