1 September 2021

Funding higher education in Wales – why, what and how?

We fund higher education institutions in Wales on behalf of the Welsh Government to carry out a range of activities that have societal and economic benefits for Wales.

Our funding is mainly for teaching and research activity but we also provide funding to institutions to support innovation and engagement, including civic mission activities, and to increase participation in higher education through widening access activity. Most of our funding is distributed as block grants to institutions, allocated by formulas. These take account of various factors, including recruitment in academic subject categories, mode of study (part-time/full time) and level (undergraduate/postgraduate), and the amount of high quality research undertaken in the institution. This year we are allocating £206.5 million to higher education providers in Wales for the 2021/22 academic year.

We want to ensure that we are funding the right things at the right level and in the right way, and so we’ve recently published two consultations – one on research funding and the second on teaching funding.

This blog post is about our teaching funding, but you can find out more about our consultation on research funding on our website.

Why now?

We have made changes over the years to our teaching funding methods in response to changing Welsh Government policy priorities and other external factors, but it’s been a while since we looked in the round across all our teaching funding streams. Some of our funding methods have been in place, in one form or another, for the best part of 20 years; while we have reviewed individual elements of our teaching funding methodology some of the principles on which we fund have stayed largely the same for a number of years, and there have been a number of developments which we have needed to take into account, such as census outcomes, relevant legislation such as the Well-being of Future Generations Act and the conclusion of initiatives such as the Communities First programme.

What are we planning?

Our current consultation on teaching funding seeks views on specific elements of our funding methods, which we are aiming to implement in academic year 2022/23.

We’ve also included in the consultation a series of questions relating to what we might do in the future, and this is a key piece of work for us.

This will be an opportunity to review the basis on which we fund at the moment and consider what we should fund in future, recognising that we may not be able to fund all types of provision in the way we’d like to, for a multitude of reasons.

Changing our funding method is a complex process which takes time and we chose to delay our plans to carry out a full funding review in 2020/21, not least because of the pandemic. We’d really like to see a range of responses to the consultation from a diversity of stakeholders so that we can aim to make well informed decisions on our funding proposals. We want to understand more about the issues we need to consider, including in light of the impact of the Covid-19 pandemic, to determine best how HEFCW’s funding can help deliver the Welsh Government’s priorities, including in aiding the economic recovery.

The report from the OB3 review of part-time provision has given us a lot to think about, with steers on part-time funding as well as more general recommendations about how we could work with institutions to increase and improve opportunities for higher education students to study on a part-time basis in Wales. For example, the report found that bespoke part-time courses were argued to be more expensive to design and deliver than accommodating part-time students via existing full-time provision. The report also recommended that HEFCW explore how future funding could be better aligned to support the growth of flexible and tailored models of higher education which are more suited to the needs of part-time students. We have taken some initial steps to address this point and recently published a circular to call for bids for funding to research and develop micro-credential provision.

The HEFCW part-time data analysis report is a critical piece of work that we have drawn upon in our discussions to date and which will help inform the next stage of the review. The report brings out some interesting observations about part-time provision in Wales. For example, the report noted that for students gaining a degree in 2017/18, the proportion of full-time students gaining a first class degree was 26%, compared to 24% for part-time students. For upper second class honours degrees the proportion was 47% for full-time students and 32% for part-time students.

We are monitoring developments in other parts of the UK, which have the potential to affect HE providers in Wales but ultimately we are aiming to develop a new method of funding higher education teaching in Wales that helps deliver the objectives in our Corporate Strategy and our vision for high quality, accessible and inclusive education as we move into the transition period between HEFCW and the new post-16 body, the Commission for Tertiary Education and Research.

Our current consultation is the first phase of the review, and we will use the outcomes to help us design further proposals for the next phase on which we’re expecting to consult in the autumn.

Nicola Hunt, Senior Student Experience Manager