OfS confirms funding reforms

The Office for Students (OfS) has today confirmed changes to how it will distribute funding to universities and colleges for 2021-22. OfS funding supplements course fees which pay for the bulk of higher education course costs.

In total, the OfS will distribute £1.4 billion to universities and colleges, with funding used to support high-cost subjects, student access and success, increased support for students transitioning into higher education, and mental health.

This follows consultation and new terms and conditions received from the Secretary of State for Education, published today, which confirm that:

  • the OfS may not vary the level of grants awarded universities and colleges based on their geographic location, meaning the removal of subsidies for universities and colleges operating in London
  • high-cost subjects not related to medicine or healthcare, STEM or those supporting specific labour market needs, will be subject to reductions in funding from next year.

High-cost subject funding relates to a specific area of OfS funding which is provided directly to universities to supplement student course fees.

For subjects where reductions are to be applied, this subsidy will be reduced from £243 per full-time student per year (in 2020-21) to £121.50. This reduction is equivalent to around 1 per cent of the combined course fee and OfS funding.

There is no change to how these subjects are treated for other OfS funding streams, such as the additional premiums awarded to universities and colleges to support disadvantaged students.

Funding for specialist institutions will increase by £10 million to £53 million – including additional grants for a number of world-leading institutions delivering courses in the performing and creative arts.

Finally, the OfS will distribute £131 million in capital funding for providers through a small formula allocation of £7.4 million and a bidding exercise for the remaining £123.6 million. The deadline for submission of bids is 10 September 2021.

The total OfS funding budget is limited and set by government. Today’s changes to the funding method come in the context of significant growth in student numbers – particularly in courses that are more expensive to teach. This means that OfS funding will need to stretch further to cover more students.

Nolan Smith, director of resources and finance at the OfS, said:

‘Distributing funding is an important part of our regulatory work. The strategic priorities grant for universities and colleges plays an important role in supporting high-cost subjects and boosting student access across the country. We will continue to work with government and others to ensure our funding continues to make a positive impact across the higher education sector’.

Read the statutory guidance issued by the Secretary of State.

The OfS has today published analysis of the consultation responses it received relating to both recurrent and capital funding.

It has also published new bidding guidance for universities and colleges applying for capital grants for financial year 2021-22.

  1. The total funding to be distributed by the OfS for academic year 2021-22 is £1,437 million, comprising £1,287 million in recurrent grants and £150 million in capital grants. The recurrent total is an increase of a little under 1 per cent and the capital total is unchanged compared with 2020-21. There is an increase of 7 per cent in the total student numbers counting towards OfS funding for 2021-22. This means there is a reduction in the overall amount of funding per student that we are able to provide to universities and colleges. In 2019-20, higher education providers reported income of approximately £8,861 million from Student Loan Company loans to students/Local Education Authority in relation to UK students.
  2. According to terms and conditions applied by the Secretary of State, when determining the amount that the OfS allocates to universities and colleges for the specific recurrent High-Cost Subject Funding grant in academic year 2021-22, the OfS must ensure that any subject not specified below is funded at half the rate at which it was funded during the academic year 2020/2021. This applies only to the additional High-Cost Subject funding subsidy, not income received through course fees. Subjects currently funded which will not have reductions applied are:
    1. Anatomy and Physiology, Pharmacy and Pharmacology
    2. Archaeology
    3. Clinical Dentistry, Dental Hygiene and Therapy
    4. Clinical Medicine
    5. Engineering subjects
    6. Information Technology
    7. Nursing and allied health professions (pre-registration courses)
    8. Sciences (Agriculture; Forestry and Food Science; Earth, Marine and Environmental Sciences; Biosciences, Chemistry, Physics)
    9. Veterinary Science
  3. Archaeology will no longer receive a reduction in funding as outlined in the Terms and Conditions received from the Secretary of State yesterday.
  4. The subjects with reductions to be applied are those in music/dance/performing arts, art and design, and media studies, which fall into the new price group C1.2.
  5. Some subjects, those described by the OfS as being in price groups C2 (intermediate-cost subjects with a laboratory, studio or fieldwork element, such as geography, mathematics, languages or psychology), or D (classroom based subjects such as humanities, business or social sciences) already attract no high-cost subject funding.
  6. The OfS will fund an additional £5 million to help address student hardship, and a further £15 million to support student mental health and transitioning into higher education.
Published 20 July 2021

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