10 June 2021

Funding for higher education in 2021/22


£206.5 million will be allocated to higher education (HE) providers in Wales for the 2021/22 academic year.

The allocation includes £88.3 million for recurrent research funding, with the remainder given to universities and other providers to support, among other things, innovation and engagement, full-time undergraduate expensive and higher cost subjects, teaching part-time undergraduate courses, degree apprenticeships and capital developments.

Funding in 2021/22 has increased by nearly £35 million compared to the anticipated 2020//21 pre-Covid funding allocation of £171.5 million announced in W20/20HE HEFCW’s Funding Allocations 2020/21.

However, the total funding  provided for 2020/21 of £311.7 million was £140.2 million higher than the anticipated £171.5 million, mainly due to additional funding allocations made in-year to support higher education providers and students through the Covid-19 pandemic.

The extra £140.2 million for 2020/21 included additional support as a result of the pandemic:

  • £27 million for the Higher Education Investment and Recovery (HEIR) fund
  • £10 million to support well-being and health, and student hardship
  • £40 million to provide further support for student hardship
  • £44 million capital.
  • £1.5 million Graduate Support Fund, to support individuals in groups under-represented in HE who graduated during the pandemic to help their transition into a disrupted labour market.
  • £3.0 million additional for the Research Wales innovation fund
  • £4.7 million additional QR funding
  • £4.8 million additional High Cost Subjects Premium

The £206.5 million for 2021/22 will be allocated as follows:

Funding Available for Allocation
Funding expenditureAcademic year 2020/21
£ million
Academic year 2020/21
revised £ million
Academic year 2021/22
circular £ million
Research Wales Innovation Funding£7.5£10.5£15.0
Full-time undergraduate teaching[2]£26.8£33.4£40.5
Part-time teaching[3]£29.2£29.2£30.7
Baseline recurrent funding£141.9£158.4£174.5
Strategic investment£4.9£9.7£11.3
Well-being and health,£2.0£2.0£2.0
Degree apprenticeships£9.0£5.4£4.4
PGT master’s incentivisation bursaries£3.7£3.7£4.3
Total Revenue spend£161.5£257.7£196.5
Capital, Covid-19£0£44.0£0
Total Revenue and Capital Spend£171.5£311.7£206.5

[1] Includes QR quality-based research funding, PGR postgraduate research funding, and Sêr Cymru. [2] Includes Expensive Subjects Premium (ESP), higher costs subjects premium (HCSP), disability premium and per capita, and PGCE [3] Includes part-time undergraduate funding and postgraduate teaching funding [4] Includes Investment Recovery Fund, Graduate Support Programme, Support for Student Mental Health, Student Hardship and £900k Well-being and Health. Additional Covid-19 funding of £3 million is included as Research Wales Innovation Fund (RWIF) and not included here.

2021/22 priorities


Quality research (QR) funding, to support the research infrastructure of HE providers. It is allocated based on the outcomes of the last Research Excellence Framework (REF 2014), where almost a third of submitted research by Welsh universities was considered ‘world-leading’.

Innovation and engagement support, through the Research Wales Innovation Fund (RWIF), for commercialisation, income-driven activities, new business growth and skills support, and civic mission and public engagement.  

Postgraduate Research (PGR) Training funding, to support the development of highly-skilled researchers.

Full-time teaching, including expensive and higher cost subjects 

This funding is partly provided as an expensive subjects premium (ESP) – additional funding to support full-time undergraduate courses in clinical medicine, clinical dentistry and performing arts. This also includes funds for the higher cost subjects (HCS) of non-clinical medicine and dentistry, science and engineering, technology, mathematical sciences, IT, and computing.

A funding premium to support disabled students for all modes and levels of study, including full-time undergraduate students. 

Full-time teaching funding also includes ‘per head’ funding for full-time undergraduate and postgraduate taught students.

Part-time teaching

This funding contributes towards the cost of part-time courses. It includes £23.9 million funding for undergraduate provision as well as premium (supplementary) funding of £5.5 million to recognise providers’ successes in recruiting and retaining part-time undergraduate students from disadvantaged areas, £2.0 million to support part-time and full-time postgraduate disabled students, and £93k to support part-time undergraduate students receiving their tuition in Welsh. It also includes some ‘per head’ funding for part-time undergraduate and postgraduate taught provision, recognising the cost of registering each individual student. This is awarded for every taught student irrespective of mode or level, and applies to full-time as well as part-time postgraduate taught students.

Degree apprenticeships

Funding is available in 2021/22 for digital, engineering and advanced manufacturing degree apprenticeships.

Strategic funding

These are various amounts of funding provided to support a number of strategically-important initiatives, including ongoing programmes such as Reaching Wider, which improves access for, and the retention of, under-represented students; and GO Wales: Achieve through Work Experience.

Reaching Wider supports priority schools, colleges and their learners, and adults without level four qualifications. In 2021/22, we will provide £1.7 million to support three regional, collaborative Reaching Wider Partnerships to widen access to higher education.

Well-being and health

This year, £2 million will be provided for institutions to support well-being and health developments. This funding is intended to become a recurring annual allocation for future years.

Capital funding

This contributes towards the cost of the effective development and improved efficiency of HE providers’ estate.

Dr David Blaney, Chief Executive of HEFCW, said: “This is a substantial increase in funding for higher education in the next academic year, which shows the importance the Welsh Government has placed on supporting students, ensuring an excellent student experience, and bolstering Welsh universities’ strong position to help with a successful post-Covid economic recovery.

 “We are able to allocate nearly £207 million partly thanks to the changes following the recommendations of the Diamond review of higher education support, which will allow reinvestment in research and innovation and more expensive subjects.  

“We welcomed the significant boost to our funds last year thanks to funding that recognised the additional support students and higher education providers would need during the pandemic, and to help secure higher education’s role in the economic and social recovery of Wales. We will be monitoring the outcomes of these funding programmes throughout 2021/22.

“Welsh universities stepped up to the challenges they faced last year, from the significant changes they had to make to teaching and learning to demonstrating their value as part of communities or using their research to help us to meet current and future challenges.

“We continue to underline that continued investment in higher education providers is crucial. I would like to reiterate that it is welcome that the Welsh Government recognises the value of a resilient and strong higher education sector, as we continue to make the case for sustained investment as further funds become available.”

Table 6: Funding comparison AY 2020/21 and AY 2021/22 [Links to higher-res table]

1) Premiums consist of the access and retention premium (PT UG), the Welsh medium premium (PT UG) and the disability premium (PT UG, FT & PT PGT and FT & PT PGR). (2) FT UG/PGCE premium allocations are the expensive subjects premium, the higher cost subjects premium and the disability premium. (3) Totals may not sum exactly due to rounding. (4) We have allocated strategic funding to the Open University in Wales for a further year for 2021/22. This represents a reduction on the allocation in 2020/21, taking account of the University’s allocation via the Capital and RWIF funding streams. Additional performance element funding is allocated to University of South Wales in respect of the performance element provision at Royal Welsh College of Music and Drama. (5) RWIF funding for 2021/22 is provisional as data used in the calculation of the allocations is currently being verified. (6) University of Wales Trinity Saint David includes University of Wales Centre for Advanced Welsh and Celtic Studies

Technical notes

1.         Full allocations are on the HEFCW website under Publications – Circulars – HEFCW’s Funding Allocations 2021/22 (Circular W21/15HE).

Welsh Government budget and funding adjustments

2.         The Welsh Government allocates its budget to us on a financial year (FY) basis. HEFCW distributes funding, however, by academic year (AY). The financial year ending 31 March 2022 is shown as FY 2021-22 while the academic year ending 31 July 2022 is AY 2021/22. Allocations to higher education institutions and further education colleges can be subject to in-year adjustments if our own budget from the Welsh Government changes.

3.         The funding allocations for AY 2020/21 increased since the original allocations were published in August 2020, as HEFCW received four revised Welsh Government remit letter funding annexes during the year, and they included a number of funding adjustments to the 2020-21 financial year budget. These provided additional funding to HEFCW to address specific Welsh Government priorities and additional funding to HE providers, in the context of the Covid-19 pandemic. The net effect of these in-year changes, together with funding for some initiatives carried forward from the previous year, was an overall funding increase of £140.2 million against the original AY 2020/21 allocations.

4.         The budget for AY 2021/22 is based on a proportion of the confirmed budget for FY 2021-22, and a proportion of the assumed budget for FY 2022-23. The total funding allocation for AY 2021/22 is £206.5 million.

5.         The funding allocations in this press release and associated circular do not reflect any potential in-year funding adjustments – up or down –  that might be made later by the Welsh Government to HEFCW’s budget for FY 2021-22. Should any adjustments be made, they will result in a revision to the individual allocations for AY 2021/22. Furthermore, if the FY 2022-23 budget is different to the amount assumed for this allocation, there will be an impact on the resource available for higher education providers in AY 2021/22 and the associated allocations.

6.         Recurrent teaching and research funding is based on calculations for each provider using our long-standing funding methodology and developments consulted on during AY 2018/19 to introduce funding for higher cost provision (see circular W18/24HE).

Funding allocations and priorities

7.         The funding allocated to higher education providers continues to be allocated according to Welsh Government priorities. HEFCW targets activities (such as protecting part-time provision, maintaining higher cost provision, rewarding excellence in research, supporting and incentivising innovation and recruiting and retaining students from low-participation backgrounds) that a funding system which relies on full-time undergraduate tuition fees alone would not deliver.

8.         HEFCW is particularly targeting funding for:

  • quality research (QR), which focuses on supporting research at the highest levels of performance, to maintain Wales’s competitiveness at the leading edge; and innovation and engagement.
  • the protection, as far as possible, of part-time undergraduate teaching funding at a sector level. HEFCW continues to fund through the credit-based funding method for part-time courses for the 2021/22 academic year.
  • an expensive subjects premium for full-time undergraduate clinical medicine/dentistry and conservatoire performing arts courses. This is in addition to the fees of £9,000 per student that providers receive for these courses. Institutional allocations for expensive subjects are subject to a maximum payment, which is based on quotas or previously agreed funding arrangements.
  • a higher cost subjects premium, in addition to the fees of £9,000 per student that providers receive for these courses, covering some of the higher costs of full-time undergraduate non-clinical medicine and dentistry, science and engineering, technology, mathematical sciences, IT and computing.

Funding Quality Research

9.         The funding for quality research (QR) takes account of the quality and volume of research in Wales, as reported in the 2014 Research Excellence Framework (REF). More: www.hefcw.ac.uk/policy_areas/research/funding_research.aspx

11.       The AY 2021/22 QR allocations by university are in Table 2a of the circular and are based on the same methodology as AY 2020/21.

12.       The Research Excellence Framework (REF2014) is the UK-wide system for assessing research in UK higher education institutions using panels of experts in individual academic subject areas, which assess the quality, impact and environment of institutions’ research submissions. It was carried out jointly by the four UK higher education funding bodies. The first REF was completed in 2014 (replacing the former Research Assessment Exercise (RAE)). www.ref.ac.uk/. The next REF exercise will report in 2022.

13.       Table 6 provides a comparison with AY 2020/21 recurrent funding allocations by institution.

Open University in Wales

14.       HEFCW has monitored the overall impact in recent years of funding reductions on the Open University (OU) in Wales, given that the OU has no full-time undergraduate fee income (or full-time postgraduate courses) to offset any reductions in other budget lines. This year HEFCW provides funding of £605k to the OU. This amount would be reviewed annually, as previously reported, and has been reduced since last year to take account of emerging funding streams, such as the Research Wales Innovation Fund and the Capital Fund.