DfE’s annual funding letter is out. Don’t spend it all at once

Last year’s annual funding letter to the (England) sector from the Department for Education (DfE) appeared the day before Easter.

This year we’ve been spared the bad news over Easter, and instead have the bad news now that Easter’s all over.

The headlines in the letter to the Office for Students (OfS) are fairly grim. There’s a £2m uplift on the strategic priorities grant – that’s up 0.14 per cent on last year, and so a huge real terms cut (of £53m, if you take February’s CPI).

In the attached strings, the famous “magic money twig” (what’s supposed to be funding for universities to support students at risk of not completing but gets wheeled out as both a mental health and hardship fund by ministers at every opportunity) is “up” £5m – although given DfE allocated an extra £10m this year, that’s really a £5m cut.

The main text bit of this year’s letter – signed by just Gillian Keegan this year – is hauntingly familiar, adding to the sense of stasis surrounding the state in general right now. It weighs in at 1,822 words, as compared to last year’s 1,819 – and has pretty much the same headings. Even Gillian Keegan’s signature is a resized jpeg:

Not a word on the increasingly obvious financial problems that the sector is in, obviously – and seemingly obliviously.

“Priorities”

The intro thanks OfS for successfully launching the Degree Apprenticeship Development Fund – and Keegan is “pleased to confirm” that the total funding for the campaign is being maintained at £40m across the two financial years as already promised last year.

It also confirms funding to support the increased provision of 405 medical places starting in 2024-25 academic year – £2m, which includes funding for the 200 medical degree apprenticeship pilot programme that will start in 2024.

In recognition of the “considerable cultural, societal and economic benefits” they offer, Keegan figures that it is important that we continue to support our world-leading small and specialist providers. OfS is therefore told to continue to fund specialist providers up to a limit of £58.1m – a £100k increase on last year, which may or may not cover the head of provider salary increases of the lucky few.

On UniConnect, Keegan says that widening access to HE and supporting disadvantaged students by raising aspiration and attainment “remain priorities”. She’s nevertheless happy to cut funding to the scheme by £10m, down to £20m (having been halved from £60m in 2021) – adding that OfS should focus those dwindling resources on “activities that are found to be the most effective”, and “the targeting of geographical areas to address regional disparities in progression to HE”.

As well as the student premium funding discussed above, the mental health of students is a “priority” – and so funding for the premium for student transitions and mental health is being protected (ie cut in real terms) at £15m. This funding, says Keegan, should “help providers” (ie barely scratch the surface) to engage with the National Review of Higher Education Student Suicides and develop mental health and suicide prevention strategies.

On student number changes, Keegan says OfS should continue to look at numbers when doing formula-funded grants, but that it should protect funding rates for nursing, midwifery and allied health supplement, overseas study programmes, and accelerated full-time undergraduate provision.

And additional funding made available from these funding lines due to changes in student numbers should be allocated to funding for high-cost courses – you’ll note how what’s left is being eaten away here. More detail below.

Capital funding was already announced last year as £450m – getting hardly anything these days over two years has apparently enabled DfE to support a “wider range of more impactful projects that will support high quality skills-based higher education”.

Down in the detail

In the annexes, there’s a remarkable (and much longer than usual) list of restrictions and strings that very much ties the hands of an OfS that is supposed to be at arm’s length from government, and is doing its own review of how funding is allocated.

As signalled above, price groups A, B, and C1.1 get an increase of £18.1m – while C1.2 (creative subjects) is “maintained” (real terms cut) at 16.7m. The postgraduate taught supplement and the intensive PG supplement get cut by £5m and £10m respectively.

There’s also a cut to the total budget for “National Facilities and Regulatory Initiatives” by £3m back to the year before’s £27m – this covers some NSS funding, funding for TASO (The Centre for Transforming Access and Student Outcomes in Higher Education), supporting preparation for the Lifelong Learning Entitlement (which oddly for a major oncoming development in higher education funding doesn’t merit much of a mention in this letter) and the performing arts specialist initiative, as well as £10.2 for Jisc – which DfE says can be funded via any remaining scraps of capital funding not allocated as part of its competitive bidding round.

OfS is even told that it must “not allocate funding to any new challenge competition(s)” unless it has identified funds from the grant which are not otherwise allocated, and it has sought and received “written agreement from the Secretary of State to run any new challenge competition(s).” Thank god. It’s not as if providers or their students need any help with anything right now.

A DfE spokesperson said:

We continue to provide significant financial support of nearly £6 billion per year to the higher education sector, plus more than £10 billion per year in tuition fee loans. The Strategic Priorities Grant is designed to support universities to deliver high-cost courses and specific projects. The funding we’ve allocated over the past two years along with funding for this financial year represents the largest increase in government funding for the higher education sector in over a decade.