The funding stakes

Peter Knight presents his annual analysis of the winners and losers in the funding per student for university teaching.

For the past two years I have analysed the funding for teaching that each university received from the Higher Education Funding Council for England. The purpose was to identify winners and losers as, unlike the Research Assessment Exercise where it is clear which universities are doing well, the methodology for funding teaching does not produce an obvious result.

The HEFCE system funds students differently depending on level (teaching or research), mode (full-time or sandwich) and subject category. As universities have freedom to switch funding for one type of teaching to the funding of a different type, it is important to analyse the overall funding received by each university.

The system developed over the past few years takes into account the fact that a university which is operating in expensive subjects, such as science, engineering and medicine, will be funded better than a university with a portfolio of courses weighted towards the less costly humanities and social sciences. The methodology compares the funding received for a particular activity, such as science, with the average level of funding received at that mode and level by all universities. This approach is then extended over all subject categories and all modes. Funding for research students and funding from the Teacher Training Agency or the Further Education Funding Council are excluded.

The funding for full-time, including sandwich, students, has varied little from last year. The differential between the best funded institution (Oxford Brookes at Pounds 477 per student above the average) and the least well-funded institution (Derby at Pounds 435 below the average), has narrowed slightly in 1995/96. Nevertheless it will take approximately 15 years at the current rate before the levels of funding converge to what might be regarded as an acceptable margin.

The stability in full-time student funding is not unexpected. After all there are only limited opportunities for growth in respect of postgraduate students and negligible opportunities for growth in full-time undergraduates because of the restrictions on student numbers. Those universities who have suffered a reduction in numbers, presumably as a result of recruitment difficulties, have to a certain extent been sheltered by HEFCE's policy of ensuring the rates of change are not unmanageable. Therefore they have lost less money than they might have done in previous years.

The new universities are still slightly better funded than the old in respect of full-time students. The difference in average funding per student is now only Pounds 78.

Funding for part-time students is exciting as a result of the introduction of the load factor method of calculation. This is an imaginative attempt by HEFCE to ensure that it is paying for the same level of activity in respect of each part-time student. Put simply, the principle is that if a full-time student takes three years to complete an honours degree and a part-time student takes five years, then the part-time student is assumed to have a load factor of 0.6 of a full-time student.

Universities were required to assess their part-time students in respect of this load factor and to reach a conclusion on the appropriate load factor to return. There is evidence to suggest that some universities may have picked high rather than low load factors. The allocation system will introduce a marginal advantage by ensuring that those universities that have artificially depressed their unit of funding by this approach are obliged to contribute less than would otherwise have been the case to the efficiency savings. Nevertheless, this brave attempt provides the basis on which future changes in methodology can be developed.

The variations in average units of funding for part-time are staggering. The most generously funded university is once again Oxford Brookes which receives Pounds 2,213 better than the average in respect of its part-time students. The worst-funded is Bath which is Pounds 2,171 below the average. Clearly these figures are wildly out and these extremes may be moderated when universities appreciate the significance of the data that they have returned and use the flexibility available to them within the redistribution survey to ensure there is no cross subsidy between full-time and part-time students.

The use of the load factor means that for the first time it is possible to produce an aggregate table of the overall winners and losers in HEFCE's funding methodology for teaching. Not surprisingly, Oxford Brookes is the best-funded university; as it had to be, as it topped both the full-time and part-time tables. The least well-funded is Keele which is Pounds 510 below the average per full-time equivalent student. Overall the range of funding between the best and worst funded is now Pounds 1,159. Clearly this range is a result of a number of historic positions as well as curious results from the the load factor approach on part-timers. Nevertheless it is a range of funding which cannot be sustained in the medium term as it is unjustifiably broad.

HEFCE has produced a consultative paper on changes to the funding of teaching and has now acknowledged that the current range of funding is not acceptable. If HEFCE wished it could use the existing methodology to redirect money from the well-funded institutions to the less well-funded. It would merely need to be more aggressive in the application of the efficiency gain.

However it is constrained in that approach, not by any limitation in the methodology but by a major political problem. Any attempt to redistribute money may well cause serious problems for those universities that are funded above the average. The organisational consequences for universities in the upper quartile of the table would be serious to say the least. Even if HEFCE changes its methodology this problem of how to remove money from well-funded institutions will remain difficult in terms of real politics.

If ever there was a problem that it would be worth passing on to Ron Dearing in the hope that he will solve it, and perhaps take the blame as well, this is one. Otherwise, irrespective of methodology, tables showing a range of funding as broad as this are likely to be still being published in 2010.

Peter C. Knight is vice chancellor of the University of Central England and writes in a personal capacity.