HE Funding… another thread unravels.

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So, as you do on a cold Thursday evening in February, there I was reading the HEFCE Model Financial Memorandum (as updated July 2010). And it struck me… with HEFCE funding becoming an increasingly rarefied component of institutional funding, how far can HEFCE actually mandate that institutions do stuff?

The main lever that they’ve had so far is the (partial) withdrawal of funding – they’ve also got the right to request changes in governance structures and personnel. And with these levers, they make institutions do some fairly interesting things. But what I spotted that did surprise me was that:

It is a condition of grant for an institution in receipt of HEFCE funding to subscribe to the Higher Education Statistics Agency (HESA)
It is a condition of grant for an institution in receipt of HEFCE funding to subscribe to the Quality Assurance Agency (QAA).

No-one ever mentions HESA, which is a shame as it is pretty awesome (and will be more so when they start getting in to releasing more open data). They collect information about the HE sector, which informs HEFCE funding and central planning. But it did merit a passing allocation of new work in the Browne Review, working with OFFA (another quango in a similarly interesting situation). Of course the QAA (who do a damn good job too) was enthusiastically (and implausibly, given that it is a UK wide organisation) mashed into HEFCE by Browne at that point.

Neither body is unduly expensive – the QAA costs the UK about £12m (£7m from funding councils – mainly HEFCE, £4m from institutions), HESA costs HEFCE around 200k (yes, really!) with institutional subscriptions and data purchase contributing the most of rest of the charitable body’s £4.3m annual income.

But the point is that both of these organisations are bodies with statutory responsibilities given to them by HEFCE – they are doing jobs that actually need to be done to run HE in the UK. They have to be paid somehow. But with decreasing HEFCE grants (many institutions losing more than 90% of their funding) it will become increasingly difficult to insist that universities and colleges subscribe as a condition of grant – they could just not take the grant, or ignore HEFCE and take the (proportionally tiny) cut. You could make it a condition of fee receipt, but I can’t see BIS insisting that these new private bodies subscribe to the QAA (or jump through any other hoops). And have “Student Finance England” really got the infrastructure or legal clout to do this?

Given that the overall level of funding coming in to HEFCE is dropping so substantially, it seems unlikely that HEFCE will be able to support the full costs of these bodies directly. Indeed this would mean top-slicing what remains of institutional grants, something unlikely to be politically popular.

How else can they be supported? BIS are currently doing everything they can not to end up spending more on HE support than they are currently – to the extent of threatening to cut research funding and student number allocation (wasn’t the whole point of Browne not to put limits on institutional growth?) if tuition fees tend too high (can they even do this legally?). 

The limited appeal of the Browne model and Cable-Willetts adaptions comes only when you consider direct tuition costs as the only requirement of funding. The model ignores indirect costs such as infrastructure on a national and institutional level. Rather than engaging with the ongoing TRAC debate, Browne chose to ignore it and have all funding follow students directly and explicity, with the expectation that other costs would somehow sort themselves out. Already we are seeing discussions about students “paying” for £9,000 worth of services – how do you convince a student that using some of their fees to pay for the QAA, or HESA or another institutional subscription is worthwhile?

QAA and HESA are not going to disappear, they are too important. Other subscription-supported organisations may be in more trouble. But a new model of funding that appears to forget that any of these organisations need to be actually funded in order to do any good is a worrying development.

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