Funding will shift to drive government aims

3 April 2009

Funding mechanisms will be adjusted to align universities’ activities more closely with emerging government priorities, the Universities Secretary has said.

Speaking at the annual conference of the Higher Education Funding Council for England on 2 April, John Denham said he wanted more incentives introduced to ensure that universities were doing all they could to support the economy as it emerges from recession.

“What we do to respond to the downturn must take us towards our vision for a world-class higher education system in 10 to 15 years,” he said.

“We will need to ensure that government policy is coherently organised to make the most of this potential.”

Indicating that the funding system would be rejigged to ensure that the Government’s ambitions were achieved, Mr Denham said he wanted greater incentives to encourage “dynamism, innovation and entrepreneurial activism” in the university sector.

He said: “I will want to discuss with the funding council how we might evolve our current funding model to enable the higher education system to become more responsive.

“It is relatively easy to create new pots of money to incentivise change, but at the expense of reducing the size and flexibility of the core grant.

“So although we could consider a slight rebalancing – relatively less funding in the core block grants and relatively more to support and drive change – the temptation to proliferate ever more initiatives could be strong.

“So in developing the framework for higher education, which we will be publishing in the summer, I’ll be discussing with Hefce what steers we should give. Perhaps we should clearly limit the amount that could be withheld centrally at any one time.”

Mr Denham highlighted international capacity and collaboration, e-learning and business engagement as among the areas that he was particularly keen to promote.

He acknowledged that re-emphasising these areas in the funding model might require areas currently supported by special funding streams to take a back seat.

“The Higher Education Innovation Fund [which supports third-stream activities] has already moved from competition funding to allocated grant; and as such activities prove their worth, [they] may at some point no longer need to be separately identified,” he said.

“I would be disappointed if we had to spend as high a proportion of our funding on widening participation as we do today.

“Within this approach, we may see the fastest change and the greatest innovation where funding is distributed through contestable processes rather than allocation.”

Responding to Mr Denham’s comments, Rick Trainor, president of Universities UK, said that core grant was crucial to providing universities the stability required for long-term planning. Any redirection of this money could have adverse effects, he said.

“New money for targeted initiatives, in addition to the stability of the core grant, is the way to ensure that universities can respond to specific strategic demands,” he said.

john.gill@tsleducation.com