Capital competition from OfS

Capital funding is a useful thing to get.

At a basic level, there are two forms of funding:

• Recurrent funding comes regularly (hence the name…) and covers your regular costs – if you are a university this is primarily staff costs, but also stuff like maintenance, costs of borrowing, and consumables. You only get the benefit of recurrent spending for one year, then you have to spend it again to keep getting the same benefits.
• Capital funding is an occasional allocation and covers capital costs – for universities this could be new buildings, new equipment, or new investments. You only spend capital funding once, but you get the benefit for a long time.

So if you think about your own university if you need more staff you need more recurrent funding – you have to pay staff every year, after all! If you need a new building or one of those expensive toys that physical scientists like it is capital you are after.

Back in the days of yore HEFCE offered teaching and research capital via a number of routes. A formula allocation – your share of a central pot of capital – and various bidding competitions where you got to ask for money for particular projects. As time passed the sector expressed a clear preference for formula funding – even though the total available to you might be less, you knew you would get something. With a bidding competition you had to spend money on staff time to prepare a bid, and then you might not get anything in return.

Finance has fashions

The clear direction of travel in the last days of HEFCE was towards formula funding. Various regulatory interventions to reduce burden had reached the conclusion that bidding was an expensive and wasteful way to distribute funding. But since then the pendulum has swung in the opposite direction – Office for Students now argues that “using OfS resources in an efficient, effective, and economic way” (HERA2017 section 2 sub-paragraph 1(f)) means ensuring that capital can support projects at scale that meet government priorities.

The formula funding that remains exists primarily to ensure that very small registered providers get at least some capital – some £11.2m (the calculation is actually based on a nominal £142m!) is shared out on the basis of weighted (subject price groups, level of study, specialist status, proportion of students with a disability) student FTE with no provider getting more than £50,000, and anyone who would have got less than £10,000 getting nothing. So a bunch of FE colleges and very small registered providers don’t get any capital, and the overwhelming majority of providers get £50,000. There’ll likely be one of these each year for the next three years.

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Competition time

Fifty thousand is probably not going to get you far towards that lecture theatre/cyclotron/campus that you had your eye on – so providers also get a chance to access a share of around £400m by submitting a bid. The maximum you can ask for is £6m over three years (though if you are at the top end you might be asked to dial things back a bit), the minimum is £100k.

There are more strings than a Blüthner piano attached here – you’d need to spend every penny of the money by 31 March 2025 (not always easy with a big building project), and you’re subject to annual monitoring on project progress. You can spend on purchasing equipment, premises, or infrastructure, (or the refurbishment/adaptation of such resources) linked to learning, teaching, or assessment – but only if you teach a high-cost strategically important (groups A, B, C1.1) subject, offer technical provision at levels 4 and 5, or support part-time and other short-course learning.

If your full time three year undergraduate theatre studies students need a practice space this is not the funding competition for you – bids are market against the three conditions

The other arm of panel assessment focuses on the way you deliver the project in question, including other sources of funding (more fool you if you thought this was just money from the OfS that you could spend because you hadn’t got access to any other!) and your project management processes. Very much the kind of thing you will be good at if you are used to doing it.

In short

This is a great way for OfS to provide capital to large STEM-focused providers. Others would be unlikely to score well against these criteria – but some may be desperate enough to spend money on a punt. You only get one chance to bid for this three years of funding, so don’t feel like you can spread your chances.

We are looking to keep the information we require in the bidding template as low-burden as
possible

is the message, but getting a competitive bid in – especially for those many projects that may not directly link to the fairly narrow priorities – will not be easy. In many cases burden will be minimised by not entering.