In our latest blog Dr Kate Wicklow, Policy Director, explores our perspective on prioritising grant funding, following the GuildHE response to the OfS funding approach consultation.

The OfS receives £1.456 billion in public funds to allocate on key strategic priorities, but on what basis should the OfS allocate this funding? 

Government grant funding is not enough to fund all the key priorities and the financial context of higher education has radically altered in recent years. Frozen fees, surging inflation, the pandemic, an energy crisis, oversubscribed student support services, a desire to innovate and enhance our student experience and meet Net Zero Targets all means there are critical funding gaps. Grant funding has been essential but has to date merely filled these growing gaps, as the OfS’s recent financial analysis shows.

Arguing for an overall increase to higher education income is inevitable. Not through increasing tuition fees perhaps, but instead asking the Treasury to reinvest some of the cost savings they made through changing the student loan repayment system. We’ve argued that employers should also be asked to contribute more to training and skills. The sector can only go so far in cost saving without risking our high quality and well-respected student experience. 

As we respond to the OfS Call for Evidence on the use of grant funding we argue that as long as higher education overall is underfunded, OfS grants should be focused on plugging the most important gaps – the higher costs of certain courses, student support and preserving the diversity of the sector. That is the approach most likely to mitigate risks to student choice and the quality of teaching and the student experience balanced with the skills needs of our country. 

Our higher education system is high-quality and diverse, and should not be taken for granted. The answer to the funding question cannot simply be for providers to merge or grow. The Higher Education Research Act 2017 is clear that the OfS’s duty to promote choice for students includes choice amongst a diverse range of types of provider. We highlight a number of key principles that should form the basis for these decisions within our submission. 

• Clear understanding of the cost of delivering courses – high cost subjects receive significant additional funding but there should be greater clarity on what it costs to deliver these courses, rather than the current levels of expenditure that institutions currently pay to deliver them. The high-cost funding methodology supports HE providers to minimise additional in-course costs for students. However not all high-cost subjects receive an appropriate amount of resources to support the delivery and minimise additional costs to students (for example the sustained cuts to C1.2).
• Grant funding shouldn’t be used to cover funding gaps from other government departments – much of the grant funding covers costs that should reasonably be expected to be covered from other departments such as NHS funding for clinician pay or additional training costs
• Supporting student success – Student premium funding effectively supports students with additional needs, but we argue in our submission that its connection to OfS expectations around equality of opportunity (B3, APP etc) needs clarity, and more support for care-experienced students is necessary as they often have significant additional needs.
• Key national infrastructure should be funded where there are clear savings for institutions – there are many national grant allocations, such as for Jisc, that help save the sector significant amounts of money due to shared services, procurement and development. Collaboration is often what makes our sector thrive, and ensures equality of access for all providers. 
• Priorities should be set based on evidence – we believe that the OfS should award funding allocations based on evidence rather than being politically driven. Calling it a ‘strategic priorities grant’ creates unnecessary complexity and potential politicisation by government which does not always recognise the OfS’ general duty to support a diversity of HE providers. The recent move towards directing funding allocations through strict ‘terms and conditions’ within the secretary of State’s letters are a worrying new trend as is the continual cutting from creative arts even though the creative industries are strategically important to the health of the economy and there are well-documented creative skills shortages.
• Bidding competitions need to better distribute funding across different providers – We’d like to see a new approach to competitive bidding that minimises administrative burden, provides more time to develop proposals, is flexible to different sizes and specialism of provider, and takes account of the spread of previous successful bids ensuring funding is shared equality within the sector.

Ultimately we want the OfS grant funding to work harder in protecting the diversity of the sector. Specialist institutions are not part of many countries’ higher education ecosystems and, as in the recent case in Australia, the government has lamented the disintegration of their specialist sector. For our members who receive the World Leading Specialist funding, this equates to between 9%-20% of their total income. It is clearly needed, valued and a valuable funding mechanism to support small-group teaching models, specialist industry-level equipment and other costs that can’t be cross-subsidised in the same way as in larger institutions. However, there are also nationally significant specialist providers who are also worthy of additional funding. 

We therefore suggest two strands of specialist funding: one for world-leading providers and one for high-impact specialists based on an analysis of their contribution to offering an excellent student experience and their regional/national importance to growth, regeneration and community building. 

In conclusion we think that the OfS’s duties to promote choice (including through diverse types of provider), quality and opportunities for students (including through supporting the higher costs of certain subjects) and equality of opportunity are particularly relevant to this call for evidence. We recognise that balancing these duties isn’t always straightforward. While we understand the need for the elected government to give guidance on priorities, we think the detail of implementing funding allocations is much better left to the OfS, precisely because the duties provide a framework which allows for balanced decisions that can consider the overall impact on the higher education sector.