UK: Public purse the main source of income

The government of the day is the largest provider of funding for higher education in Britain, with the money distributed by funding councils for England, Wales and Scotland.

The Higher Education Funding Council for England (Hefce) allocated £7.1 billion (US$14 billion) for 2007-08 to 275 institutions. This amounts to 44% of the total spending of £16.1 billion on higher education in England

Hefce works within a remit set by the Education Secretary but it is not part of a government department so it affords universities academic freedom in curriculum and research. The council also gives independent advice to ministers while the actual amount of money is decided by the government and voted on by Parliament.

The council states that its mission is “working in partnership, we promote and fund high-quality, cost-effective teaching and research, meeting the diverse needs of students, the economy and society”.

The institutions it funds range from specialist colleges such as London’s Courtauld Institute for Art with around 400 postgraduates to the University of Manchester with 35,000 students, three-quarters of them undergraduates. Of the 275 institutions, 88 are universities, 44 are specialist institutions and general colleges, and 143 are further education colleges providing higher education courses.

Public funds also come from the student loan company, local education authorities, research councils and government-backed schemes such Widening Participation which was set up in 2002 when it was revealed that Britain had the third lowest number of youngsters going on to higher education in the EU.

Hefce distributed £377 million in 2006-07 to help universities work with local schools and communities to encourage more teenagers whose parents did not stay on at school or go to university, to aim for higher education.

Private finance accounts for around 40% of higher education cash. Overseas student fees provide 8% (£1,293 million), residence and catering charges generate 6% and charities 4%. Full-time undergraduates now have to pay £3,070 towards the cost of their tuition in England but not in Scotland.

The funding cycle runs from March to November with Hefce calculating grants based on the number of students as well as subject, student and institution-related factors. Certain areas are ‘weighted’ so more money goes to the clinical stages of medicine, dentistry and veterinary science, for example. London’s higher education institutes, smaller institutions and those with historic buildings to keep up, are also weighted.

A pivotal role of the council is to ensure that universities are well governed and managed and use public funds properly. This aspect of its work places demands on institutions to provide information and statistics, so it introduced the idea of a ‘single conversation’: from next year, institutions will only have to provide information every December which will reduce the bureaucratic burden and minimise costs.