Explainer: how much state funding do universities get?

The sums have been done. In 2015-16, £3.97 billion will be flowing into the coffers of England’s higher education institutions, up slightly from £3.88 billion the previous year. The amount each higher education provider will receive from the government has just been announced by the Higher Education Funding Council for England (HEFCE) and some institutions will be getting much more than others.

Tuition fees reform in 2011 means that universities now have to meet the cost of teaching from student fees rather than government grants – so research and related activities now take a large proportion of the funds HEFCE hands out. This year they have allocated £1.558 billion to research, with a further £160m for knowledge exchange and £52m for “transitional” funding for research.

Transitional funds are allocations for one year only to mitigate the effects on institutions of two changes which have been introduced: the removal of special funding to protect science, technology, engineering and maths (STEM) research and the effects of a decline in funding aimed at supervising research degree programmes.

The teaching funding is still substantial – at £1.418 billion – but is used mainly to support high-cost subjects such as STEM, work in some small specialist institutions and to provide some support to widen the participation of socially disadvantaged students in higher education.

Two types of currency

To academics, the grant allocations for research represent higher education’s “second currency”. They sit below the pecking order of the scores each department gets in the Research Excellence Framework (REF) process of evaluating the quality of research across the UK – which represents a “first currency” of reputation. But for the people whose job it is to manage the budgets, that order of importance is reversed.

It should be remembered that there is not a direct correlation between a university’s overall score in the REF and the money it receives. The size of the institution and numbers of staff submitted for the REF represent an important intervening factor. Where institutions have reduced the numbers of staff submitted to the REF exercise in order to achieve a higher score – by focusing on their “research elite” – the result may be a higher REF score but lower research funding as a result of the smaller staff numbers submitted. These universities have opted for more reputational currency over financial currency.

Top ten on research funding

So who gets the most money? Looking at the “top ten” institutions in terms of research funding, there are no great surprises. Oxford, University College London and Cambridge top the list. The table below lists the ten institutions which received the largest sums of research monies from HEFCE alongside the total funding they received from HEFCE for teaching.

HEFCE

These ten universities are getting more research money from HEFCE than they are receiving money for teaching, although for six of the ten, this represents a drop over the funding levels achieved from the previous REF in 2008. However, many institutions still get more teaching funding than research funding.

For example, the Open University receives £66.4m for teaching (the highest of any university) against £8.8m for research; Plymouth University receives £20.9m for teaching against £8m for research; and Liverpool University £33m against £28.2m. But of course, with the fees regime, all institutions are receiving only a small proportion of their teaching budgets from HEFCE.

Money brings forth money

The research allocations can be viewed in two ways. They are a reward for research outputs already achieved, at the same time as being the basis for research outputs to come. Top research universities produce more high-quality research in part because they receive more money to do so – and money brings in more money. Although the HEFCE research allocations do not include the substantial sums for research awarded by the research councils and other sources, there is generally a correlation at the institutional level between research funding obtained from HEFCE and research funding obtained from other sources. And HEFCE remains the largest single source of research funding in the sector as a whole.

There is a shift going on in the relationship between public and private funding sources for research and teaching: public money is shifting more and more towards research. But this does assume that a substantial proportion of government-backed student loans do actually get repaid eventually, an assumption that is looking increasingly fragile. Over the longer term, it seems likely that the public funding of teaching in higher education will remain substantial, whether by accident or design on the part of government.

Scale and diversity

Leaving aside purely private providers, more than 130 higher education institutions and 200 further education colleges are in receipt of some funding from HEFCE – although in the case of the colleges this is only for teaching rather than research.

While the major research institutions can be clearly identified, with three institutions each in receipt of more than £100m and a further three institutions in receipt of more than £50m for research, the rest of the research funding is very broadly spread. There are 27 institutions each in receipt of more than £10m for research and 47 institutions each receiving more than £1m.

HEFCE continues to fund “selectively, focusing on world-leading and internationally excellent activity”. With 80 institutions in receipt of substantial research funds from HEFCE, in most cases augmenting them with funding from diverse other sources, the extent and diversity of higher education’s research functions are considerable and widely spread.

John Brennan has received funding from the Higher Education Funding Council for England and other national and international research funders. This article reflects his personal views.