EL/01/09/A ENTERPRISE AND LIFELONG LEARNING COMMITTEE ... · ENTERPRISE AND LIFELONG LEARNING COMMITTEE AGENDA 9th Meeting, 2001 (Session 1) Wednesday 21st March 2001 The Committee

EL/01/09/A

ENTERPRISE AND LIFELONG LEARNING COMMITTEE

AGENDA

9th Meeting, 2001 (Session 1)

Wednesday 21st March 2001

The Committee will meet at 10.00am in The Chamber, Assembly Hall, The Mound,Edinburgh to consider the following agenda items:

1. Item in Private: The Committee will consider whether to discuss item 5 inprivate.

2. Subordinate Legislation: The Committee will consider the following negativestatutory instrument—

The Designation of UHI Millennium Institute (Scotland) Order 2001 (SSI 2001/39)

3. SHEFC Review of Teaching and Research Funding: The Committee will takeevidence from—

Universities Scotland:David Caldwell, DirectorProfessor Andrew Miller, Principal and Vice-Chancellor of Stirling University

Association of University Teachers (Scotland) (AUT):Dr Bill Stewart, PresidentDr Angela Roger, Vice-PresidentDr Tony Axon, Research Officer

Educational Institute of Scotland (EIS):Marian Healy, Further and Higher Education Officer, EISMr Howard Wollman, EIS-ULA (Napier University)Dr Alex Fotheringham, Vice President, EIS-ULA (Heriot-Watt University)Mr Iain McDonald, Ex-President, EIS-ULA (Heriot Watt University)

4. Tourism Industry: The Committee will consider whether to discuss the impact ofthe foot and mouth crisis on the tourism industry at a forthcoming meeting.

EL/01/09/A

5. Local Economic Forums: The Committee will consider whether to makenominations for the Ministerial Taskforces.

Simon WatkinsClerk to the Committee

Room 2.7, Committee ChambersExt. 0131 348 5207

****************************************************The following papers are attached for this meeting:

Agenda Item 2

The Designation of UHI Millennium Institute (Scotland) Order 2001 SSI 2001/39:

Note from the ExecutiveCopy of the Regulations EL/01/09/1

Agenda Item 3

Background Information on SHEFC Inquiry - EL/01/09/2

• SPICe briefing paper on Funding Higher Education Institutions• SHEFC Consultation Document HEC 08/00 Review of Teaching Funding: Third Stage Consultation• SHEFC Consultation Document HEC 09/00 Review of Research Policy and

Funding: Second Stage Consultation• SHEFC commentary on tables published in the Herald• Letter from SCDI to SHEFC dated 1st March 2001

Submissions from -

Universities Scotland EL/01/09/3Association of University Teachers (Scotland) EL/01/09/4Educational Institute of Scotland EL/01/09/5

Agenda Item 5

Letter from the Minister of Enterprise and Lifelong Learning EL/01/09/6

Enterprise and Lifelong Learning Committee

Meeting – Wednesday 21dt March 2001

Papers circulated

Agenda EL/01/09/AScottish Executive Cover Note for TheDesignation of UHI Millennium InstituteOrder 2001 (SSI 2001/39)

Copy of the Regulations (Hard Copy tofollow)

EL/01/09/1

• SPICe briefing paper on FundingHigher Education Institutions

• SHEFC Consultation Document HEC08/00 Review of Teaching Funding:Third Stage Consultation

• SHEFC Consultation Document HEC09/00 Review of Research Policy andFunding: Second Stage Consultation

• SHEFC commentary on tablespublished in the Herald

EL/01/09/2

Universities Scotland EL/01/09/3Association of Universities (Scotland) EL/01/09/4Educational Institute of Scotland EL/01/09/5

http://www.scotland-legislation.hmso.gov.uk/legislation/scotland/ssi2001/20010039.htm

EL/01/09/1


Meeting 21 March 2001

The Designation of the UHI Millennium Institute (Scotland) Order 2001

1. Attached is The Designation of the UHI Millennium Institute (Scotland) Order2001 together with its accompanying Explanatory Note and an Executive Noteproduced by the Executive Secretariat. The author of the note, Ann Scott, will bepresent at the meeting to answer members' questions.

2. The instrument is laid before Parliament under Standing Order 10.4 and is subjectto negative procedure. The instrument comes into force on 1st April 2001, andParliament has until that date to take any action.

3. This statutory instrument has been approved by the Subordinate LegislationCommittee.

4. This order designates the UHI Millennium Institute as an institution which may befunded by the Scottish Higher Education Funding Council. Provision is also madefor this designation to continue in the event of the name of the Institute beingchanged.

Recommendation5. The Committee is invited to consider any issues that it wishes to raise inreporting to the Parliament.

Simon WatkinsClerkAugust 2000

EL/01/09/2


Meeting 21 March 2001

SHEFC Review of Teaching and Research Funding

The Committee agreed to host a series of hearings on the subject of the SHEFCconsultation on teaching and research funding. In the first of this series of meetings,the Committee will take evidence from Universities Scotland, the Association ofUniversity Teachers (AUT) and the Educational Institute of Scotland (EIS) and theirsubmissions are provided herewith.

As background to the SHEFC hearings please find attached to this note, in additionto the submissions, a set of relevant documents including:

1. SPICe briefing paper on Funding Higher Education Institutions2. SHEFC Consultation Document HEC 08/00 Review of Teaching Funding:

Third Stage Consultation3. SHEFC Consultation Document HEC 09/00 Review of Research Policy and

Funding: Second Stage Consultation4. SHEFC Commentary on Tables published in The Herald5. Letter from SCDI to SHEFC dated 1st March 2001

Simon WatkinsClerkAugust 2000

G:\Central Distribution Office\Work\Committee Papers\Enterprise\03-21-01\EL 01_09_2 SHEFC Herald TableComments.doc

SHEFC COMMENTARY ON TABLES PUBLISHED IN THE HERALD

Coverage of the SHEFC teaching funding consultation in the Heraldnewspaper included the following two tables:

• an attempt to show proposed teaching grant changes by institution (2February 2001)

• an attempt to show 'how the funding proposals would affect courses' inseven subject areas (6 February 2001)

However, there are a number of major factors that would affect the outcomesof the proposed changes by institution and by subject, which mean that thecomparisons shown are neither accurate nor meaningful:

• Any proposed teaching grant changes would not start to be introduceduntil academic year 2002-03. By this time, resources for teaching willhave risen by around 9%

• The amounts of grant per subject and per institution will be different, asthey will be based on student numbers at the time of introduction

• It will be for institutions to decide at what level they fund individual subjectsand courses, rather than follow the very broad groupings proposed bySHEFC, so it is not meaningful to draw comparisons at individual subjectlevels

• Other proposed funding changes will also affect grant levels, such asintroducing a 5% increase in units of funding based on the number ofstudents from areas currently under-represented in higher education

• There will if necessary be transitional arrangements to make changesmanageable for institutions.

It is not yet possible to predict the effect of these factors and model thechanges for subjects and institutions. Therefore, it is crucial that the newfunding method is based on sound principles which enable a fairer and moreflexible distribution of funding. More effective and efficient funding levers areneeded so that they can then be used to deliver the provision and prioritiesthat Scotland needs, and so that artificial distortions are avoided which willinevitably arise in future if the system is not reformed.

REVIEW OF RESEARCH POLICYAND FUNDING: SECOND STAGECONSULTATION

CONSULTATION DOCUMENT HEC 09/00

December 2000

Deadline: Friday 30th March 2001

For further information contact:

Richard HancockHead of Research Funding & PolicyScottish Higher Education Funding CouncilDonaldson House97 Haymarket TerraceEDINBURGHEH12 5HD

Direct line: 0131 313 6567Fax: 0131 313 6501Email: [email protected]

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REVIEW OF RESEARCH POLICY AND FUNDING:SECOND STAGE CONSULTATION

CONTENTS PAGES

Executive Summary 5

Summary of the Proposals 13

Introduction 17

Section 1: Background

IntroductionResearch and the Knowledge AgeThe Council’s objectivesWider policy developments

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19192023

Section 2: Proposed Funding Model 25

Funding optionsMain Quality Research GrantThe physical research infrastructureScience Research Investment FundStrategic Research Development GrantResearch Development Foundation GrantJoint Research Development FundingProgrammeKnowledge Transfer GrantUK Activity Funding

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404144

Section 3: Other Policy Issues 47

Collaboration in researchSupporting interdisciplinary approaches toresearchResearch in the arts and humanitiesThe people issuesSummary

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484952

Annex 1: Summary of the Consultation Questions 53

Annex 2: Categorisation of Units of Allocation into High,Intermediate and Low Research Costs

55

The Consultation Process and Timetable 57

Further Information 59

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EXECUTIVE SUMMARY

Purpose of this consultation

1. This document forms the second stage of the Council’s fundamentalreview of research policy and funding and describes the methods that theCouncil proposes to introduce from 2002-03 to fund research in Scottishhigher education institutions (HEIs). From 2002-03, the Council proposesto:

° continue to allocate the majority of its funds through a Main QualityResearch Grant, by reference to assessments of the quality ofresearch. There will be an emphasis on protecting the unit offunding for the highest rated departments - those that arecompetitive by international standards of excellence;

° introduce a new Science Research Investment Fund, jointly withthe Office of Science and Technology, to invest in the underlyingscience research infrastructure in Scotland;

° replace the existing Research Development Grant with a new grantscheme that provides funding for the infrastructure in those areasof research that are likely to be of strategic importance to Scotlandand the UK;

° introduce a new Research Development Foundation Grant – toenhance institutions’ ability to develop strategically new andemerging areas of research, particularly where these meet local,regional or national needs;

° establish a new Knowledge Transfer stream of funding to helpplace Scotland’s universities and colleges at the heart of theknowledge-driven economy and society; and

° ensure that institutions in Scotland continue to have access to UKfunding activities, where it is recognised that participation in suchactivities is important to maintaining the national and internationalcompetitiveness of the Scottish research base.

The consultation document describes in more detail the proposed fundingmethods and invites views on their introduction and operation.

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Background - Research and the Knowledge Age

2. The Scottish Higher Education Funding Council’s (SHEFC) fundamentalreview of research policy and funding was launched in February this yearwith an initial consultation, Research and the Knowledge Age. The mainpurpose of that consultation was to discuss the policy objectives for theCouncil’s funding of research and to identify a number of broad fundingoptions for the future. In the initial consultation, the Council proposed anumber of objectives for its funding. There was an almost unanimousview that the first objective was the most important and, indeed, that itwas at the core of the Council’s mission:

“The development of a flexible, efficient and high quality researchbase and an increase in the volume of world-class researchundertaken in Scotland.”

3. However, there was also a considerable degree of support for the secondobjective, which the Council has amended in the light of the responses:

“The dissemination of the outcomes of research to promote theirapplication and commercialisation for the wider economic,educational, social, healthcare and cultural benefit of society.

The main issue for this consultation paper is how these two coreobjectives can be promoted operationally through revised methods offunding.

Proposed funding model

4. In its initial consultation document, the Council highlighted some of themain practical issues that would need to be addressed in the developmentof possible new methods of funding research. Having considered theviews received in the consultation and the evidence, the Council nowproposes to introduce the following funding model from 2002-03. Themodel is shown in Figure 1 below:

QualityInfrastructure

Funding

Main Quality ResearchGrant

Science ResearchInvestment Fund

(2002-03 and 2003-04)

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Figure 1.

Quality Infrastructure Funding

Main Quality Research Grant

5. The majority of the Council’s funds for the research infrastructure arecurrently allocated through the RAE-based grant. The Council proposesto continue to allocate the majority of its funds through a Main QualityResearch Grant. However, in preparing their submissions to RAE 2001,institutions should be aware that the Council’s priority from 2002-03 will beto maintain the average level of funding for each active researcher indepartments rated 4 and 5/5*. There may therefore be a lower unit offunding, and even possibly no funding, for departments rated 3a and 3b inthe Main Quality Research Grant after the 2001 RAE.

Science Research Investment Fund

6. The Council has welcomed the announcement by the Government in theUK Spending Review and in the Science and Innovation White Paper toestablish a new two-year Science Research Investment Fund (SRIF). It isintended that the funds from this scheme will be allocated to institutionsformulaically by reference to measures of research excellence and thevolume of research. Institutions will be provided with details of theirallocations early next year and will be invited to put forward proposals forthis expenditure.

ResearchDevelopment

Funding

Strategic Research DevelopmentGrant

Research DevelopmentFoundation Grant

Joint Research DevelopmentFunding Programme

Knowledge TransferFunding

Knowledge Transfer Grant

UK Activity Funding

Arts & Humanities ResearchBoard

UK Research Strategy LibrariesProgramme

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Research Development Funding

7. The Council introduced its Research Development Grant (RDG) in 1997-98 in response to the Government’s Technology Foresight Programme.The main purpose of the grant scheme is to stimulate the development ofresearch in areas that have the potential to meet the long-term needs ofsociety, as identified through processes such as Foresight. The Councilbelieves that the RDG has proved effective in supporting new andemerging areas of research and in stimulating increased institutionalcollaboration, particularly by bringing together groups of researchers withcomplementary strengths. It has therefore decided to continue to allocateresources for research development. There will however be an increasedstrategic focus on the use of this funding.

Strategic Research Development Grant

8. The Council will continue to allocate resources to an annual competition inwhich proposals for funding are invited from institutions or consortia. It isanticipated that between £5 - £7 million will be allocated to the competitionper annum and that it will run in broadly the same way as the current RDGscheme. However, there will be a change in emphasis, with a focus onfunding the research infrastructure in areas that are likely to be ofstrategic importance to Scotland and the UK, or where investmentsthrough the SRDG have the potential to build capability significantly inpotential areas of research strength.

Research Development Foundation Grant

9. The Council has indicated that, following the 2001 RAE, there may be alower unit of funding, and even possibly no funding, for departments rated3a and 3b in the Main Quality Research Grant. It recognises that thischange presents the danger of choking off emerging areas of research, ornew areas of research, that have the potential to become world-class. Itintends therefore to allocate an element of its research developmentfunding to institutions on a formula basis to support emerging and newareas of research. It anticipates that resources of around £5 million perannum will be available through this method.

Joint Research Development Funding Programme

10. The Scottish Executive is a major funder of research in Scotland andbeyond. In 1999-2000, for example, it spent over £130 million onresearch, excluding the funds provided to SHEFC. The Council believesthat there are benefits that can be achieved, both to institutions and morebroadly to Scotland, by seeking synergies with the Scottish Executive’sprogrammes of research funding. The Council intends, therefore, toreserve an element of Research Development funding to support jointprogrammes in the future. The exact level will vary, but it is expected tobe in the region of about £1 million per annum.

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Knowledge Transfer Funding


11. The Council’s core role will be to continue to fund a basic researchcapability. This will provide the foundation for applied research andtechnological change that are essential to the development of aknowledge-based economy and society. However, investment in a basicresearch capacity is not by itself a sufficient condition to achieveenhanced economic growth. The investment needs to be complementedby effective policies for knowledge transfer and the commercialisation ofthe research base, and by excellent bi-directional flows of informationbetween the research base and the users of research.

12. In response to the Council’s initial consultation, Research and theKnowledge Age, many institutions drew attention to the long-term role,and the priority that they intend to give to commercialisation activities and,more broadly, to knowledge transfer activities. However, the Councilrecognises that there are costs associated with commercialisation andknowledge transfer. The Council proposes therefore to create apermanent, recurrent funding stream for knowledge transfer. It isanticipated that about £6 million per annum will be available through thisroute. These resources will provide the sector with a long-term, flexiblefunding stream to support knowledge transfer.

UK Activity Funding

13. The Council has indicated that its funding methods and policies willcontinue to be set within the overall framework for the public funding ofresearch in the UK. It will seek complementarity with the other majorpublic funders of research in the UK, including the Research Councils andthe OST. The Council proposes to retain a funding stream to provideinstitutions with access to UK funding activities, where it is recognised thatparticipation in such activities is important to maintaining the national andinternational competitiveness of the Scottish research base.

Other Policy issues

Collaboration in research

14. The Council believes that its primary role should be to ensure that itsfunding methods help to create an environment in which collaboration thatis researcher-driven can take place. The proposed Strategic ResearchDevelopment Grant will play a key role in this regard. However, in thecontext of its plans for the SRDG, the Council will consider the potentialthat might be gained from funding networks of collaborative researchactivity, particularly where these are based around certain nodal points.

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Supporting interdisciplinary approaches to research

15. The Council intends to look again at the effects of the RAE oninterdisciplinarity as part of the proposed UK-wide review of researchassessment that is due to take place next year. It also intends to continueto give a degree of prominence to proposals that adopt interdisciplinaryapproaches through the Strategic Research Development Grant.

Research in the arts and humanities

16. The Council believes that the Arts and Humanities Research Board(AHRB) has made impressive progress since its inception in 1998, to theextent that it is now regarded by many as a de-facto Research Counciland the second arm of the dual support system for the arts andhumanities. However, the Council believes that it is now timely toconsider again as to whether the AHRB should be established formally asa Research Council. It intends to explore this issue over the coming yearwith the other funders of the Board and with the Scottish Executive.

The people issues

17. The Council’s initial consultation document, Research and the KnowledgeAge, recognised that people are the most valuable resource in theresearch enterprise. In the responses to that consultation, there were anumber of specific issues raised about the training and funding ofresearch students and the development of research staff, where it wassuggested that the Council should consider taking action.

Research training

18. There was a shared view in the responses to the Council’s initialconsultation that much still needed to be done to improve the quality ofresearch training. It was also suggested that the funding of postgraduateresearch students by SHEFC through both the teaching funding andresearch funding streams was anomalous. The Council thereforeproposes to transfer the funding of PGR from the Teaching Fundingstream to the Main Quality Research Grant from 2002-03. There mayalso be merit in strengthening the training of postgraduate researchstudents by establishing national criteria for the standards of training andsupervision, including the facilities and environment in which studentsundertake their research.

Development of research staff

19. A further issue that was raised in the initial consultation was the adequacyof arrangements for the career development of research staff. TheCouncil will consider the position of research staff in the development ofits policies for improving human resource management within the HEsector.

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Contract Research Staff

20. The Council’s Contract Research Staff (CRS) initiative has been runningsince 1995. There is an argument that CRS issues should now beaddressed in the round, as part of institutions’ wider Human ResourceManagement strategies. The Council proposes therefore to discontinueits specific CRS initiative at the end of 2001 and, thereafter, will addressthe career development and management of contract research staff aspart of its plans to develop integrated policies for human resourcemanagement in the higher education sector.

Summary

21. The funding model proposed in this consultation document is intended toprovide institutions with increased flexibility. From 2002-03, the majorityof funds will be allocated to institutions formulaically, with less emphasison bidding processes. However, there will be an increased need forinstitutions to plan strategically for the use of these funds, focusing ontheir areas of strength.

How to respond to this consultation

The deadline for submission of responses is Friday, 30 March 2001. As partof the Council’s commitment to openness, responses to this consultationpaper will be made available to the public on request. Please indicate if youdo not wish your response, or any part of it, to be made available publicly.

The options for returning responses are as follows:

Web

Responses may be returned directly on-line using the form which is availableat the following web address:

http://www.shefc.ac.uk/shefc/content/library/consult/2000/hec0900.htm

E-mail attachment

Provision has been made at the above address to download the responseform as a Word document. Completed versions of the form may then be sentas an e-mail attachment to the following address: [email protected]

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Post

Responses may be sent by post to:

Richard HancockHead of Research Funding & Policy BranchScottish Higher Education Funding CouncilDonaldson House97, Haymarket TerraceEdinburgh EH12 5HD

Email: [email protected] or Fax: 0131-313-6501

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SUMMARY OF THE PROPOSALS

The Council proposes to: Page


° Continue to allocate the majority of its funds through a MainQuality Research Grant, by reference to assessments of thequality of research.

° Continue to use all Category A staff as the measure of volumein calculating the distribution of funds to the subject areas (orsubject pots).

° Retain the Cost (C) factor in the method of allocation.° Give priority to maintaining the average level of funding for

each active researcher in departments rated 4 and 5/5* afterthe 2001 RAE.

° Retain the current Main Volume Indicator – numbers ofacademic staff active in research – in the second stage of thefunding method.

° Consider whether to earmark again specifically for investmentin capital a proportion of its funding from the Main QualityResearch Grant.

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29

2933

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35


° Introduce a new Science Research Investment Fund, jointlywith the Office of Science and Technology, to invest in theunderlying science research infrastructure in Scotland overthe period 2002-03 and 2003-04.

35

Research development funding

° Establish a new Strategic Research Development Grant(SRDG), to fund the research infrastructure in areas that arelikely to be of strategic importance to Scotland and the UK.

° Consider whether, and how, the SRDG might be used toensure that centres of research excellence in Scotland can belinked into proposals to map European centres of researchexcellence.

° Invite on to the membership of the SRDG assessment panel,one or more international members.

° Invite applicants who are seeking funding from the SRDG forequipment and facilities to put in place arrangements forenhanced access.

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° Allocate an element of its research development funding toinstitutions on a formula basis through a new ResearchDevelopment Foundation Grant.

° Reserve an element of research development funding tosupport joint research funding programmes with ScottishExecutive departments

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Knowledge transfer funding

° Establish a time-limited working group with Scottish Enterpriseto begin to consider how the two organisations can achievegreater complementarity in their policies for promotingcommercialisation and innovation.

° Establish a new Knowledge Transfer stream of funding.

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UK activity funding

° Retain a funding reserve to provide institutions in Scotlandwith access to UK funding activities, where it is recognisedthat participation in such activities is important to maintainingthe national and international competitiveness of the Scottishresearch base.

44


° Consider the potential that might be gained from fundingnetworks of collaborative activity, particularly where suchnetworks are based around key facilities that are concentratedat certain nodal points.

° Continue to seek to maximise the opportunities for productivecollaboration through its research funding methods

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47


° Look again at the effects of the RAE on interdisciplinaryresearch as part of the proposed UK-wide review of researchassessment.

° Continue to give a degree of prominence through theproposed SRDG to proposals that adopt interdisciplinaryapproaches.

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° Keep under review the level of funding available toresearchers in the arts and humanities.

° Consider again as to whether the AHRB should beestablished formally as a Research Council.

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The people issues

° Transfer the funding of postgraduate research (PGR) studentsfrom the Teaching Funding stream to the Main QualityResearch Grant from 2002-03.

° Include the number of postgraduate research students as aminor indicator of volume in the proposed ResearchDevelopment Foundation Grant.

° Consider whether national criteria for the standards of trainingand supervision of PGR should be established.

° Consider the position of research staff in the development ofits wider policies for improving human resource managementwithin the HE sector.

° Discontinue its specific Contract Research Staff (CRS)initiative at the end of 2001 and, thereafter, address thecareer development and management of CRS as part of itsplans to develop integrated policies for human resourcemanagement in the higher education sector.

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INTRODUCTION

1. This document forms the second stage of the Council’s fundamentalreview of research policy and funding and describes the methods that theCouncil proposes to introduce from 2002-03 to fund research in Scottishhigher education institutions (HEIs). From 2002-03, the Council proposesto:

° continue to allocate the majority of its funds through a Main QualityResearch Grant, by reference to assessments of the quality ofresearch. There will be an emphasis on protecting the unit offunding for the highest rated departments - those that arecompetitive by international standards of excellence;

° introduce a new Science Research Investment Fund, jointly withthe Office of Science and Technology, to invest in the underlyingscience research infrastructure in Scotland;

° replace the existing Research Development Grant with a new grantscheme that provides funding for the infrastructure in those areasof research that are likely to be of strategic importance to Scotlandand the UK;

° introduce a new Research Development Foundation Grant – toenhance institutions’ ability to develop strategically new andemerging areas of research, particularly where these meet local,regional or national needs;

° establish a new Knowledge Transfer stream of funding to helpplace Scotland’s universities and colleges at the heart of theknowledge-driven economy and society; and

° ensure that institutions in Scotland continue to have access to UKfunding activities, where it is recognised that participation in suchactivities is important to maintaining the national and internationalcompetitiveness of the Scottish research base.

In short, the proposals in this consultation document are intended tosupport excellence, help develop and support research in areas ofstrategic importance to Scotland and the UK, and enhance the efficienttransfer of knowledge and understanding from the research base to thewider society. The document describes in more detail the proposedfunding methods and invites views on their introduction and operation.

2. The consultation document is in three parts:

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Section 1: sets out the background to the Council’s review andhighlights some key issues that emerged from the initialconsultation on research policy and funding (Consultation02/00);

Section 2: describes in outline the funding methods that the Councilproposes to use from 2002-03 and invites views on theintroduction and operation of these;

Section 3: discusses, and invites views on, a number of otherresearch policy issues.

A summary of the consultation questions is provided in Annex 1 to thisdocument. Responses to this consultation are invited by Friday, 30 March2001.

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SECTION 1: BACKGROUND

Introduction

3. This consultation document describes the methods that the Councilintends to introduce from 2002-03 to fund research in Scottish highereducation institutions (HEIs). The proposals in this document, togetherwith those contained in the Council’s parallel consultation documents onTeaching Funding and Quality Enhancement, recognise that Scotland hasa diverse higher education sector and that universities and colleges havedifferent missions and strengths - whether it is in teaching, research,knowledge transfer, or in a combination of each. The proposals in thethree documents are intended to reward this diversity by allowinginstitutions more clearly to focus on those areas where they excel while, atthe same time, encouraging institutions in their own distinctive ways tocontribute to the development of Scotland’s knowledge economy andsociety. The proposals will however place a greater requirement oninstitutions to review their activities and plan strategically in their chosenareas of strength.

Research and the Knowledge Age

4. The Scottish Higher Education Funding Council’s (SHEFC) fundamentalreview of research policy and funding was launched in February this yearwith an initial consultation, Research and the Knowledge Age. The mainpurpose of that consultation was to discuss the policy objectives for theCouncil’s funding of research and to identify a number of broad fundingoptions for the future. The consultation was intended to be retrospective,by seeking views on the strengths and weaknesses of the existingmethods of funding research, and prospective: looking ahead to theissues that might influence the development of new methods of funding.

5. The Council’s review arose out of earlier discussions between the UKhigher education funding councils, following the 1996 ResearchAssessment Exercise (RAE), on plans to carry out a fundamental reviewof the mechanisms for assessing research in the UK. It was agreed thatthis review should be preceded by separate reviews by the FundingCouncils of their respective methods and policies for funding research, toensure that the mechanisms for assessment were determined in thecontext of decisions about policies and funding methods, rather than theother way around. There were also a number of other important factorswhich suggested that a review of research policy was timely. Theseincluded the establishment of the devolved administrations in the UK, newGovernment priorities for research and knowledge transfer, and changesin the broader research landscape at both the national and internationallevel. At the same time, there were concerns that potential changes in the

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volume and quality of research as measured by the 2001 RAE, togetherwith constraints on the funds available, would call into question the abilityof the existing methods of funding to support the Council’s core objectivesfor research.

Outcome of the Council’s initial consultation

6. The Council published two versions of its initial consultation document,Research and the Knowledge Age. The first version of the paper wasaddressed primarily to higher education institutions in Scotland and tothose working in the higher education community. The second version ofthe paper sought views on the key issues from those communities that arethe users, or potential users, of research, including businesses, industries,commerce, charities and Government. As part of the consultationprocess, the Council also held a series of meetings with key stakeholdergroups, including meetings with representatives from the higher educationsector, the business and technology communities and the medical andhealthcare sectors. In addition, representatives from SHEFC alsoparticipated in a number of UK-wide meetings involving representativesfrom the arts and humanities communities and from the charitable sector.

7. By the close of the consultation period, the Council had received nearly 90written responses. These came from a wide range of bodies andindividuals including from higher education institutions (HEIs), charities,businesses, Government departments, subject associations andindividuals with an interest in research in Scotland. In addition, over 100people participated in the stakeholder meetings organised as part of theconsultation, including representatives from nearly 50 businesses inScotland. The Council is extremely grateful to all those who responded tothe consultation and to those who gave their time to take part in themeetings.

8. This consultation document does not provide a detailed summary of theresponses, although it does highlight some of the main issues thatemerged during the initial phase of the Council’s review. However, threereports have been produced which do provide a detailed summary andanalysis of the responses. These are available from the Council’s web-site at the following address:

http://www.shefc.ac.uk/content/shefc/research/researchreview.htm

A list of the respondents to the initial consultation is also available at thisaddress, together with other information about the Council’s review.

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The Council’s objectives for the future funding of research

9. In 1999, the Council published a statement of the purpose of funding forresearch.1 This statement describes how core funding from SHEFC canbe used to support research in higher institutions. In its initial consultationdocument on research, the Council also proposed a number of objectivesfor its funding. In other words, what it wants to achieve with this funding.The objectives proved helpful in stimulating a debate about the role of theFunding Council in supporting research and how this might best befulfilled in the future. There was an almost unanimous view that the firstobjective was the most important and, indeed, that it was at the core ofthe Council’s mission:

“The development of a flexible, efficient and high qualityresearch base and an increase in the volume of world-classresearch undertaken in Scotland.”

10. However, there was also a considerable degree of support for the secondobjective. This had proposed that Council funding should be concerned,not only with the generation of new knowledge and understanding throughresearch, but also with the transmission and utilisation of that knowledgefor wider economic, educational, social and cultural benefits. The Councilagrees that this should remain a core objective for its funding, although itaccepts that the emphasis in the wording might be changed to reflectbetter the fact that a university or college is just one of the actors involvedin the process of exploiting and utilising the outcomes of research. Ittherefore proposes the following revised objective:

“The dissemination of the outcomes of research to promote theirapplication and commercialisation for the wider economic,educational, social, healthcare and cultural benefit of society.

The main issue for this consultation paper is how these two coreobjectives can be promoted operationally through revised methods offunding.

Research within higher education

11. The discussion about objectives provoked a more fundamental,philosophical discussion about the purpose of higher education institutionsand, in particular, raised questions about the relationships betweenresearch and higher education. Did higher education status imply that allinstitutions should undertake research and, if so, should they all be fundedin the same way for this role? Conversely, was it necessary for allinstitutions to be funded for research or would Scotland’s interests best beserved by concentrating funding on a small group of institutions with acritical mass of internationally competitive research? The Councilbelieves that it may be helpful to address these questions directly, not

1 SHEFC Circular 13/99. Main Grants in Support of Teaching and Research for 1999-2000.

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least because this will ensure that the rationale for the policies andmethods of funding research proposed in this consultation document aremore readily understood.

12. There is considerable debate about the relationship between researchand higher education and, in particular, whether all higher educationinstitutions need to undertake research to justify their status. TheCouncil’s view is that higher education should be informed by researchand that there should be links between the two. It also believes that allinstitutions derive benefits from being engaged in the research process.However, it does not take the view that all academic staff neednecessarily to be engaged directly in research or that all departments orinstitutions should be engaged in research to the same degree. There isconsiderable diversity in the higher education system in Scotland and theCouncil believes that this should be maintained. It would not, therefore,be appropriate to provide baseline research funding to all institutions,since the degree of engagement in research varies considerably acrossthe sector, depending on different institutional missions. Having said this,the Council takes the view that all institutions should be eligible to receiveresearch funding and, indeed, virtually all institutions in Scotland doreceive an element of such funding. The Council also believes that itsfunding methods should recognise appropriately the different types of highquality research that are carried out by different institutions.

13. The other side of the coin is the argument that SHEFC should seekexplicitly to concentrate funding on a few research-intensive institutions.The Council recognises that Scotland benefits from the presence of anumber of institutions which can be regarded as world-class by virtue ofthe quality of research undertaken and the breadth. It is important thatthese institutions continue to be internationally competitive. There washowever little support from the consultation for a policy of explicitconcentration of funding, and there is little evidence to suggest that such apolicy would necessarily lead to an overall improvement in researchquality. Studies commissioned by our sister Funding Council, the HigherEducation Funding Council for England (HEFCE), reveal that there aremany pockets of research excellence in institutions in the UK which,overall, are not research-intensive.2 Indeed, lower rated departments mayinclude some staff of international standing. Our own analysis revealsthat some lower rated departments in Scotland attract similar levels ofexternal research funding per research active member of staff as morehighly rated departments. A policy of explicit concentration might verywell damage some excellent and emerging areas of research. TheCouncil’s view therefore is that two key principles underlying its funding ofresearch should be that:

° all institutions should be eligible to compete for research funding;and that

2 Adams J, Law G, Cook N, Marshall S, Wilkinson D, Mount D, Bayers N, Pendlebury D,Small H, Stephenson J, 2000. The Role of Selectivity and the Characteristics of Execellence.Higher Education Policy Unit, University of Leeds.

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° excellence in research should be funded wherever it is located.

These two principles have guided the development of the fundingmethods proposed later in this consultation document.

Wider policy developments

14. In reviewing its methods of funding research, the Council has consideredcarefully the responses to its initial consultation, Research and theKnowledge Age. It has also taken into account relevant UK evidenceprovided through a number of studies commissioned by the HigherEducation Funding Council for England as part of its separate review. Asthe initial consultation indicated, the Council seeks to take a holisticapproach towards the funding of research, ensuring that its policies andfunding methods complement, and fit within, the broader framework forthe funding of research, both in Scotland and across the UK. TheCouncil has, therefore, also considered the implications of wider policydevelopments including, most recently, the UK Government’s White Paperon Science and Innovation.3 That White Paper set out plans for newinvestments in the science infrastructure and, more broadly, theGovernment’s strategy for improving the country’s record of innovationand enterprise. (Proposals in the White Paper for a Science ResearchInvestment Fund are discussed in the next section of the consultationdocument.) There are also a number of other policy developments whichare likely to have implications for the Council's future policies andmethods of funding research:

The Way Forward: Framework for Economic Development in Scotland

The Scottish Executive’s framework for economic development4,published in June 2000, discusses the role of the science base instimulating innovation in the Scottish economy. It indicates that theExecutive intends to give priority to supporting innovation and thecommercialisation of research. The Council anticipates that thedevelopment of this framework will have implications for its policiesand methods of funding knowledge transfer.

A Science Strategy for Scotland

The Scottish Executive is also developing a science strategy forScotland. The strategy is expected to be published early next year andwill contain proposals relevant to the Funding Council’s role as a majorfunder of the science research base in Scotland.

3 Excellence and Opportunity – A Science and Innovation Policy for the 21st Century. Cm4814. June 2000.4 The Way Forward. Framework for Economic Development in Scotland. Scottish Executive.June 2000.

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A European Research Area

The European Commission has published proposals to develop aEuropean Research Area.5 Among the proposals, are plans to linkselected centres of research excellence in Europe and developpolicies to encourage the greater mobility of researchers.

There are also likely to be other deve lopments that will be relevant,including the publication of the Foresight action plans and, in Scotland, ofthe report of the second Knowledge Economy Task Force. The Councilwill consider the implications of these major policy developments for itsfuture methods of funding research in due course, consulting with thesector where appropriate. It intends, however, to maintain the momentumwith its own review of research policy and funding in order to ensure thatrevised funding methods are announced for the 2002-03 funding round,the first following the 2001 Research Assessment Exercise.

15. The next section of the consultation document describes the proposedfunding methods in more detail and invites comments on the introductionand operation of these methods.

5 Towards a European Research Area. European Commission. January 2000.

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SECTION 2: PROPOSED FUNDING MODEL

Funding options

16. In its initial consultation document, the Council highlighted some of themain practical issues that would need to be addressed in the developmentof possible new methods of funding research. Views were invited on thepotential advantages and disadvantages of five outline funding modelsranging from the conservative option of retaining a form of RAE-basedgrant, together with a new Strategic Research Development Grant, to themore radical options of funding on the basis of research leaders orinstitutional research strategies.

17. There was a degree of support for each of the options, or for acombination of the options. However, the consensus was in favour ofOption 1, which had proposed retaining a form of quality-based grantmodelled on the current RAE-based grant. This would be complementedby a modified Research Development Grant scheme with a more strategicfocus. Having said this, there were different views about how this optionmight best be developed and, in particular, about the role of the proposedStrategic Research Development Grant. There was also a degree ofconsensus that this option needed to be complemented by a third mainfunding stream to support commercialisation and other knowledge transferactivities. Although, understandably, most respondents believed that sucha new funding stream should not be provided at the expense of corefunding for research.

18. Having considered the views received in the consultation and theevidence, the Council now proposes to introduce the following fundingmodel from 2002-03. The model is shown in Figure 1:

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Figure 1.

QUALITY INFRASTRUCTURE FUNDING

19. The Council’s initial consultation document invited views on the strengthsand weaknesses of the current policies and methods of funding research.Many respondents reminded the Council that the major strength lay in thetraditional role that it had played as one arm of the dual support system,by providing funding through a relatively stable and transparent blockgrant system. It was suggested that this system had provided institutionswith a great deal of flexibility and had allowed universities and collegesthe freedom to determine their own strategic priorities for research. At thesame time, the policy of allocating funds selectively by reference to

QualityInfrastructure

Funding

Main Quality ResearchGrant

Science ResearchInvestment Fund

(2002-03 and 2003-04)

ResearchDevelopment

Funding

Strategic Research DevelopmentGrant

Research DevelopmentFoundation Grant

Joint Research DevelopmentFunding Programme

Knowledge TransferFunding


UK Activity Funding

Arts & Humanities ResearchBoard

UK Research Strategy LibrariesProgramme

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assessments of quality had ensured that funds were focused primarily onexcellent research.

20. The Council accepts this view. It believes that the dual support systemhas allowed the UK to develop a broad and diverse research base, with abalanced portfolio of research ranging from basic, blue-skies research, atone end of the spectrum, to highly applied and commercially relevantresearch at the other. The policy of selectivity in the allocation in fundinghas also ensured that the quality of the research base has improved overtime. This appears to be supported by the evidence, in particular from therecent study that was commissioned by HEFCE into the role of selectivity.Among the main conclusions from this study were that:

° in the period since the first Research Assessment Exercise in 1986,the effectiveness and productivity of the UK research base hasincreased significantly;

° the introduction of a national system for the assessment ofresearch quality has been effective in significantly increasing theconscious management of the research environment in UKuniversities; and

° research activity in the UK has increased at a faster rate thanfunding, indicating an increase in efficiency.

21. This has all contributed to the strength of the research base in the UK.Overall, on many measures, UK researchers are among the best in theworld. For example, they rank first in the world in terms of the numbers ofpublications and citations per million dollars spent on research. The UK isalso among the top five in terms of the numbers of papers produced perresearcher. Although there is no room for complacency, the Scottishresearch base also appears to perform well on a number of measures.For example, Scotland ranks third in the world in terms of publications perhead of population.

22. The Council’s policies and methods of funding will seek to ensure thatScotland develops and maintains a flexible, diverse research base that isexcellent by international standards. It will therefore continue to allocatethe majority of its core funding for the research infrastructure selectively,by reference to assessments of the quality of research and measures ofthe volume. However, the Council fully recognises concerns that wereexpressed by many respondents to its initial consultation about the effectsof the Research Assessment Exercise. In particular, the view wasfrequently expressed that the RAE does not sufficiently recognise thedifferent characteristics of excellence in different types of research andbetween different subject areas. The Council, together with its sisterFunding Councils, will look at the evidence as part of the review ofresearch assessment in the UK, which will be carried out later next year.

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23. From 2002-03, the Council will provide core funding for the researchinfrastructure through two main routes:

° Main Quality Research Grant; and

° Science Research Investment Fund (jointly with the OST).

There are a number of important technical issues about the introductionand operation of these two funding methods on which the Council nowwishes to consult.


24. The majority of the Council’s funds for the research infrastructure arecurrently allocated through the RAE-based grant. The Council proposesto continue to allocate the majority of its funds through a Main QualityResearch Grant but wishes now to consult on the detailed method ofallocation. In 2000-01, the current RAE-based grant amounted to £112million, or about 85% of the Council’s total funding for research. Themethod of distribution involves first:

° distributing the funds between 69 units of allocation (or subjectareas) based on indicators of the quality, volume and the cost ofresearch for each area; and second

° distributing these funds to institutions based on the indicators ofquality and volume of research of their eligible departments withineach unit of allocation.

25. The data on the quality of research that is currently used to inform thedistribution of funds is taken from the 1996 Research AssessmentExercise. From 2002-03, the Council intends to use the data from the2001 RAE to inform the distribution of funds in its Main Quality ResearchGrant. In the longer term, the source of this data, and the type of data onthe quality of research, may change depending on any decisions that theCouncil and the other UK funding bodies take in the light of the outcomesfrom the proposed review of research assessment. However, there are anumber of issues about the operation of the Main Quality Research Grantfrom 2002-03 on which the Council now wishes to consult.

Distribution of funds to Units of Allocation

26. In the first stage of the method of allocation, the total resources aredivided among the 69 subject areas (or subject pots) that correspond tothe Units of Assessment in the 1996 RAE. (There will be 68 Units ofAssessment in 2001 RAE.) This allocation is in proportion to the productfor each subject of:

V x C x Q

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where:

V is an indicator of the volume of research in the subject area. It iscurrently the number of academic staff active in research indepartments rated 3b or more in the 1996 RAE;

C is a cost factor, which in broad terms takes account of the relativecost of research in the subject area.

Q reflects the relative quality of Scottish research within the subjectarea as a whole in comparison with the Scottish average for alldisciplines (using the outcomes of the 1996 RAE).

Volume (V)

27. The number of academic staff active in research is the most importantindicator of the volume of research activity and is, therefore, a keyelement in the distribution of funds to subject areas. Only Category Astaff who were submitted for assessment in the 1996 RAE and are fromdepartments eligible for funding (3b or above) are currently included in thefunding method.

28. Category A staff are defined as those staff who are active in research andwho have a contract with the institution requiring them to undertakeacademic duties and who receive a salary from it, regardless of how it isfunded. The Council has considered whether the main measure ofvolume should continue to include all Category A staff or whether a subsetor subsets, such as those funded only from institutions’ general funds,would be a more appropriate measure in the future. The Council’s view isthat the present inclusive approach more accurately reflects the overallvolume of activity and provides an incentive for institutions to continue tolever in external funds for research. From 2002-03, the Council proposestherefore to continue to use all Category A staff as the measure of volumein calculating the distribution of funds to the subject areas (or subjectpots). The Council would however welcome views on this proposal.

Question 1: Should all Category A staff continue to be taken intoaccount in calculating the distribution of funds to subject areas?

Cost (C)

29. The different levels of non-staff resources normally required foracademics undertaking research are reflected by assigning the 69 subjectareas to one of three cost bands which are weighted differentially:

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High Cost Laboratory-based subjects 1.6

Medium Cost Intermediate or broadly-basedsubjects

1.2

Low Cost Non-laboratory-based subjects 1.0

Annex 2 to this consultation document lists the current allocation ofsubject areas to the three cost bands.

30. The Cost factor was introduced in 1994-95, using data on researchactivity from the 1992 Research Assessment Exercise to derive proxyindicators of cost in each subject. Subjects were then allocated to broadcost bands. The categorisation of subject areas into cost bands hasremained mainly unchanged since 1994-95, although the relativeweighting of the bands was refined following the 1996 ResearchAssessment Exercise.

31. The Council believes that the relative costs of different subject areasshould continue to be taken into account in its Main Quality ResearchGrant. The Cost factor will therefore be retained. However, the Councilwill review the categorisation of subject areas to cost bands and therelative weighting of the bands using the data from the 2001 ResearchAssessment Exercise, when this becomes available. In the meantime, theCouncil will consider any other evidence for reviewing the details andmethodology of the Cost factor.

Question 2: Is there any evidence to suggest that the details ormethodology of the Cost factor need to be changed by the Council?

Quality (Q)

32. A quality factor is included within the formula for distributing funds to Unitsof Allocation. The purpose of this is to reward relative quality across, aswell as within, different subject areas. The effect of the factor ensures thatthe funding method not only rewards overall institutional performance inthe Research Assessment Exercise (competition) but also rewardsimprovements in subject areas (collaboration). The quality factor iscalculated using a function that compares the average weighted quality inScotland within a subject with the average weighted quality in Scotlandacross all subjects. The quality function moderates the influence of smallvariations in the quality indicators. (These may not represent realdifferences in the underlying quality of research.)

33. The use of the quality factor does not change the total resourcesavailable. However, it does change the distribution of resources acrosssubject areas, reflecting their relative performance in the ResearchAssessment Exercise. Its use ensures, therefore, that subject areas

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performing above the Scottish average, in terms of quality, receive moreresources. Following the 1996 RAE, the most significant changes thatarose from the use of the Quality factor were in Engineering andTechnology, Social Sciences, Business and Administrative Studies andthe Humanities, all of which gained by performing above the Scottishaverage. The Hospital-Related Subjects, Language-Based Studies andEducation under-performed against the Scottish average.

34. Some concerns were raised during the Council’s initial researchconsultation, that the use of a quality factor has disadvantaged certainsubject areas in comparison to England and Wales, where a quality factoris not used in the first stage of the funding method. In particular, it wasargued that, since the unit of funding per research active member of staffin certain subjects is lower than in England and Wales as a result, thismay affect the recruitment and retention of high quality researchers inScotland in these subject areas.

35. The Council believes that there are persuasive arguments for retaining aquality factor in the method for allocating resources to subject areas. Thisis consistent with the aim of encouraging the highest quality research andof maintaining a dynamic and responsive research base in Scotland.However, the Council does recognise the concerns that have beenexpressed about differences opening up across the UK in the funding ofsimilar subject areas. It wishes therefore to invite further views on thisissue.

Question 3: Should the Council retain the use of the Quality factor inallocating resources to subject areas through its Main QualityResearch Grant?

Priority (P)

36. Until 1998-1999, the Council had included a Priority factor in its fundingmethod for the main RAE-based grant. The theoretical purpose of thisfactor was to provide the Council with a mechanism for giving higher orlower priority to specific subject areas. This factor was never used by theCouncil and was removed from the funding method in 1999-2000. Themain reason was that it was recognised that there were conceptual andpractical difficulties in seeking to prioritise particular areas of researchwithin a funding stream that was intended to support a long-term, basicresearch capacity.

37. However, a number of respondents to the initial research consultationsuggested that the Council’s funds for research might have more impact ifthey were concentrated in a smaller number of strategic or priority areasof research infrastructure. It was, argued, for example, that othercountries of a similar size to Scotland, such as Finland, had successfullyprioritised their investments in the research base and, indeed, that suchprioritisation of resources was essential for small countries wishing to

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transform themselves into competitive knowledge-driven economies andsocieties. While the Council recognises the attraction of this argument, itrecognises equally that there are dangers inherent in seeking to prioritiseinvestments in the research base in this way, not least because othermajor funders of the research base already include specific priorities intheir research funding processes. It also needs to be borne in mind thatfunding from SHEFC only accounts for about 35% of the total income forresearch to Scottish HEIs. The introduction of a Priority factor couldtherefore potentially reduce the margin of flexibility that is currently opento institutions to respond to the priorities of other funders. The Councilbelieves, nevertheless, that it is worth investigating again the potentialbenefits and disadvantages of seeking to prioritise areas of researchthrough the Main Quality Research Grant.

Question 4: Assuming that priorities for investment in the researchbase in Scotland can be identified, views are invited on the idea ofincluding a Priority factor in the method of allocation of the MainQuality Research Grant?

Distribution of subject resources to institutions

38. In the second stage of the funding method, the total resources for eachUnit of Allocation are divided among the institutions active in that subjectarea in proportion to the product of an indicator of research quality (q) anda measure of research volume (v). The sum of the resources allocated todepartments within an institution forms the RAE-based Grant to thatinstitution.

Quality indicators (q)

39. In both stages of the method of distribution, the quality ratings are giventhe same numerical values to inform the selective allocation of funds.Following the 1996 RAE, the Council decided that only departmentsachieving ratings of 3b or above would be eligible for Council funding.Ratings of 1 and 2 are therefore given the value of 0. The Council alsodecided that there should be no distinction applied between the 5 and 5*ratings. The values which are currently applied to the quality ratings areas follows:

Quality Rating Value (Q/q)

1 02 03b 1.003a 1.554 2.45 3.725* 3.72

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The scale represents a 55% increment in value between successiveeligible ratings. The Council’s funding of research is, therefore, highlyselective.

40. However, if the improvement in quality grades and volume of researchcontinues at the same rate as that between the 1992 and the 1996 RAEs,over £30 million would be needed to maintain the current relationshipbetween ratings and funding for 5/5* and 4 rated departments. If thisadditional funding is not available after the 2001 RAE, then, under thepresent relationship between ratings and funding, there will be a reductionin the average unit of funding for each active researcher in departmentsrated 5/5* and 4. This would be inconsistent with the Council’s objectiveto promote a high quality, internationally competitive research base.

41. From 2002-03, therefore, the Council’s priority will be to maintain the levelof funding for top-rated departments, namely those rated 4 and 5/5*. Thisapproach was broadly supported by responses to the Council’s initialconsultation. However, this will mean increasing the selectivity in thefunding formula which would lead to a lower unit of funding, and evenpossibly no funding, for departments that are rated 3a and 3b.

In preparing their submissions to RAE 2001, institutionsshould be aware that the Council’s priority from 2002-03will be to maintain the average level of funding for eachactive researcher in departments rated 4 and 5/5*.

42. The Council recognises that, by seeking to maintain the level of fundingfor higher rated departments, there is a danger that funding for researchmay be concentrated too narrowly, both in terms of subject areas andinstitutions. This approach, on its own, could very well choke off emergingareas of high quality research and, overall, reduce breadth and diversity inthe system. The Council proposes measures to respond to these dangerslater in the consultation document.

43. There is one further issue surrounding the use of the quality factor in thefunding formula that the Council wishes to raise. Following the 1996 RAE,the Council took the decision that recurrent funding should not beprovided differentially for departments rated 5 and 5*. It did, however,recognise the achievement of departments rated 5* by making available tothem a special one-off grant for 1997-98. There is no compellingevidence that the Council’s decision not to provide enhanced recurrentfunding for 5* departments has disadvantaged their performance.However, a number of respondents to the Council’s initial consultationargued that 5* rated departments should be more explicitly recognised byenhancing the level of recurrent funding, although such a change would ofcourse reduce the funding available for other departments. Views areinvited on this issue.

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Question 5: Should the Council enhance the level of recurrentfunding for 5* rated departments (Units of Assessment) followingthe 2001 RAE?

Volume indicators (v)

44. The second stage of the current funding method uses a number ofindicators of volume. These are shown below. The volume indicators areweighted and then aggregated for each department to determine itsvolume measure (v).

Main Volume Indicator Weighting

Academic staff active in research 1.0

Minor Volume Indicators Weighting

Research assistants 0.1

Research students 0.1

Research income 0.15 dividedby 28,000*

* £28,000 is assumed as the average cost of a research assistant.

45. The Council proposes to retain the current Main Volume Indicator and itsweighting, in the Main Quality Research Grant from 2002-03. However,the Council would welcome views on whether the Minor Volume Indicatorsremain appropriate measures of research volume in departments and, ifso, whether the relative weightings assigned to each should remain as atpresent. There is also a further issue about the volume indicator ofresearch income. This indicator currently includes income from allsources, including Government departments, Research Councils,charities, industry and business etc. (It excludes, however, income fromthe higher education Funding Councils.) In response to the Council’sinitial consultation, some respondents argued that the Council shouldweight differentially the different sources of research income to reflectdifferent policies on the payment of overheads for research grants andcontracts by the different types of sponsor. Is there a case for the Councilto weight differentially the different sources of research income?

Question 6:

a. Do the current Minor Volume Indicators continue to beappropriate measures of research volume?

b. If so, should the relative weightings assigned to each indicatorremain as at present?

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c. Is there an argument for weighting differentially the differentsources of external research income in the funding method?

The physical research infrastructure

46. Over recent years, there has been significant concern about the long-termdeteriorating state of the physical research infrastructure in the UK. TheCouncil has, in response, enhanced its investment in the infrastructurethrough its participation in the Joint Research Equipment Initiative and byfunding a number of ‘near-miss’ bids to the Joint Infrastructure Fund (JIF)from its Research Development Grant scheme. The JIF, of course, hasalso provided welcome additional resources for the research infrastructureacross the UK. However, a recent study commissioned by our sisterFunding Council, HEFCE, has confirmed the responses to the Council’sinitial consultation, which highlighted continuing problems in the state ofthe infrastructure.6 (This study updates a previous one commissioned bythe Funding Councils in 1996 from Policy Research in Engineering,Science and Technology and the Centre for Applied Social Research).

47. The Council is concerned that the deterioration in the infrastructure shouldnot continue. However, while this deterioration has taken place, there hasbeen a significant growth in the number of researchers, which suggeststhat institutions may have invested in research active staff at the expenseof buildings and equipment. Until 1997-98, the Council funded capitalinvestments separately from its main Teaching and Research fundingstreams. (About 82% of formula estates and equipment funding wasallocated on the basis of factors relating to teaching grants and 18% onthe basis of factors related to research grants.) The Council hasconsidered whether it should again earmark specifically for investment incapital a proportion of its funding from the Main Quality Research Grantand has concluded that there may be merit in this approach. Views areinvited on this proposal.

Question 7: Should the Council earmark specifically for capitalinvestment a proportion of its funding from the Main QualityResearch Grant?


48. The Council has welcomed the announcement by the Government in theUK Spending Review and in the Science and Innovation White Paper toestablish a new two-year Science Research Investment Fund (SRIF).The fund includes a sum of £375 million to be allocated by the Office ofScience and Technology (OST) across the UK. In Scotland, the share ofthis fund is likely to be supplemented by a further capital investment from

6 Flanagan K, Geoghiou L, Evans J, Croasdale P, 2000, Research Equipment Needs in UKUniversities, a “Snapshot” Study, PREST/CASR

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SHEFC which will be allocated to institutions by the Council through aconsolidated funding stream.

49. The OST, the Scottish Executive and the UK funding bodies intend jointlyto announce details of SRIF early next year. It is intended that the fundsfrom this scheme will be allocated to institutions formulaically by referenceto measures of research excellence and the volume of research.Institutions will be provided with details of their allocations early next yearand will be invited to put forward proposals for this expenditure.

Institutions are now urged to begin giving early considerationto their priorities for capital investment in the scienceresearch infrastructure.

RESEARCH DEVELOPMENT FUNDING

50. The Council introduced its Research Development Grant (RDG) in 1997-98 in response to the Government’s Technology Foresight Programme.The main purpose of the grant scheme is to stimulate the development ofresearch in areas that have the potential to meet the long-term needs ofsociety, as identified through processes such as Foresight. The schemeis currently entering its fifth round. Since 1997-98, the Council has madea total of 72 awards, amounting to over £40 million. The scheme hasbenefited 17 lead institutions and over half of the awards have been madeto consortia.

51. The Council believes that the RDG has proved effective in stimulatingincreased institutional collaboration, particularly by bringing togethergroups of researchers with complementary strengths. Many of the awardsthat have been made so far are funding the development of centres ofexcellence in specific disciplinary or cross-disciplinary areas, which areintended to bring wide benefits to Scotland and beyond. Examplesinclude the Scottish Centre for Nanotechnology in Construction MaterialsProject, a Scottish Facility for Ultra-High Resolution Mass Spectrometry ofBiomolecules, the Scottish Offshore Materials Support Facility and theCentre for Genomic Microarray Technology. Other examples include theScottish Centre for Research into Speech Disability, the Scottish Centrefor Research on Families and Relationships and the Scottish Network forEconomic Policy.

52. The Council is currently undertaking an evaluation of the proposalsfunded under the first round of the RDG scheme. The initial results of thisevaluation will be available early next year and will be considered by theCouncil in the context of its review of research funding. However, in theresponses to the Council’s initial consultation document, which formed thefirst stage of the review, there was a widespread view that a ResearchDevelopment Grant should be retained in some form after 2002-03. It

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was argued that the RDG had benefited many institutions by supportingemerging areas of research or had supported novel proposals, byencouraging collaborative and interdisciplinary approaches. One keytheme that emerged was the way in which the RDG had brought togetherresearchers from different types of institutions, or different research areas,to develop proposals that would have genuine benefits beyond one or twoinstitutions, and possibly across Scotland. It was suggested that this formof collaboration would probably not have taken place without themechanism of the RDG.

53. There were differences of view about how the Council might seek tomodify or further develop the RDG scheme. For example, it wasrecognised that if there was a lower unit of funding, and even possibly nofunding, for departments rated 3a and 3b in the Main Quality ResearchGrant following RAE 2001, the RDG might be used strategically tomaintain and develop research that was important to Scotland. Indeed,this was a possibility that the Council had specifically raised in its initialconsultation document. There was a shared view that a form of RDG wasrequired to maintain diversity, and to continue to support emerging andnovel types of research, particularly if the funding method in the MainQuality Research Grant was likely to be more selective after RAE 2001.Others suggested that the RDG should be used strategically to supportScotland’s overall capability in relatively, or potentially, strong areas ofresearch, particularly where this was unlikely to happen without targetedresources to enhance collaboration between institutions and evenbetween different subject areas within a single institution.

54. Given the size and scale of the higher education sector in Scotland, theCouncil believes that the RDG is a useful mechanism for enhancingresearch capability and for stimulating change. Indeed, it is aware thatthe Higher Education Authority in the Republic of Ireland has introduced avery similar type of funding scheme with similar objectives (Programmefor Research in Third-Level Institutions7). Having considered theresponses to the initial research consultation, and reviewed the broaderpolicy environment, the Council has decided to continue to allocateresources for research development. There will however be an increasedstrategic focus on the use of this funding. The Council proposes threeelements to its Research Development funding from 2002-03:

° Strategic Research Development Grant;

° Research Development Foundation Grant; and

° Joint Research Development Funding Programme.

All three elements of the scheme will seek to promote the main objectiveof the current Research Development funding stream. In other words,

7 Information on the Programme for Research in Third-Level Institutions is available athttp://www.hea.ie/projects/index.htm

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they will seek to improve the fit between the research capability ofScottish higher education institutions and the long-term needs of society.


55. The Council will continue to allocate resources to an annual competition inwhich proposals for funding are invited from institutions or consortia. It isanticipated that between £5 - £7 million will be allocated to the competitionper annum and that it will run in broadly the same way as the current RDGscheme. However, there will be a change in emphasis, with a focus onfunding the research infrastructure in areas that are likely to be ofstrategic importance to Scotland and the UK, or where investmentsthrough the SRDG have the potential to build capability significantly inpotential areas of research strength. The Council intends to commissiona study to examine the infrastructure needs in Scotland - in terms ofequipment, facilities and basic technologies - which may prove helpful inproviding a context for decisions about funding from the SRDG.Preliminary discussions about the study have been held with UniversitiesScotland and will continue next year. The Office of Science andTechnology has also identified three areas for strategic investment inresearch – in genomics, e-science and basic technology – and there mayalso be opportunities for parallel investments by the Council through theproposed SRDF.

56. The Council has noted a proposal from the European Commission tonetwork centres of research excellence in Europe. It believes that it isessential for the visibility, competitiveness and development of researchthat centres of excellence in Scotland are linked into this network. Oncefurther details of the proposals become available, it will consider whether,and how, the Strategic Research Development Grant might be used toensure that centres of research excellence in Scotland can be linked intothis wider European network.

57. There are two further changes that the Council proposes to make toensure that its SRDG has a broader, more strategic focus. Firstly, it willconsider inviting on to the membership of the SRDG assessment panel,one or more international members. The intention will be to ensure greaterexternality in the assessment process. The second change concernsaccess to facilities and equipment funded through the SRDG. TheCouncil is concerned that researchers working in departments that areprimarily teaching-based should have access to state of the art equipmentand facilities in research-oriented departments. It will therefore inviteapplicants who are seeking funding for equipment and facilities to put inplace arrangements for enhanced access. Where these are likely toinvolve additional costs, it will be expected that these will be costed in theproposal for funding at the outset.

58. The Council would welcome views on its proposals for the StrategicResearch Development Grant.

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Question 8: What are your views on the Council’s proposals for aStrategic Research Development Grant?


59. The Council has indicated that, following the 2001 RAE, there may be alower unit of funding, and even possibly no funding, for departments rated3a and 3b in the Main Quality Research Grant. It recognises that thischange presents the danger of choking off emerging areas of research, ornew areas of research, that have the potential to become world-class. Italso risks damaging the present diversity and dynamism in the system.As this consultation document has already highlighted, there is evidencethat there are pockets of research excellence in institutions in the UKwhich, overall, are not research-intensive and that some lower rateddepartments may include research staff of international standing. TheCouncil believes that its funding methods should seek to recognise suchpockets of excellence and promote emerging research.

60. While the initial research consultation earlier in the year, revealed agenerally positive attitude towards the Research Development Grant fromrespondents, there were, nevertheless, some criticisms. In particular,some people argued that a primarily bid-based approach was expensivein terms of the amount of time required to develop proposals. It was alsosuggested that there would be benefits in providing developmentalfunding to institutions in a more stable and predictable fashion, one whichwould allow them to determine their own priorities for developing areas ofresearch that meet local, regional and national needs. The Council hasrecognised these concerns. It intends therefore to allocate an element ofits research development funding to institutions on a formula basis. Itanticipates that resources of around £5 million per annum will be availablethrough this method.

61. Since the purpose of this research funding is developmental, and the mainobjective is to focus on research that meets the long-term needs ofsociety, the Council will use a proxy measure of need in the formula forallocating funds to institutions. This will be based on levels of researchincome attracted by departments that submit to RAE 2001 but which arenot successful in gaining funds through the Main Quality Research Grant.This may be departments rated 3a or less. The Council’s view is that thelevel of external income demonstrates a demand for this developingresearch. This proposal is, in effect, a variation on the Council’s formerIncome-Based Grant.

62. It is intended that funding for institutions from the Research DevelopmentFoundation Grant should be provided to institutions recurrently over afour-year period. HEIs will be invited to submit proposals setting out planson how they intend to use the funding to develop strategically theirresearch portfolio, particularly in areas of research that meet local,regional or national needs. The Council will expect these proposals to be

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consistent overall with institutions’ Strategic Plans and to set out in detailthe objectives for the funding, the potential outcomes and themechanisms for effective knowledge transfer. The Council believes thatits proposals for this grant will provide institutions with greater flexibilityand a better opportunity to develop their research capabilitiesstrategically. However, it would welcome views on the proposal.

Question 9: What are your views on the Council’s proposal for aformula-led Research Development Foundation Grant?

Joint Research Development Funding Programme

63. The Scottish Executive is a major funder of research in Scotland andbeyond. In 1999-2000, for example, it spent over £130 million onresearch, excluding the funds provided to SHEFC. The purpose of thisfunding varies widely but, in the main, it is intended to improve the qualityof life in Scotland, improve performance and competitiveness, generateevidence to inform policy or to enhance professional practice. There is apotential complementarity with SHEFC’s Research Development funding.The Council believes that there are benefits that can be achieved, both toinstitutions and more broadly to Scotland, by seeking synergies with theScottish Executive’s programmes of research funding. The developmentof joint programmes with the Executive will clearly help to lever inadditional resources to Scottish HEIs but, more importantly, it will help toensure that institutions are able to develop their research capability in anumber of areas that are directly relevant to Scotland’s needs. This mightbe in health, agriculture, education or social policy, to give just a fewexamples.

64. The Council has already announced two joint funding programmes, inVeterinary Science and Primary Health Care, and is in discussions with anumber of Scottish Executive Departments about the possibility of furtherschemes. The forthcoming Scottish Science Strategy may also providean incentive for new joint activities between the research funders inScotland. The Council intends, therefore, to reserve an element ofResearch Development funding to support further joint programmes in thefuture. The exact level will vary, but it is expected to be in the region ofabout £1 million per annum. The Council would be interested to receiveviews on areas where it might achieve greater synergies with ScottishExecutive programmes of research.

Question 10: In what areas might the Council use its researchdevelopment funding to achieve greater synergies with theprogrammes of research funded by the Scottish Executive?

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KNOWLEDGE TRANSFER FUNDING


65. In the initial consultation document, Research and the Knowledge Age,the Council highlighted the way in which many industrialised countrieswere seeking to improve competitiveness by enhancing the role of theresearch base in the process of innovation. The ability to create newknowledge and exploit it rapidly to achieve enhanced economic growthwas a major theme of the UK Government’s recent Science andInnovation White Paper. It was also given priority in the ScottishExecutive’s Framework for Economic Development and is expected to beaddressed in the forthcoming Scottish Science Strategy. The Council’sview is that the most effective way to link the research base to economicgrowth is to ensure that Scotland continues to maintain and develop aflexible, diverse research base that is excellent by international standards.

66. As this document has already emphasised, the Council’s core role will beto continue to fund a basic research capability. This will provide thefoundation for applied research and technological change that areessential to the development of a knowledge-based economy and society.However, investment in a basic research capacity is not by itself asufficient condition to achieve enhanced economic growth. Theinvestment needs to be complemented by effective policies for knowledgetransfer and the commercialisation of the research base, and by excellentbi-directional flows of information between the research base and theusers of research. Bridging the gap between high quality research and itsuse and application by business and industry – described by one USpolitician as the “valley of death” in the innovation system – is an essentialprerequisite to the development of a knowledge-based economy andsociety8.

67. Institutions in Scotland have an impressive record of “bridging the gap”.Indeed, the Council was pleased to see the recent publication fromUniversities Scotland, The Home of Innovation, which highlights examplesof commercially important research that are coming out of Scotland’shigher education sector, as well as other research which will be relevantto a range of other agencies and bodies. In response to the Council’sinitial consultation, many institutions drew attention to the long-term role,and the priority that they intend to give to commercialisation activities and,more broadly, to knowledge transfer. This is a major theme that has alsoemerged from institutions’ Strategic Plans. However, the Councilrecognises that there are costs associated with commercialisation andknowledge transfer. It has noted, for example, the conclusions from therecent Universities UK study into spin-offs and start-ups in UKuniversities,9 which highlights the additional skills and resources requiredto professionalise the commercialisation process. The Council also

8 See Branscomb L, June 1999, Science and Public Affairs, A Culture for Innovation.9 Spin-offs and Start-ups in UK Universities, August 2000, CVCP.

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recognises, as does the Universities UK study, that more can be done tocommercialise the high quality research from universities and colleges, aswell as to strengthen the links between the research base and businessand industry, as well as with other potential research users.

68. As the initial consultation document, Research and the Knowledge Age,highlighted, the Council is already working with a number of bodies inScotland and elsewhere to promote the commercialisation of researchand enhance knowledge transfer. Details of some of the maincommercialisation and knowledge transfer activities in which the Councilis involved may be found at the following address:

http://www.shefc.ac.uk/content/shefc/research/innovation.htm.

It recognises however that there would be benefits in co-ordinating therange of initiatives in Scotland more effectively within an overarchingstrategy. The main issues for the Council are

° firstly, how to ensure that its policies are integrated effectively withother funders of the commercialisation process within an overallinnovation strategy for Scotland; and

° secondly, how best to support institutions in the commercialisationand knowledge transfer function.

With regard to the first issue, the Council intends to establish a time-limited working group with Scottish Enterprise to begin to consider howthe two organisations can achieve greater complementarity in theirpolicies for commercialisation and innovation. It is intended that theworking group should report later next year.

69. With regard to the second issue, the Council believes that there would bemerit in assisting institutions by establishing the currentProfessionalisation of Commercialisation grant scheme on a morepermanent, recurrent basis. This approach will allow the Council to:

° provide HEIs with greater stability in funding and a betteropportunity to develop sustainable strategies for knowledgetransfer; and

° demonstrate the Council’s commitment to supporting institutions intheir role at the centre of the knowledge-driven economy andsociety.

70. However, the Council takes the view that it would be desirable to widenthe scope of the grant scheme beyond the commercialisation of research.This would recognise that commercialisation is one element in a widerrange of activities that can contribute to the development of a knowledge-based economy and society. Other elements include continuousdevelopment of high level skills and training. Meetings with

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representatives from the business and technology communities inScotland, carried out as part of the initial consultation on research funding,highlighted the importance and value of Continuing ProfessionalDevelopment activity, and of schemes such as the Teaching CompanyScheme, in transferring knowledge from the research base to business. Itwas argued that such activity often provided the opportunity for an initialengagement between business and HE that could be developed further.

71. The Council also believes that it would be desirable to widen the scope ofthe present scheme to recognise the wider benefits that arise fromknowledge transfer, as well as the different methods by which it canoccur. For example, high quality policy relevant research in the socialsciences can help to inform and strengthen decisions taken byGovernment about the organisation of public services and their delivery.In the arts and humanities, there are potential benefits from strengtheningthe links between the research and knowledge base and the cultural,museums and tourist sectors in Scotland, as well as with media,publishing, design and the visual and performing arts.

72. The Council proposes therefore to create a permanent, recurrent fundingstream for knowledge transfer, by merging the current Professionalisationof Commercialisation grant scheme with the existing pump-primingfunding for Continuing Professional Development. It is anticipated thatabout £6 million per annum will be available through this route. Theseresources will provide the sector with a long-term, flexible funding streamto support knowledge transfer. At the same time, it will recognise that allinstitutions, through a diversity of routes, have a role to play in stimulatingknowledge transfer to meet economic, educational, social and culturalneeds at the local, national and international levels. The Councilproposes initially to allocate the funding by reference to two formulae, onebased on the volume of research and the other on the level of CPDactivity in institutions. The funding will be released on the submission ofoutline plans which will be expected to set out strategically howinstitutions intend to promote and professionalise their knowledge transferactivities. The Council will expect these plans to demonstrate howinstitutions’ intend to contribute to the development of a knowledge basedeconomy and society in Scotland and to cross-refer, as appropriate, toinstitutional Strategic Plans, as well as those for the use of ResearchDevelopment Foundation Grant. The Council intends to hold a workshoplater next year to discuss further how best to maximise the benefits forScotland of its proposed Knowledge Transfer grant scheme. Views on theproposal for this new funding stream are invited.

Question 11: What are your views on the Council’s proposal toestablish a permanent, recurrent funding stream to support theknowledge transfer activities of HEIs?

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UK ACTIVITY FUNDING

73. The Council has indicated that its funding methods and policies willcontinue to be set within the overall framework for the public funding ofresearch in the UK. It will continue therefore to seek complementaritywith the other major public funders of research in the UK, including theResearch Councils and the OST. The Science Research InvestmentFund will be a major element of this joint UK framework. The Council willalso continue to work with the other HE Funding Councils, where thereare benefits to the UK as a whole that could not be achieved by theCouncils working in isolation. This approach was strongly endorsed bymany respondents to the initial research consultation and, indeed, anumber of these argued that it was important that the Council’s objectivesshould be interpreted in the wider UK, European and international context.

74. The Council accepts this view and proposes to retain a funding stream toprovide institutions with access to UK funding activities, where it isrecognised that participation in such activities is important to maintainingthe national and international competitiveness of the Scottish researchbase. As well as supporting the activities of the Joint Information SystemsCommittee (JISC), which promotes the innovative application and use ofinformation systems and information technology in HE, the Councilcurrently supports the following UK activities:

The Arts and Humanities Research Board

Last year the Council announced its intention to participate in the Artsand Humanities Research Board (AHRB) and allocated £2 million forthis purpose. For 2000-01, the Council has allocated £2.03 millionand will contribute at similar levels over the period up to 2003-04.These arrangements will be reviewed in 2002-03 in order that theCouncil can be assured that they continue to meet Scotland’s needsfor world class research in the arts and humanities.

UK Research Support Libraries Programme

The UK Research Support Libraries Programme was introduced in1999-2000 and replaced the former Libraries and SpecialisedResearch Collections in the Humanities Grant. The programme isintended to bring together both traditional and new forms of access tolibrary information, with specific reference to support for research.The Council allocated £1.117 million for the support of thisprogramme in 2000-01.

The Council invites views on its decision to maintain a fund to supportjoint UK-wide activities.

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Question 12: Do you agree that the Council should maintain afunding stream to provide institutions in Scotland with access to UKfunding activities, where it is recognised that participation in suchactivities is important to maintaining the national and internationalcompetitiveness of the Scottish research base?

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SECTION 3: OTHER POLICY ISSUES

75. This next section of the consultation document discusses, and invitesviews on, a number of other research policy issues.


76. In its initial consultation, the Council highlighted the issue of collaborationin research and, in particular, it sought views on whether its mainstreammethods of funding should be seeking to facilitate more effectivecollaboration. Many respondents pointed to the dangers of trying toengineer collaboration and believed that it was more likely to be effectivewhen it was led from the “bottom-up”. Others suggested that theResearch Development Grant had been successful in stimulatingcollaboration and had acted as a useful counterbalance to some of theperceived negative effects of the Research Assessment Exercise. It wasalso suggested that the Council should not adopt a narrow conception ofcollaboration. For example, it was pointed out that intra-institutionalcollaboration was often critical, particularly in large research intensiveinstitutions that had centres of critical mass across a broad range ofsubjects. On the other hand, it was argued that the best examples ofcollaboration were not necessarily on a Scottish basis, but on a UK-wideor international basis.

77. A number of respondents believed that the Council could play a usefulrole by funding networks of activity, where key facilities, such as specialistequipment or research training, could be concentrated at certain nodalpoints, but where access is agreed and funded more widely. There wasalso a suggestion that the Council might seek to foster the formation ofstrategic alliances in well-defined research areas. The Council believesthat its primary role should be to ensure that its funding methods help tocreate an environment in which collaboration that is researcher-driven cantake place. The Strategic Research Development Grant will play a keyrole in this regard. However, in the context of its plans for the SRDG, theCouncil will consider the potential that might be gained from fundingnetworks of collaborative research activity, particularly where these arebased around certain nodal points. The Council would welcome views onthis proposal.

Question 13: Would there be benefits in using the StrategicResearch Development Grant to fund networks of collaborativeresearch activity, where such networks are based around keyfacilities that are concentrated at certain nodal points?

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78. The Council also believes that there will continue to be instances wherecollaboration between institutions should be supported because itenhances the competitiveness of Scotland or achieves a more efficient oreffective use of resources - to the benefit of the sector as a whole.Indeed, the Council has noted the contents of the recent Letter ofGuidance to SHEFC from the Minister for Enterprise and LifelongLearning. That guidance states that:

“We should be seeking to promote more collaboration for Scotlandrather than competition within Scotland – encouraging institutions towork together in the interests of students and the wider economy.”10

The Council will therefore continue to seek to maximise the opportunitiesfor productive collaboration through its research funding methods


79. A further specific issue that SHEFC sought to address in its initialconsultation was that of interdisciplinary approaches to research. It hadasked the question: in what ways could the Council’s policies andmethods of funding research most effectively support and promoteinterdisciplinary research? A common theme in the responses was theneed to separate the issues of support for interdisciplinary research, fromthe promotion of such research. It was argued that other funders, such asthe Research Councils, were better placed to stimulate interdisciplinaryresearch and that no further incentives were required from SHEFC.

80. On the other hand, it was suggested that the Council could supportinterdisciplinary research, especially by removing obstacles ordisincentives. Despite the changes that had been made in advance ofRAE 2001, a number of respondents remained convinced that the RAEdisadvantaged interdisciplinary research or, at least, that it failed torecognise such research adequately. Others welcomed the prominencethat had been given to interdisciplinary approaches through the ResearchDevelopment Grant scheme and, indeed, there was a degree of supportfor prioritising these more highly. However, there was little support for theidea of establishing a separate funding stream specifically forinterdisciplinary research. The Council accepts this view. Havingconsidered the responses, it will look again at the effects of the RAE oninterdisciplinarity as part of the proposed UK-wide review of researchassessment due to take place next year. It also intends to continue togive a degree of prominence to proposals that adopt interdisciplinaryapproaches through the Strategic Research Development Grant.

10 Higher Education: Guidance & Funding for 2001-02. Wendy Alexander MSP, Minister forEnterprise & Lifelong Learning. 23 November 2000.

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81. An issue that was not specifically raised by the Council in its researchconsultation, but which emerged in the responses was the funding ofresearch in the arts and humanities. The Council believes that the Artsand Humanities Research Board (AHRB) has made impressive progresssince its inception in 1998, to the extent that it is now regarded by manyas a de-facto Research Council and the second arm of the dual supportsystem for the arts and humanities. The Council is pleased to note aswell that researchers in Scotland have secured a high proportion offunding across most of the Board’s funding schemes. Having said this,while other subject areas are able to benefit from large Research Councilbudgets, the project funds available from the AHRB arguably are at amuch-reduced scale. The Council will, therefore, keep under review thelevel of funding available to researchers in the arts and humanities.

82. Over the last year, the Council has been working with the AHRB, and withthe other funders of the Board, to develop proposals to give the AHRB anindependent status, by making it a company limited by guarantee.However, the Council believes that it is now timely to consider again as towhether the AHRB should be established formally as a Research Council.It intends to explore this issue over the coming year with the other fundersof the Board and with the Scottish Executive.

The people issues

83. The Council’s initial consultation document, Research and the KnowledgeAge, had recognised that people are the most valuable resource in theresearch enterprise. It had also highlighted a number of ‘people issues’,including the recruitment and development of the next generation ofacademic researchers, the recruitment and retention of internationalresearch leaders and the training and development of research staff andstudents. The employment and management arrangements of contractresearch staff (CRS) were also raised as a topic for discussion. Viewswere invited on the role that the Council might play in addressing theseissues.

84. Most respondents generally recognised that more attention needed to begiven to the ‘people issues’ but, on the whole, they envisaged a limitedrole for the Council in this area. The main reason being that some of thekey problems, such as uncompetitive salaries or the value of researchstudentships, were beyond the remit of SHEFC. However, a number ofrespondents suggested that the Council had played a useful role infacilitating pilot studies and in disseminating good practice in themanagement of staff, mainly through the Contract Research Staff Initiative(CRS). Having said this, there were number of specific issues raisedabout the training and funding of research students and the developmentof research staff, where it was suggested that the Council should considertaking action. These issues were raised by respondents from within and

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outwith the higher education sector, and have also emerged from thereviews of research funding and policy that are being carried out by oursister Funding Councils.

Research training

85. The 1996 Review of Postgraduate Education (the ‘Harris Report’),11 hadargued that research students were entitled to be supervised by academicresearch leaders, and to work in a research environment of the higheststandards. There was a shared view in the responses to the Council’sinitial consultation that much still needed to be done to improve the qualityof research training and to address the recommendations in the HarrisReport. It was also suggested that the funding of postgraduate researchstudents by SHEFC through both the teaching funding and researchfunding streams was anomalous. It was argued that there would be amore direct relationship between the provision of a high quality researchenvironment and the training of new researchers, if the formula funding forpostgraduate research students (PGR) through the teaching fundingstream were transferred to the Council’s Main Quality Research Grant.

86. The Council believes that there would be merit in such a change andproposes to transfer the funding of PGR from the Teaching Fundingstream to the Main Quality Research Grant from 2002-03. (This issue isalso addressed in the Council’s parallel consultation on TeachingFunding.) However, the Council recognises that, while there will bebenefits in more clearly linking the funding of research training withassessments of quality, there may be equally a danger in over-concentrating such training. In particular, the Council recognises that thepresence of postgraduate research students can be crucial to thedevelopment of emerging subject areas. It proposes therefore to includethe number of postgraduate research students as a minor indicator ofvolume in the proposed Research Development Foundation Grant.Institutions, which are eligible to receive such funding, will be invited to setout in their proposals how they intend to provide a high-quality trainingenvironment for their postgraduate research students.

87. There may also be merit in strengthening the training of postgraduateresearch students by establishing national criteria for the standards oftraining and supervision, including the facilities and environment in whichstudents undertake their research. The Council will discuss this proposalwith its sister Funding Councils and with other funders, including theResearch Councils, over the course of the next year. Views are invited onthese proposals.

Question 14: What are your views on the Council’s proposals for thefunding and training of postgraduate research students?

11 HEFCE, May 1996, Review of Postgraduate Education.

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Development of research staff

88. The Council welcomes the proposals in the UK Spending Review for a£50 million fund to recruit international research leaders. (This fund will beadministered jointly by the DTI, the Wolfson Foundation and the RoyalSociety). It recognises however that there is still a wider issue about thecompetitiveness of salaries for academic staff. A further issue that wasraised in the initial consultation was the adequacy of arrangements for thecareer development of research staff. The Council recognises theconcerns that have been expressed. However, it announced earlier in theyear an investment in human resource management intended tocontribute to the development of institutional staff strategies, includingtargeted staff development.12 It believes that this is an issue that isalready being addressed by higher education institutions, and that theposition of research staff needs to be considered in this broader context.

89. The Council’s recent Letter of Guidance from the Minister for Enterpriseand Lifelong Learning suggests however that continued improvements arerequired in human resource policies and management, including peoplemanagement and staff development. The Council will therefore considerthe position of research staff in the development of its policies forimproving human resource management within the HE sector.

Contract Research Staff

89. The Council’s Contract Research Staff (CRS) initiative has been runningsince 1995. Many respondents suggested that it had been helpful inproviding resources to improve the career development and managementof contract research staff, and in disseminating good practice. The workof the national Research Careers Initiative (RCI) was also applauded.The Council is currently funding a number of projects and studies underthe CRS initiative, all of which are due to be completed within the nextyear. These projects will provide further evidence and material that mayassist institutions in their management and development of contractresearch staff, as well as offering evidence on the costs and relativebenefits and disadvantages of different methods of employing researchstaff.

90. The Council believes that the conclusion of these projects provides anappropriate opportunity now to review the future of the CRS initiative. TheCouncil recognises that more still needs to be done to improve themanagement and staff development of Contract Research Staff and,indeed, it has noted the recommendations contained in the second reportof the UK Research Careers Initiative.13 However, there is an argumentthat CRS issues should be addressed in the round, as part of institutions’wider human resource management strategies. The Council proposestherefore to discontinue its specific CRS initiative at the end of 2001 and,

12 SHEFC, Circular Letter 04/2000, Funding for improving Human Resource Management.13 CVCP/OST, May 2000, Second Report of the Research Careers Initiative.

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thereafter, will address the career development and management ofcontract research staff as part of its plans to develop integrated policiesfor human resource management in the higher education sector. At thenational level, the Council will continue to work with other funders toachieve improvements in the management and development of CRS,principally through the RCI Steering Group and through a new StrategyGroup that will be established shortly by the OST.

SUMMARY

91. The Council seeks to provide resources for research in as flexible manneras possible while, at the same time, also seeking to ensure that theresearch base continues to be responsive to new challenges andpriorities. Many respondents to the initial consultation recognised thatthere was a need for the Council to promote a number of objectivesthrough its funding methods, but believed that more of these should beachieved through core recurrent funding. In short, they wanted greaterflexibility and predictability in funding, while recognising that this wouldrequire enhanced strategic planning on their part, and appropriateaccountability.

92. The funding model proposed in this consultation document is intended toprovide institutions with increased flexibility. From 2002-03, the majorityof funds will be allocated to institutions formulaically, with less emphasison bidding processes. However, there will be an increased need forinstitutions to plan strategically for the use of these funds, focusing ontheir areas of strength. Overall, the Council believes that the mainelements in the proposed model will allow it to promote more effectively itscore objective of seeking to develop a high quality, flexible and efficientresearch base in Scotland, one that is competitive by internationalstandards. There is also a new emphasis on knowledge transfer - toplace institutions at the heart of the knowledge-driven economy andsociety, and to ensure that the full benefits of Scotland’s world-classresearch can be realised more effectively in the future. The Councilwelcomes views on the overall funding model proposed in thisconsultation document.

Question 15: What are your views on the overall funding model thatthe Council proposes to introduce from 2002-03?

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Annex 1

SUMMARY OF CONSULTATION QUESTIONS

Question 1: Should all Category A staff continue to be taken into accountin calculating the distribution of funds to subject areas?

Question 2: Is there any evidence to suggest that the details ormethodology of the Cost factor need to be changed by theCouncil?

Question 3: Should the Council retain the use of the Quality factor inallocating resources to subject areas through its Main QualityResearch Grant?

Question 4: Assuming that priorities for investment in the research base inScotland can be identified, views are invited on the idea ofincluding a Priority factor in the method of allocation of theMain Quality Research Grant?

Question 5: Should the Council enhance the level of recurrent funding for5* rated departments (Units of Assessment) following the2001 RAE?

Question 6:

a. Do the current Minor Volume Indicators continue to be appropriatemeasures of research volume?

b. If so, should the relative weightings assigned to each indicator remain asat present?

c. Is there an argument for weighting differentially the different sources ofexternal research income in the funding method?

Question 7: Should the Council earmark specifically for investment incapital a proportion of its funding from the Main QualityResearch Grant?

Question 8: What are your views on the Council’s proposals for aStrategic Research Development Grant?

Question 9: What are your views on the Council’s proposal for a formula-led Research Development Foundation Grant?

Question 10: In what areas might the Council use its research developmentfunding to achieve greater synergies with the programmes ofresearch funded by the Scottish Executive?

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Question 11: What are your views on the Council’s proposal to establish apermanent, recurrent funding stream to support theknowledge transfer activities of HEIs?

Question 12: Do you agree that the Council should maintain a fundingstream to provide institutions in Scotland with access to UKfunding activities, where it is recognised that participation insuch activities is important to maintaining the national andinternational competitiveness of the Scottish research base?

Question 13: Would there be benefits in using the Strategic ResearchDevelopment Grant to fund networks of collaborative researchactivity, where such networks are based around key facilitiesthat are concentrated at certain nodal points?

Question 14: What are your views on the Council’s proposals for thefunding and training of postgraduate research students?

Question 15: What are your views on the overall funding model that theCouncil proposes to introduce from 2002-03?

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Annex 2

Categorisation of Units of Allocation (Subjects) into High, Intermediate andLow Research Costs(The numbers for the RAE Units of Assessment are given in brackets)

High Intermediate Low

Clinical LaboratorySciences

(1) Community BasedClinical Subjects

(2) Town and CountryPlanning

(34)

Anatomy (6) Hospital BasedClinical Subjects

(3) Law (36)

Physiology (7) Clinical Dentistry (4) Anthropology (37)Pharmacology (8) Pre-Clinical Studies (5) Politics and

International Studies(39)

Pharmacy (9) Nursing (10) Social Policy andAdministration

(40)

Biochemistry (12) Other Studies andProfessions Allied toMedicine

(11) Social Work (41)

Biological Sciences (14) Psychology (13) Sociology (42)Agriculture (15) Pure Mathematics (22) Business and

Management Studies(43)

Food Science andTechnology

(16) Applied Mathematics (23) Accountancy (44)

Veterinary Science (17) Statistics andOperationalResearch

(24) American Studies (45)

Chemistry (18) Built Environment (33) Middle Eastern andAfrican Studies

(46)

Physics (19) Geography (35) Asian Studies (47)Earth Sciences (20) Economics and

Econometrics(38) European Studies (48)

EnvironmentalSciences

(21) Linguistics (56) Celtic Studies (49)

Computer Science (25) Archaeology (58) English Language andLiterature

(50)

General Engineering (26) Library andInformationManagement

(61) French (51)

ChemicalEngineering

(27) Art and Design (64) German, Dutch andScandinavianLanguages

(52)

Civil Engineering (28) Sports RelatedSubjects

(69) Italian (53)

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Electrical andElectronicEngineering

(29) Russian, Slavonic andEast EuropeanLanguages

(54)

Mechanical,Aeronautical andManufacturingEngineering

(30) Iberian and LatinAmerican Languages

(55)

Mineral and MiningEngineering

(31) Classics, AncientHistory, Byzantine andModern Greek Studies

(57)

Metallurgy andMaterials

(32) History (59)

History of Art,Architecture andDesign

(60)

Philosophy (62)

Theology, Divinity andReligious Studies

(63)

Communication,Cultural and MediaStudies

(65)

Drama, Dance andPerforming Arts

(66)

Music (67)Education (68)

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THE CONSULTATION PROCESS AND TIMETABLE

Timetable

The consultation will last until 30 March 2001. As part of the consultationprocess, the Council will hold a discussion forum with representatives ofhigher education institutions and those working within the higher educationcommunity. The details will be announced in due course.

Submission of responses

The deadline for submission of responses is Friday, 30 March 2001. As partof the Council’s commitment to openness, responses to this consultationpaper will be made available to the public on request. Please indicate if youdo not wish your response, or any part of it, to be made available publicly.

The options for returning responses are as follows:

Web

Responses may be returned directly on-line using the form which is availableat the following web address:

http://www.shefc.ac.uk/shefc/content/library/consult/2000/hec0900.htm

E-mail attachment

Provision has been made at the above address to download the responseform as a Word document. Completed versions of the form may then be sentas an e-mail attachment to the following address: [email protected]

Post

Responses may be sent by post to:

Richard HancockHead of Research Funding & Policy BranchScottish Higher Education Funding CouncilDonaldson House97, Haymarket TerraceEdinburgh EH12 5HD

Email: [email protected]: 0131-313-6501

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Outcomes of the consultation

The outcomes of the consultation will be considered by the Council’sResearch Policy Advisory Committee in April 2001 and, thereafter, by theCouncil in June. It is anticipated that the Council will publish the outcomes ofthe consultation in summer 2001, together with decisions about the fundingmethods and policies that it intends to adopt from 2002-03.

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FURTHER INFORMATION

The Council has established a website for its review which contains anelectronic version of this consultation paper. The site also contains links toother useful sites that are of relevance to the review. The website is locatedat:

http://www.shefc.ac.uk/content/shefc/research/researchreview.htm

Further information on the Council’s review may be obtained from:

Richard Hancock, Head of Research Funding and Policy BranchTel: 0131-313-6567Email: [email protected]

or from:

David Wann, Director of FundingTel: 0131-313 6561Email: [email protected]

REVIEW OF TEACHING FUNDING:THIRD STAGE CONSULTATION

Consultation Document HEC 08/00

DECEMBER 2000

REVIEW OF TEACHING FUNDING:THIRD STAGE CONSULTATION

CONTENTS

SECTION 1: EXECUTIVE SUMMARY

Summary information

How to Respond

Summary of the Proposed New Features of theTeaching Funding Method


SECTION 2: OBJECTIVES AND CRITERIA

OBJECTIVES AND CRITERIA FOR A REVISEDFUNDING METHOD

SECTION 3: PROPOSALS FOR THE REVISED TEACHINGFUNDING METHOD

PART 1 – STRUCTURESubject PricesVolume ControlsOther Price IssuesOther Volume IssuesRelationship between Formula and Initiative Funding

PART 2 – MECHANISMS FOR DELIVERYMeasuring Student ActivityMechanisms for Increasing Policy Effectiveness

ANNEX A: Background to the Review of Teaching FundingANNEX B: Summary of Evidence Considered by the CouncilANNEX C: Summary of Organisations ConsultedANNEX D: Composition of Proposed Funding Subject Groups

PAGES

1-2

2-3

4

5-8

9

10-1313-1515-181819

20-2222-24

SECTION 1: EXECUTIVE SUMMARY

Purpose of this Consultation

1. This consultation document seeks views on the Council’s detailed proposalsfor changes to the method of funding teaching provision in Scottish highereducation institutions (HEIs).

Reasons for Review

2. In 1998 the Scottish Higher Education Funding Council decided that the timewas right to review its methods for funding teaching provision - methodswhich had remained substantially unaltered since the introduction of theSHEFC funding method in 1993-94. New policy priorities from Government -particularly the increased emphasis on widening access to higher education- highlighted the importance of testing whether its existing methods offunding teaching were best suited to promoting the delivery of ScottishExecutive objectives by the HE sector.

Steps Taken to Date

3. The Council initiated its review of teaching funding in October 1998, with thecirculation of its first stage consultation paper (05/98). This canvassed viewson the appropriate objectives and criteria for a funding method, ways ofmeeting Scottish needs for graduates and diplomates, promoting wideraccess and lifelong learning, and some broad options on the future structureof the main teaching funding formula.

4. After considering the responses to the consultation, a broad way forward forthe development of the teaching funding method was announced in CircularLetter 31/99. This stated that Council would establish two working groups toconsider two of the three main aspects of a new teaching funding method:the prices paid for teaching activity (the Prices Working Group) and themeasurement of student activity (the Measurement Working Group). Thethird aspect - a mechanism for redirecting resources to promote the deliveryof the Council’s policy priorities more effectively - was canvassed inFebruary 2000, in a second consultation (01/00) on a proposed ‘core andmargin’ system of resource allocation.

Evidence Considered

5. The Council set up an Advisory Group on Teaching Funding (AGTF) in June2000 to consider the responses to both consultations and therecommendations of the two working groups. It has also considered thefeatures of the current HEFCE and HEFCW funding methods and therecommendations of the Joint SHEFC/SFEFC Working Group on Widening

Participation. The AGTF provided the Council with recommendations on therevised teaching funding method, on the basis of its review of this body ofevidence. The Council has developed its proposals for a revised method ofteaching funding on the basis of these recommendations. The Councilconsiders that the proposed revised method will be able to deliver ScottishExecutive and Council policy objectives more effectively than its existingmethods, and now wishes to test this with its stakeholders.

6. Further detail on the background to the review and the evidence consideredis provided at Annexes A and B.

Structure of Consultation Document

7. The Council’s analysis of the key aspects of the teaching funding method isdetailed in Section 3 and its proposals for the revised method flow from itsconsideration of each of these key aspects. Section 3 is divided into twoparts: Part 1 details the proposed structure of the revised method and Part 2sets out the proposed mechanisms for delivering the revised fundingmethod. A summary of the proposed changes to the funding method isprovided at the end of this Executive Summary, along with a summary of theconsultation questions.

How to Respond to this Consultation

Deadline

8. Responses to this consultation are invited by Friday 30th March 2001.

Status of Responses

9. The organisations being invited to respond are set out in Annex C.Respondents should complete a single response on behalf of theirorganisation. Individuals may submit additional comments, but the status ofthese comments (e.g. personal opinion, collective view of a department)should be made clear at the start of their response.

Confidentiality

10. It should be noted that, as part of the Council’s commitment to openness,responses to the consultation will normally be made available to the publicupon request. Please indicate if you do not wish your response, or specifiedparts of it, to be made publicly available.

Format of Responses

11. Responses may deal with any or all of the issues raised in the consultationpaper. The consultation questions are summarised at the end of thisExecutive Summary. There may be some issues not covered by thesequestions which respondents may wish to draw to the attention of the

Council. If appropriate, additional issues may be covered as part of yourresponse under a separate heading.

12. Responses will be accepted in either of the following formats:

a) Submission of a written response; and/orb) Submission of an email attachment.

13. Responses should be sent to:

Joyce WilsonScottish Higher Education Funding CouncilDonaldson House97 Haymarket TerraceEdinburgh EH12 5HDEmail: [email protected] ,Telephone: 0131 313 6680, Fax: 0131 313 6501.

Acknowledgements of Responses

14. Council will acknowledge all responses. Where possible, an email addressshould be supplied to which acknowledgement can be sent.

Further Information

15. Further information can be obtained from Louise Ferguson (postal addressas above), Email: [email protected] , Telephone: 0131 313 6546, Fax:0131 313 6501.

Review Timetable

16. The revised funding method will be announced in summer 2001.Implementation of the revised method is expected to begin in academic year2002-03.

Availability

17. In addition to the copies of this document circulated to those bodies listed atAnnex C, this consultation document will be placed on the Council’s website.Any relevant comments from other individuals or organisations will also betaken into account.

SUMMARY OF THE PROPOSED NEW FEATURES OF THE TEACHING FUNDING METHOD

It is proposed that: Page

Subject Prices and Volume Controls

• Existing Funding Subject Groups will be aggregated into 6 broadFunding Subject Groups.

10-12

• (Step 1) Relative prices will be set for the proposed subject groups. 10-12• (Step 2) Funded activity will be re-based to incorporate the ‘fees-only’

students currently in the system. This would change the relative pricesestablished at Step 1.

13-14

Other Price Issues

• A premium of 10% will continue to be set for part-time students. 17• A premium of at least 5% will be set for ‘wider access’ students. 15• A premium (level to be decided) will be set for disabled students. 15• Funding for Postgraduate Research students will be transferred to the

research funding formula.16

• Prices will not vary according to students’ level of study or for distancelearning students.

16-17

Other Volume Issues

• Student numbers in ‘controlled’ Funding Subject Groups will continueto be monitored separately.

18

• The Council’s policy on priority subjects will be reviewed taking intoaccount Scotland’s needs and Scottish Executive guidance.

18

• Student numbers will continue to be monitored at both the current levelof subject detail, and at undergraduate and postgraduate levels.

18

Relationship between Formula and Initiative Funding

• Where appropriate, funding for initiatives will cease where funding forthe same or similar activity is included in the revised teaching fundingmethod.

19

Measurement

• Full-time and part-time students will continue to be measured in Full-time Equivalents (FTEs) for funding purposes.

20

• The Council will prepare the way for a move to measuring all activity inCredit Value Enrolled (CVEs) in the longer term.

20

• Funding will continue to be allocated on the basis of studentenrolments, rather than graduate outputs.

21

• The UK–wide unit postcode database showing under-representedareas will be used to measure ‘wider access’ students.

21

• The headcount of students in receipt of the Disabled Students’Allowance will be used as a basis for the distribution of additionalfunding for disabled students.

22

Increasing Policy Effectiveness

• A policy-specific range of measures will be deployed to increase thepolicy effectiveness of teaching funding.

22-24


SUBJECT PRICES

1. Do you have any comments on the following elements of the proposalsfor prices by subject:

a. that the existing Funding Subject Groups be aggregated into the 6broad Funding Subject Groups shown in Table 1 (below)?

b. that, as Step 1 in the setting of subject prices, the relative pricesbetween the proposed subject groups should be as shown inTable 1? (The proposal for Step 2 in the setting of subject prices isset out in Question 2 below.) and

c. that the new subject grouping and price structure should be keptunder review to ensure its continuing relevance in the light of anyemerging new evidence?

Table 1: Proposed Funding Subject Group structure and price relativities,based on funded places for 2000-01 (Step 1)

New Funding Subject Groups Price Relativeprice

Estimatedchange

fromfunding

announcedfor 2000-01

1. Clinical and Veterinary Practice £12,114 3.29 8.3%

2. Conservatoire Music £10,346 2.81 -1.1%

3. Subjects requiring significant provision oflaboratories or workshops and specialist equipment

£6,259 1.70 2.5%

4. Subjects generally taught in small groups andrequiring access to specialist equipment

£5,523 1.50 -8.4%

5. Subjects requiring access to specialist equipment £4,713 1.28 -1.0%

6. Other subjects £3,682 1.00 -1.2%

All Groups 0.0%

VOLUME CONTROLS

2. Do you have any comments on the Council's proposal that, as Step 2in the setting of subject prices, the volume of activity funded by theCouncil should be re-based to include all the ‘fees-only’ students

currently in the system, as shown in Table 2 (below)? (The proposal forStep 1 in the setting of subject prices is set out in Question 1 above.)

Table 2: Proposed Funding Subject Group structure and price relativities,based on all students eligible for funding in 1999-2000 (Step 2)


Estimatedchange

fromfunding





£6,193 1.88 4.5%


£4,645 1.41 -9.6%


6. Other subjects £3,294 1.00 -4.3%

All Groups 0.0%

PRICES FOR DIFFERENT TYPES OF STUDENT

3. Do you have any comments on the following elements of the proposalsfor prices by types of student?

a. that additional costs of 5% per FTE for providing higher educationto ‘wider access’ students - defined as those from sociallydeprived areas - be met through the main teaching fundingformula?

b. that, in addition, a premium to provide a reward to institutionswhich have recruited ‘wider access’ students be incorporated inthe main teaching funding formula? and

c. that additional funding to meet the additional costs of providingfor disabled students be allocated through the main fundingformula?

4. Do you wish to recommend a level for the proposed fundingsupplement for disabled students?

PRICES FOR DIFFERENT LEVELS OF STUDY

5. Do you have any comments on the following proposals for prices bylevel of study?

a. that Council continues to pay prices undifferentiated by students’year of course, whether at degree or sub-degree level, or atundergraduate or postgraduate level? and

b. that the Council transfers formula funding for postgraduateresearch students from the teaching to the research fundingformula? (This issue is also considered in the Second StageConsultation on Research Funding, Consultation Document HEC09/00.)

PRICES BY MODE OF LEARNING

6. Do you have any comments on the following proposals for prices bymode of learning?

a. that a cost supplement of 10% per FTE continue to be allocated forpart-time students? and

b. that - other than for the Open University, which will be consideredseparately - the price paid for students studying under distancelearning continues to be the same as for other students?

CONTROLLED AND PRIORITY SUBJECTS

7. Do you have any comments on Council's proposals:

a. to continue to monitor student numbers in the controlled subjectareas of medicine, dentistry, veterinary science, conservatoiremusic and initial teacher education in broadly the same way as itdoes at present?

b. to review its policy and control mechanisms for priority subjectstaking into account Scotland’s needs and Scottish Executive’srevised guidance? and

c. to continue to monitor student numbers at both Funding SubjectGroup level, and undergraduate and postgraduate levels?

RELATIONSHIP BETWEEN FORMULA AND INITIATIVE FUNDING

8. Do you have any comments on Council's proposal to cease funding forinitiatives wherever funding for the same or similar activity can beappropriately included in the revised teaching funding method?

MEASURING STUDENT ACTIVITY FOR FUNDING PURPOSES

9. Do you have any comments on the Council's proposals relating to themeasurement of student activity:

a. that it will continue for the time being to measure full-time andpart-time students in FTEs for funding purposes?

b. that the Council remains committed to moving towards measuringall student activity in CVEs in the future? In the interim, theCouncil will prepare the way for the switch to measuring in CVEs.

INPUT VERSUS OUTPUT FUNDING

10. Do you have any comments on Council's proposal to continue fundingon the basis of student enrolments, rather than graduate outputs?

MEASURING ‘WIDER ACCESS’ AND DISABLED STUDENTS

11. Do you have any comments on the Council's proposals to:

a. use the UK–wide unit postcode database showing under-represented areas to measure ‘wider access’ students?

b. investigate other measurement mechanisms for ‘under-represented groups’? and

c. use the headcount of students in receipt of the Disabled Students’Allowance (available from the HESA return) as a proxy for thevolume of disabled students attending HEIs, and as a basis for thedistribution of additional funding for disabled students?

MECHANISMS FOR INCREASING POLICY EFFECTIVENESS

12. Do you have any comments on the Council's proposal to deploy apolicy-specific range of measures (as outlined in paragraphs 32 to 36of Section 3 of this document) as it judges necessary – as the wayforward for increasing the policy effectiveness of funding of teaching?

SECTION 2: OBJECTIVES AND CRITERIA

OBJECTIVES AND CRITERIA FOR A REVISED TEACHING FUNDING METHOD

1. Early in the review process, Council decided that the objectives of any newmethod of teaching funding should be to promote:

• quality enhancement;

• efficiency in use of resources;

• responsiveness by providers;

• increased Council and Government policy effectiveness; and

• provision allied to Scotland’s needs.

2. The ultimate objective is a mechanism that enables Council, through theactivities of HEIs, to achieve best value – in terms of the highest qualityteaching and learning that meets Scotland’s needs - from the public fundsprovided to SHEFC by the Scottish Executive. Council also agreed thecriteria against which new funding methods should be appraised - namely,that any new teaching funding method should be:

• transparent;

• equitable;

• financially predictable;

• flexible;

• reliant on robust data; and

• cheap to administer, both for the sector and for the Council.

3. Council agreed that the most important test of any new method forfunding teaching would be its likely effectiveness in delivering theCouncil’s policy objectives.

4. After careful appraisal of the evidence described in Section 3 overleaf,Council considers that the methods of funding teaching proposed in the nextsection are those best able to deliver Scottish Executive and Council policyobjectives and also meet the criteria laid down in paragraph 2 above.

SECTION 3: PROPOSALS FOR THE REVISEDTEACHING FUNDING METHOD

PART 1: STRUCTURE

1. This section sets out the proposed structure of the revised teaching fundingmethod and the Council's proposals for:

a) the prices which will be paid for different types of teaching activity;

b) the volume controls which will operate under the revised method; and

c) the relationship between formula and initiative funding.

SUBJECT PRICES

Evidence Considered

2. The Council considered the recommendations of the Advisory Group onTeaching Funding (AGTF). These recommendations had been informed bythe final report of the Prices Working Group (PWG). The PWG'srecommendations were, in turn, informed by a study commissioned from JMConsulting Ltd into the relative costs of delivering efficient and effectivehigher education by subject, by type of student, by mode of learning and bywhether full or part-time. Downloadable versions of both the JMConsulting’s final report and the PWG report are available from theCouncil’s website (http://www.shefc.ac.uk/content/library/consult/2000/hec0800.html).

Council’s Analysis of the Evidence

3. The PWG and the AGTF considered a funding simulation showing thepossible allocations of main teaching grant to institutions on the basis of JMConsulting’s findings. This indicated that some institutions might experienceextreme changes to funding allocations (up to ± 25%). The magnitude ofthese changes led both the PWG and the AGTF to agree that if changes ofsuch magnitude were to be contemplated, the evidence base for makingthem would have to be extremely robust. The view of both the PWG and theAGTF was that the principles on which JM Consulting’s findings werebased seemed logical and reasonable. However, the evidence base for theproposed mapping of subjects to new categories across the full range ofsubjects, and on the full range of price relativities between therecommended subject groups was insufficiently robust to enable the results

to be used with confidence. Council accepted, and concurred with, theviews of both the PWG and the AGTF.

4. Council acknowledged that data emerging from the Transparency Reviewwould, in due course, provide more robust cost information on existingpatterns of provision. Careful examination of these data may confirm someof the assumptions contained in the JM Consulting report. If so, the reportcould be used to inform future reviews of the Council’s price structure,together with data from the Transparency Review.

5. Both the AGTF and the Council agreed that, in light of the lack of hardevidence available on relative costs of the most cost-effective methods ofdelivering different subjects, an alternative basis for the revised pricestructure was required. The AGTF recommended that the Council's existingfunding subject groups (FSGs) should be regrouped into around 6 broadcategories. The AGTF considered that the subjects placed within therevised FSGs each had sufficiently similar cost drivers to justify placingthem in the same groups. The relative prices of each of these categorieswas therefore set as the weighted average of the existing relativitiesbetween the current units of resource for the original FSGs contained withinthe new, broader groups. This recommendation was also consistent withthe Council’s decision, announced in July 1999, to reduce the number ofFSGs in order to simplify the teaching funding formula and to allowinstitutions greater flexibility in their internal resource allocation methods.The Council agreed to support the AGTF’s recommendation.

6. The AGTF considered whether there should be any exceptions to the use ofcurrent price relativities. Exceptions might be made where there wasevidence that the current Units of Resource did not reasonably reflect therelative costs of providing teaching for the subjects in question. The AGTFtook into account the representations the Council has received from thesector on the prices paid for the high-cost subjects of medicine, dentistryand veterinary science and the prices paid elsewhere in the UK for thesesubjects. The AGTF decided to recommend to the Council that the relativeprice for Subject Group 1 (as shown in Table 1 below) should be increasedfrom 3.04 (relative to the cheapest Subject Group) to 3.29. The Councilagreed to consult the sector on this proposal.

7. Special consideration was also given to Pharmacy provision. The AGTFnoted that Pharmacy is currently funded in the ‘Other Health and Welfare’FSG and would therefore fall into Funding Subject Group 4 with a relativeprice of 1.50 if the current FSGs were strictly adhered to in developing thenew structure. Council accepted the recommendation of the AGTF that theteaching of Pharmacy had more in common with that for Pharmacology inthe more expensive Subject Group 3. The Council is therefore seekingcomments on the proposal that Pharmacy should be moved to Group 3because of the requirement for laboratory provision for this subject, thusattracting a relative price of 1.70.

8. After considering the recommendations of the AGTF, Council decided thatall other subjects should remain within their existing FSGs for the purposesof mapping them to the revised FSGs. In particular, Council’s attention wasbrought to the placing of drama within the proposed structure, compared toJM Consulting’s findings. Council decided that Art, Design & PerformingArts funding subject group should be placed in the new Funding SubjectGroup 4, and that drama should be included in this group. The Council iscurrently considering which institutions may be given small, specialist status(Circular Letter 37/00). The issue of small, specialist institutions does notform part of the review of teaching funding, and therefore, is not beingconsulted on here.

9. The Council recognises that all subjects now need computing andinformation technology equipment and this is reflected in the proposedrelative prices.

10. The resulting subject-related price structure recommended by the Council isoutlined in Table 1 below. For illustrative purposes, the base price has beenset so that the total amount of funding distributed using these prices wouldbe close to the 2000-01 level of Main Teaching Grant. The prices shown inthe table are gross prices, inclusive of the Government determined tuitionfee. The prices in Table 1 have been calculated independently of theimplications of changes to the ‘fees-only’ system discussed in paragraphs11 to 14 below. A table showing the mapping of current FSGs to each of the6 new, broader subject groups is provided as Annex D.

Table 1: Proposed Funding Subject Group structure and price relativities,based on funded places for 2000-01 (Step 1)


Estimatedchange

fromfunding





£6,259 1.70 2.5%


£5,523 1.50 -8.4%


6. Other subjects £3,682 1.00 -1.2%

All Groups 0.0%

Questions

1. Do you have any comments on the following elements of theproposals for prices by subject:

a. that the existing Funding Subject Groups be aggregated intothe 6 broad Funding Subject Groups shown in Table 1?

b. that, as Step 1 in the setting of subject prices, the relativeprices between the proposed subject groups should be asshown in Table 1? (The proposal for Step 2 in the setting ofsubject prices is set out in Question 2 below.) and

c. that the new subject grouping and price structure should bekept under review to ensure its continuing relevance in thelight of any emerging new evidence?

VOLUME CONTROLS

Evidence Considered

11. The responses to the first consultation on teaching funding consultationdocument (5/98) provided the Council with background material to itsdecision-making process on the subject of volume controls in the revisedfunding method. The Council also took into account the features of theHEFCE and HEFCW funding methods and the nature and level of detail ofthe guidance it customarily receives from the Scottish Executive on therequired volume of students in the sector.


12. The Council decided that it should review the relationship between theactivity which it funds (i.e. the total funded places) and the number of‘students eligible for funding’. The number of students eligible for funding isaround 10% more than the number of funded places. The differencebetween the two numbers is referred to as the number of ‘fees-only’ placesbecause the institution receives the Government determined standardstudent tuition fee for such student places (e.g £1,050 per full-timeundergraduate and £2,740 per full-time postgraduate in 2000-01), but nofunding from SHEFC.

13. The percentage of students eligible for funding that are ‘fees-only’ varies bysubject, level of study and institution. Because of this, SHEFC funding perstudent eligible for funding actually varies between institutions, even though

the price paid per funded place is the same between institutions (for anygiven subject). This ‘fees-only’ mechanism thus weakens the link betweenthe provision being delivered and the provision being funded. It is also moredifficult for the Council to influence the total volume of activity and thereforeto ensure that the Scottish Executive's planning totals for student numbersare achieved.

14. Council therefore proposes that the volume of activity funded by the Councilshould be re-based to include all the ‘fees-only’ students currently in thesystem. The total amount of funding for teaching from SHEFC wouldremain unchanged, but the change would have the effect of lowering theSHEFC prices paid per FTE. The extent to which prices would changewould vary between subjects, since the proportion of ‘fees-only’ studentsvaries. For illustrative purposes, an example of the impact on the proposednew price structure of re-basing funded provision in this way is shown inTable 2 below (based on the student numbers returned in the 1999-2000Early Statistics Return). A higher tolerance level of around 5% is proposedfor under-enrolment before clawback rules would come into effect to allowinstitutions to manage the greater uncertainties in levels of fundedenrolment. It is proposed that this re-basing will take place only in the firstyear in which the revised method is being implemented. In future years, theCouncil would determine the change in student places to be funded, in thecontext of Ministerial guidance. Institutions would still be permitted to recruit‘fees-only’ students, within consolidation limits.

Table 2: Proposed Funding Subject Group structure and price relativities,based on all students eligible for funding in 1999-2000 (Step 2)


Estimatedchange

fromfunding





£6,193 1.88 4.5%


£4,645 1.41 -9.6%


6. Other subjects £3,294 1.00 -4.3%

All Groups 0.0%

Question

2. Do you have any comments on the Council's proposal that, as Step2 in the setting of subject prices, the volume of activity funded bythe Council should be re-based to include all the ‘fees-only’students currently in the system? (The proposal for Step 1 in thesetting of subject prices is set out in Question 1 above.)

OTHER PRICE ISSUES

Prices for Different Types of Student

‘Wider Access’ Students

15. The Council decided that its new funding method should recognise theadditional costs to HEIs of recruiting and retaining ‘wider access’ students -defined as those from socially deprived areas. As recommended by thePWG, a supplement to recognise the additional costs of provision for thesestudents of 5% per FTE will be included in the main teaching fundingformula from 2001-02. (Paragraph 29 below details the Council’s proposedmethod for counting these students.) In addition, the Council will consideradding a further supplement to provide an incentive to institutions to recruit‘wider access’ students. This additional funding will help to meet theScottish Executive's recent request for the Council to devise a mechanismto provide additional support to institutions to reflect the extent to which theyprovide for students from under-represented groups and to make this part ofits core funding for teaching. A summary of the letter of guidance from theMinister to the Council is published on the SHEFC website (http://www.shefc.ac.uk/content/library/high/high1200/Nov-ecHighlight.html). The ‘wideraccess’ premium will be introduced in 2001-02, and this consultation willhelp inform any refinements required in future.

Disabled Students

16. The Council is concerned at the deterrent effect that additional costsincurred by HEIs in teaching students with disabilities may have on theirrecruitment. However, it is not aware of any reliable evidence on the size ofthe additional costs per student, which are in any case likely to bedependent on the nature of the disability. It therefore proposes a fundingsupplement - of a size to be determined - to help meet these additionalcosts. (Paragraph 30 below details the Council’s proposed method forcounting these students.) Council’s thinking on this issue may be furtherinfluenced by future Scottish Executive guidance and the introduction of theDisability in Higher Education Act (expected in 2001). Therefore, theDisabled Students’ premium may also be introduced in 2001-02, and thisconsultation will help inform any refinements required in future.

Questions

3. Do you have any comments on the following elements of theproposals for prices by types of student?

a. that additional costs of 5% per FTE for providing highereducation to ‘wider access’ students - defined as those fromsocially deprived areas - be met through the main teachingfunding formula?

b. that, in addition, a premium to provide a reward to institutionswhich have recruited ‘wider access’ students be incorporatedin the main teaching funding formula? and

c. that additional funding to meet the additional costs ofproviding for disabled students be allocated through the mainfunding formula?

4. Do you wish to recommend a level for the proposed fundingsupplement for disabled students?

Prices for Different Levels of Study

17. The Council acknowledges that there are differences in the costs ofproviding teaching to students at undergraduate and postgraduate level. Inaddition, there are differences in the costs of providing teaching to studentsin different years of undergraduate and postgraduate programmes, withhigher levels of study costing more to deliver. However, the view of theCouncil is that the prices it pays should not vary by level or year of study, asthis would add unnecessary complexity to the funding method. Therefore,Council proposes that, as at present, gross prices will not vary by students’year of study, whether at degree or sub-degree level, nor according towhether students are at undergraduate or taught postgraduate level.

18. Under the current teaching funding method, institutions receive allocationsof funded places for research students. The Council noted that the highereducation funding councils in both England and Wales previously providedfunding for research students under their teaching funding formulae.However, both Councils have recently transferred the funding for suchstudents to their research funding formulae. The view of the Council is thatit is anomalous to continue to fund research students using the teachingfunding method. Therefore, funding for research students will be transferredfrom the teaching to the research funding formula. This issue is also

considered in the Second Stage Consultation on Research Funding(Consultation Document HEC 09/00).

Questions

5. Do you have any comments on the following proposals for prices bylevel of study?

a. that Council continues to pay prices undifferentiated bystudents’ year of course, whether at degree or sub-degreelevel, or at undergraduate or postgraduate level? and

b. that the Council transfers formula funding for researchstudents from the teaching to the research funding formula?(This issue is also considered in the Second StageConsultation on Research Funding, Consultation DocumentHEC 09/00)

Prices by Mode of Learning

19. Council accepted the recommendation of the PWG that a premium of 10%additional funding per FTE should continue to be allocated for part-timestudents, in recognition of the additional costs of providing administrativesupport and facilities to a greater headcount of students that having a part-time student population implies.

20. In the absence of reliable information on cost differences, Council hasdecided that, as at present, prices paid for students studying by distancelearning will not differ from those paid for students in standard modes ofstudy. Council is also aware that the costs of providing teaching throughdistance learning may be different for a mainly campus-based institution forwhich distance learning is an additional non-core activity, compared with aninstitution for which distance learning is its core business. Because of this,Council has decided that it will continue to consider the Open Universityseparately from its other funded institutions with respect to pricing issues.

Questions

6. Do you have any comments on the following proposals for prices bymode of learning?

a. that an additional cost supplement of 10% per FTE continue tobe allocated for part-time students? and

b. that - other than for the Open University, which will beconsidered separately - the price paid for students studyingunder distance learning continues to be the same as for otherstudents?

OTHER VOLUME ISSUES

Controlled and Priority Subjects

21. The Council continues to be required by the Scottish Executive to ensure anappropriate supply of graduates from certain disciplines. Council willtherefore continue to monitor student numbers in the controlled subjectareas of medicine, dentistry, and initial teacher education to ensure therequisite numbers in those subjects. Veterinary science and conservatoiremusic have also been controlled, due to their high cost and the smallnumbers of providers offering these subjects. It is proposed that veterinaryscience and conservatoire music will also continue to be controlled.

22. Under its present funding method, the Council makes a distinction betweenpriority and non-priority FSGs. At the moment, the permission of Councilmust be sought by institutions seeking to reduce provision in priority subjectareas to enable Council to take a strategic view of the volume anddisposition of provision in priority subjects. Council has recently sought up-to-date guidance from the Scottish Executive on the continuing relevance ofits current list of priority subjects. Council will review its policy and controlmechanisms for priority subjects taking into account Scotland’s needs andScottish Executive’s revised guidance. In the interim, it is proposed that theCouncil will continue to monitor student numbers at both FSG level, andundergraduate and postgraduate levels.

Questions

7. Do you have any comments on Council's proposals to:

a. continue to fund and monitor student numbers in the controlledsubject areas of medicine, dentistry, veterinary science,conservatoire music and initial teacher education in broadlythe same way as it does at present?

b. review its policy and control mechanisms for priority subjectstaking into account Scotland’s needs and Scottish Executive’srevised guidance? and

c. to continue to monitor student numbers at both FundingSubject Group level, and undergraduate and postgraduatelevels?

RELATIONSHIP BETWEEN FORMULA AND INITIATIVE FUNDING

23. The Council recognises that its recommendations will result in funds beingallocated through the main teaching funding formula for some activitiescurrently supported by initiative funding. In line with its current generalpolicy, and recent Scottish Executive guidance, Council proposes that,wherever appropriate, the initiative funding seeking to achieve the sameobjective should cease.

Question

8. Do you have any comments on Council's proposal to ceasefunding for initiatives wherever funding for the same or similaractivity can be appropriately included in the revised teachingfunding method?

SECTION 3: PROPOSALS FOR THE REVISED TEACHINGFUNDING METHOD

PART 2: MECHANISMS FOR DELIVERY

24. This section sets out the proposed mechanisms by which the revisedteaching funding method will be delivered. It provides details of themechanisms for:

a) measuring student activity for funding purposes; and

b) increasing the policy effectiveness of teaching funding.

MEASURING STUDENT ACTIVITY FOR FUNDING PURPOSES

Evidence Considered

25. Council considered the report of the Measurement Working Group (MWG).This report contains recommendations on a number of technical issuesrelating to the implementation of credit-value enrolled (CVEs) as the basisfor measuring student activity and on the measurement of under-represented groups in higher education. A downloadable version of thisreport is available on the Council’s website (http://www.shefc.ac.uk/content/library/consult/2000/hec0800.html).

Council’s Analysis of Evidence

26. The Council considered the issues surrounding the introduction of CVEs asthe unit of measurement of funded student activity. Although the report ofthe MWG concluded that it would be possible to measure student activity inCVEs, it also exposed a number of practical problems relating to thecollection of data under a CVE system. Some of the evidence alsosuggested that not all institutions’ information management systems are yetready for the switch to CVEs. The Council remains committed to movingtowards measuring all student activity in CVEs in the future. In the interim,the Council proposes to continue measuring all student activity in FTEs.However, during this interim phase, the Council proposes to prepare theway for the switch to CVEs. For example, greater emphasis will be placedon the use of CVEs for defining and calculating undergraduate part-timeactivity to be used for funding purposes. Institutions will also be encouragedto return student data to relevant HESA fields using CVEs.

Questions

9. Do you have any comments on the Council's proposals relating tothe measurement of student activity:

a. that it will continue for the time being to measure full-time andpart-time students in FTEs for funding purposes?

b. that the Council remains committed to moving towardsmeasuring all student activity in CVEs in the future. In theinterim, the Council will prepare the way for the switch tomeasuring in CVEs.

Input Versus Output Funding

27. The Council also examined the issues surrounding the possibility of fundinginstitutions on the number of graduates, or outputs, from the system, ratherthan the current basis of enrolments, or activity, in the system. Anadvantage of such a system is that it would increase the incentive for HEIsto minimise non-completion rates by transferring the risk of non-completionto the affected institution. At the moment, the risk is shared by all fundedinstitutions.

28. However, the Council has previously recognised that too close a linkbetween completion rates and funding could discourage widening accessand put pressure on standards. In addition, the Council is satisfied that theEarly Statistics cut-off date of 1 December avoids funding the majority ofstudent wastage and the annually published performance indicators providea basis for addressing any cases of particularly high non-completion rates.Therefore, the Council will continue to fund on the basis of enrolments to,rather than outputs from, the system.

Question

10. Do you have any comments on Council's proposal to continuefunding on the basis of student enrolments, rather than graduateoutputs?

Measuring ‘Wider Access’ Students

29. The Council agreed with the recommendation of the MWG that, in theabsence of better alternatives, UK-wide postcode data on the homeaddress of students would provide the best basis for counting ‘wider access’students. This measurement mechanism would correspond with both theperformance indicator data and the methods for measuring ‘wider access’

students used in England and Wales. The Council also decided toinvestigate new measurement mechanisms for under-represented groupswhich may become available in future.

Measuring Disabled Students

30. The Council is aware that a headcount of students in receipt of the DisabledStudents’ Allowance is available from the HESA return. The Councilproposes that this information should be used as a proxy for the volume ofdisabled students attending HEIs, and that these numbers could, in turn,inform the distribution of additional funding for disabled students. Such asupplement would be allocated on the basis of the headcount of studentsreceiving Disabled Students' Allowance for the most recent completeacademic year.

Questions

11. Do you have any comments on the Council's proposals to:

a. use the UK–wide unit postcode database showing under-represented areas to measure ‘wider access’ students?

b. investigate other measurement mechanisms for ‘under-represented groups’? and

c. use the headcount of students in receipt of the DisabledStudents’ Allowance (available from the HESA return) as aproxy for the volume of disabled students attending HEIs, anduse this as a basis for the distribution of additional funding fordisabled students?

MECHANISMS FOR INCREASING POLICY EFFECTIVENESS

Evidence Considered

31. The Council considered the responses to its two consultations on the reviewof its methods for funding teaching (Consultation Documents 05/98 andHEC 01/00). The appropriateness for Scottish circumstances of themechanisms used by HEFCE and HEFCW to increase policy effectivenesswas also assessed by the Council. A further important factor considered byCouncil was the Scottish Executive guidance it receives. It is likely that thisguidance will continue to require the Council to demonstrate increasedpolicy effectiveness.


32. The Council acknowledges that the proposals contained in its consultationon a Core and Margin system (Consultation Document HEC 01/00) werenot well received by the sector. It is also acknowledged that some policyobjectives could be achieved through the responsiveness of individual HEIs.However, Council’s underlying objective of having available a method ofredistributing resources if necessary in order to achieve Scottish Executiveand Council policy objectives more effectively is unchanged. In order to tryto meet the requirement for a mechanism to ensure policy priorities are metwhilst reducing uncertainty in funding for HEIs, the AGTF explored therange of options for increasing its policy leverage.

33. The AGTF appraised 3 main options for increasing the policy effectivenessof the revised teaching funding method:

Option 1 is to ‘do nothing’ and leave the methods for achieving policyleverage as they are at present;

Option 2 is to implement the ‘Core & Margin’ system, as detailed inConsultation Document HEC 01/00; and

Option 3 is to deploy a range of measures to increase policy effectiveness.

34. After discounting Options 1 and 2 as unsuitable, the AGTF recommended,and the Council agreed, that Option 3 is the preferred mechanism forincreasing policy effectiveness. The Council’s view is that this option willgive the greatest flexibility and will also provide the Council the opportunityto exercise judgement on the variety of policy issues it is faced with.

35. It is envisaged that, under Option 3, Council would announce its intention todeploy any one or several from a range of funding measures. Thecomposition of the package of funding measures used would vary accordingto:

a) the particular policy objective that was being targeted; and

b) the Council's assessment of the capacity and ability of the sector todeliver the objective without the measure or measures.

36. Under this option, the Council might choose to begin with one or moremeasures initially – which might be supplemented with others - dependingon the policy objective and its assessment of the ability of the sector todeliver the objective. The range of measures from which the most suitablemix could be selected is as follows:

Measure a: Council announces what it wishes the sector to accomplish inthe medium term e.g. in the Main Grant Letter. It would expect initially to

see evidence of change in institutions’ strategic plans and eventually inoutcomes;

Measure b: Any additional resources available to Council might betargeted on certain institutions, subjects or types of student, in order toencourage institutions to deliver change or to reward those alreadydelivering under Measure a;

Measure c: Council might redistribute the funded activity provided toindividual institutions; and

Measure d: Under certain circumstances, Council might decide that itwould withdraw some funded activity from particular institution(s), or fromparticular subjects, or levels of study. The released resources would thenbe reallocated to higher priority areas of expenditure for teaching funding.This measure would have to be deployed where it is beyond the control ofany individual institution to achieve the policy objective through its ownactions, or where an institution or group of institutions have failed torespond to one or more of the other measures.

Question

12. Do you have any comments on the Council's proposal to deploy apolicy-specific range of measures (as outlined in ‘Option 3’above) as it judges necessary – as the way forward for increasingthe policy effectiveness of funding of teaching?

ANNEX AREVIEW OF TEACHING FUNDING:THIRD STAGE CONSULTATION

BACKGROUND TO THE REVIEW OF TEACHING FUNDING

INTRODUCTION

1. The Council’s present method of funding teaching provision in Scottishhigher education institutions (HEIs) has been in use since 1993-94. Themethod was very similar to that used by the previous funding bodiesallocating resources to HEIs in Scotland – i.e. the Scottish Office and theUniversity Grants Committee. While there is considerable agreement thatthe method has served its purposes reasonably well, it was conceived at theend of a period of expansion of student numbers. Currently, however,higher education is in a period of marginal growth.

2. Higher education has experienced other significant changes in recent yearsand the Council has received new guidance from the Scottish Executiveabout its policy priorities for the future. The Council therefore decided in1998 that the time was right to initiate a fundamental review of the way inwhich it funds teaching provision in HEIs.

Consultation

3. The first phase of the review began in October 1998, when the Councilpublished the first stage consultation paper on the funding of teaching(05/98). The consultation document requested views on:

• objectives and criteria for evaluating possible methods of funding teaching;

• funding mechanisms for determining the optimal level of participation inHE, helping to ensure that the right range and mix of skills andknowledge in graduates and diplomates is produced to meet Scotland’sneeds;

• funding mechanisms for helping HE to play its part in delivering theScottish Executive’s policy priorities of widening access to HE andpromoting lifelong learning; and

• possible future structures for the main teaching funding formula.

4. Council considered the responses to the consultation at its May 1999meeting. In the light of the responses, Council decided that the overall aim ofits teaching funding method should be:

to secure the higher education teaching and learning that studentsdemand and Scotland needs (in terms of quantity, quality, accessibility andmix) at least possible cost.

5. Council also decided to add to its set of objectives that a funding methodshould promote:

• wider access to higher education; and• life-long learning.

Key Decisions to Date

6. Following the initial consultation phase of the review, the Council decidedthe broad way forward for a revised method of teaching funding at its July1999 meeting. The Council identified a number of possible changes to thecurrent teaching funding formula for further, more detailed, consideration.These potential changes – which were outlined to the sector in July, 1999 -are:

• reducing the number of Funding Subject Groups (FSGs) in the formulain order to simplify the funding method, to provide greater flexibility forHEIs and to reduce administrative burdens for the sector, for the Counciland for its Executive;

• changing the Unit of Measurement for student activity from full-timeequivalent to Credit Value Enrolled in order to reflect the growingimportance of more flexible provision to support lifelong learning;

• investigating mechanisms to achieve more effective policy effectivenesswith public funds; and

• initiating a reasonably frequent review of the levels of relative pricesembodied in the teaching funding formula’s Units of Resource, toensure that changes in relative costs of provision between subjectgroups (e.g. due to changes in the technology of teaching and learning)might appropriately be reflected in the prices paid to institutions. Toreduce any disincentives in the present funding method to the lesstraditional forms of higher education provision, Council thought that anew price structure should also reflect any differences in the cost ofproviding higher education efficiently to:

− different types of student (e.g. students from low participationneighbourhoods, disabled students, etc);

− between different modes of learning (on-campus versus distancelearning); and

− between different levels of study (e.g. undergraduate vs.postgraduate).

10. The Council set up 2 working groups to investigate these issues further.

Working Group on Prices

11. At its September 1999 meeting the Council decided to set up a PricesWorking Group (PWG) to “consider the level and structure of relativeprices paid by Council per unit of activity, seeking prices that would promoteefficient and effective provision”. The PWG, which consists of UniversitiesScotland (formerly COSHEP)-nominated representatives from the HEIsector, as well as SHEFC executive members, first met in November 1999.

12. In February 2000 the PWG appointed JM Consulting Ltd to undertake astudy into the efficient costs of teaching provision. The consultants held aworkshop in order to test some of their initial assumptions onrepresentatives from the HEI sector. JM Consultants submitted their finalreport to the PWG in September 2000. The PWG submitted its final report inNovember 2000.

Working Group on Measurement of Student Activity

13. At its July 1999 meeting, Council decided in principle to change the Unit ofMeasurement for student activity to credit value enrolled in order toencourage more flexible provision to meet the growing demand for lifelonglearning, and to facilitate widening the access of under-represented groupsto HE. At its September 1999 meeting, Council made the decision toestablish a Measurement Working Group (MWG) to consider the feasibilityof changing the measurement of activity for teaching funding purposes,particularly any technical issues relating to the implementation of CreditValue Enrolled as the basis. The MWG is comprised of representatives ofthe sector with technical and statistical expertise.

14. The Working Group on the Measurement of Student Activity submitted itsFinal Report at the end of July 2000.

Policy Effectiveness

15. As part of its review of the teaching funding method, the Council decided toinvestigate possible mechanisms for increasing the policy effectiveness ofthe teaching funding model. Such mechanisms would provide the incentivesand resources to better achieve Council and Scottish Executive policyobjectives through redistribution of teaching funding between institutions in apredictable and non-destabilising way. In the context of expected minimalgrowth in public funding for providing teaching in HE in the forseeable future,Council recognised that redistribution of resources would be required, ratherthan using differential allocation of growth money to achieve change in thesector.

16. Specifically, Council investigated the possibility of operating a “Core andMargin” system. The concept was that the vast majority of the new teachingfunding formula would provide the core of the proposed system, and wouldprovide the continuity of funding for all institutions. The margin – once itssize had been determined – would provide the incentives and resources tohelp deliver specified policy objectives. Such a scheme would enable theCouncil to be more strategic in its use of resources for teaching funding.

17. In February 2000, the Council issued consultation paper HEC 01/00 on thesubject of the development of the proposed core-and-margin system andoptions for the reallocation of funded places. Responses to the consultationpaper were received from all 18 HEIs plus 11 organisations/committees withan interest in the development of Scottish higher education.

Advisory Group on Teaching Funding

18. Council set up the Advisory Group on Teaching Funding in June 2000. TheAdvisory Group’s remit was to draw together information from:

• the various consultations;• the findings of the working groups; and• other relevant sources

and advise the Council on the future method of funding teaching to meet theCouncil’s needs in the light of its findings.

19. The Advisory Group submitted its recommendations on the revised methodof teaching funding to Council in November 2000.

ANNEX BREVIEW OF TEACHING FUNDING:THIRD STAGE CONSULTATION

SUMMARY OF EVIDENCE CONSIDERED BY COUNCIL

The Council considered a number of items of evidence in formulating itsproposals for the revised teaching funding method. The main items of evidenceare listed below. Items marked ‘3‘ are available in downloadable format fromthe Council’s website (http://www.shefc.ac.uk/content/library/consult/2000/ hec0800.html).

Consultations

05/98 Funding for the Future: A Consultation on theFunding of Teaching

3

HEC0100 Funding For The Future: Stage 2 ConsultationPaper on the Funding of Teaching

3

Reports

July 2000 Report of the Measurement Working Group 3

September2000

Report of JM Consulting on the Efficient Costs ofTeaching

3

November2000

Report of the Prices Working Group 3

November2000

Report of the Advisory Group on TeachingFunding

Other Evidence

September2000

Recommendations of the Joint SHEFC/SFEFCWorking Group on Widening Participation.

November2000

Reports on the teaching funding methods in usein England and Wales.

ANNEX CREVIEW OF TEACHING FUNDING:THIRD STAGE CONSULTATION

ORGANISATIONS CONSULTED

The Education Sector

University of AberdeenUniversity of Abertay DundeeUniversity of DundeeEdinburgh College of ArtUniversity of EdinburghGlasgow Caledonian UniversityGlasgow School of ArtUniversity of GlasgowHeriot-Watt UniversityNapier UniversityNorthern College of EducationUniversity of PaisleyQueen Margaret University CollegeThe Robert Gordon UniversityRoyal Scottish Academy of Music and DramaSt Andrew's College of EducationUniversity of St AndrewsUniversity of StirlingUniversity of StrathclydeThe Open UniversityThe Scottish Agricultural CollegeThe University of the Highlands and Islands

The Association of Graduate Careers Advisory ServicesThe Association of Scottish CollegesThe Association of University Teachers (Scotland)Universities Scotland (formerly COSHEP)Universities UK (formerly CVCP)The Department for Education and EmploymentThe Department of Education for Northern IrelandThe Educational Institute for ScotlandThe General Teaching CouncilThe Higher Education Funding Council for EnglandThe Welsh Funding CouncilsThe National Union of Students (Scotland)The Quality Assurance AgencyThe Scottish Qualifications AuthorityThe Welsh Office Education Department

The Business Sector

Association of Scottish Chambers of CommerceThe Confederation of British Industry (Scotland)The Federation of Small Businesses (Scotland)Highlands and Islands EnterpriseThe Local Enterprise Companies and TrustsScottish Council for Development and IndustryScottish EnterpriseVisit Scotland (formerly Scottish Tourist Board)

The Public Sector

Scottish Community Education CouncilThe Convention of Scottish Local AuthoritiesThe Scottish Arts CouncilThe Scottish Council for Educational TechnologyThe Scottish Environmental Protection AgencyThe Scottish Executive Departments

Learned Societies

The British AcademyThe Royal Academy of EngineersThe Royal SocietyThe Royal Society of Edinburgh

Other Organisations

The British CouncilThe Council for Industry and Higher EducationThe Scottish Council for Voluntary OrganisationsThe Scottish Trades Union CongressUNISON

providing research and information services to the Scottish Parliament

1

Research Note for the Enterpriseand Lifelong Learning Committee Tuesday 13th March 2001

FUNDING HIGHER EDUCATION INSTITUTIONS

TERRY SHEVLIN

The Enterprise and Lifelong Learning Committee has decided to hold a number ofhearings into how Higher Education Institutions (HEIs) are funded in Scotland.The decision follows a series of critical media articles and adverse comments fromsome academics, suggesting that changes proposed by the Scottish HigherEducation Funding Council (SHEFC) will lead to funding cuts for certain HEIsubjects. This research note describes how the current system of HEI funding inScotland works; explains how SHEFC proposes to change this system; andexamines how these proposals have been received by the wider academiccommunity.

THE ROLE OF SHEFCThe Scottish Higher Education Funding Council is a non-departmental public bodysponsored by the Scottish Executive’s Enterprise and Lifelong LearningDepartment. SHEFC was established in 1992 by the Further and HigherEducation (Scotland) Act 1992, and describes its main functions as follows:

- to distribute funds to support teaching and research in higher educationinstitutions;

- to secure that provision is made for assessing the quality of higher educationsupported by the Council;


2

- and to provide Scottish Ministers with information and advice relating to allaspects of higher education in Scotland, including the financial needs of thesector.

‘Aiming Higher’ SHEFC’s annual report and accounts for 1999-2000, show thatestimated funding received by the Council for this academic year amounted to justover £607 million. Gross income, in terms of grant-in-aid received from thegovernment for distribution to institutions, amounted to just under £600 million. Interms of expenditure, two headings account for the vast majority of spending:‘Teaching’ and ‘Research’. The main teaching grant amounted to just under £440million, while the main research grant totalled £110 million. Table 1 shows theoverall payments to the 18 higher education institutions funded by SHEFC, andhow the main grant for teaching contributes to this overall figure:

Table 11: Grants to universities and colleges for academic year 1999-2000 (1)HIGHER MAIN GRANT TOTALEDUCATION FOR TEACHING PAYMENTSINSTITUTE

(£) (£)

University of Aberdeen 33,838,418 45,725,199University of Abertay, Dundee 12,695,000 14,032,835University of Dundee 28,025,974 41,230,862Edinburgh College of Art 5,400,000 6,702,438University of Edinburgh 62,682,740 105,502,196Glasgow Caledonian University 34,418,000 37,688,879Glasgow School of Art 5,953,000 7,227,130University of Glasgow (2) 65,467,828 96,626,865Heriot-Watt University 19,584,000 27,886,206Napier University 28,665,000 31,810,648Northern College of Education 5,854,000 6,813,017University of Paisley 21,610,000 26,346,888Queen Margaret University 9,084,000 10,290,435Robert Gordon University 22,832,000 25,700,779Royal Scottish Academy of 3,696,000 5,622,178Music and DramaUniversity of St Andrews 15,935,000 25,557,092University of Stirling 16,384,925 23,350,204University of Strathclyde 46,856,350 66,226,162Total 438,982,235 604,340,013

(1) These figures are on an academic year basis and relate to expenditure up to 31 July 2000.The table was produced shortly after this date, and the figures within it are estimates.Figures for the University of Glasgow include grants to the former St Andrew’s College of Education.Note that figures relating to the construction of the Edinburgh Medical School are excluded from the table.

HOW THE CURRENT TEACHING FUNDING SYSTEM OPERATESEssentially, SHEFC has responsibility for funding higher education institutions inline with overall Scottish Executive policy on higher education. Teaching fundingprovided by SHEFC to HEIs supports expenditure on items like teachers’ salariesand classroom equipment. This does not equate to all of the money needed to

1 This is an edited version of a table provided in SHEFC’s annual accounts for 1999/2000.


3

fund teaching; HEIs also receive money from, for example, the Student AwardsAgency for Scotland.

At present, there are 22 funding subject groups2, for example clinical dentistry andsocial sciences. (Appendix 1 gives a full list of the current funding subject groupsand shows how these may change under SHEFC’s proposals). Each of thesubjects has a ‘cash value’ attached to it reflecting the estimated cost of providingteaching for the subject in that year. SHEFC decides, in conjunction with the HEI,how many student places it intends to fund in each subject, using a formula basedon the student places from the previous academic year. SHEFC then provides ablock grant to each HEI to fund teaching; it does not allocate money to individualdepartments or courses within HEIs. When the money is allocated to HEIs, thedecision on spending across each department is made at the discretion of theindividual HEI, and HEIs can decide to switch resources between departments ifthey so wish. SHEFC does, however, have the sanction of being able to take backresources if funded student places are not filled, or if the quality of provision is notsatisfactory. This annual funding procedure is illustrated in Box 1:

Box 1 - The annual funding processStep 1 – SHEFC determines the broad cost of teaching a student, including theirfee, for each Funding Subject Group (FSG). This is called the unit teachingresource – ‘a’.

Step 2 – The student places that SHEFC will fund in HEIs are called full timeequivalent funded places – ‘b’,

Step 3 – By multiplying steps one and two together it is possible to calculate grossSHEFC funding: a x b = ‘c’.

Step 4 – SHEFC has to take into account the fact that institutions will receive atuition fee3 for each place that is funded by SHEFC – ‘d’.

Step 5 – This figure is subtracted from the gross SHEFC funding: c – d = ‘e’.

Step 6 – This sum ‘e’ can be described as the main teaching grant that SHEFCcontributes to each institution to purchase student places.

To fully understand the process described in Box 1, it is important to describe twokey terms: ‘fees-only’ and ‘funded places’. Basically, a funded place is one whereSHEFC will provide main teaching grant for an eligible student. Where studentsare accepted onto courses on what is called a ‘fees-only’ basis, the place does notattract funding from SHEFC’s main teaching grant, the institution receives only theindividual’s tuition fee. One consequence is that on a course where there is alarge proportion of fees-only students, there will be a lower average revenue perstudent available for teaching. For example if University ‘A’ had 100 places in

2 Some reports quote fewer groups, because subjects are sometimes counted together.3 For example, from the Students Awards Agency for Scotland.


4

Science with 90 places funded by SHEFC and 10 fees-only places; and University‘B’ had 100 places all funded by SHEFC, then there would be exactly the samenumber of students. However there would be less money to teach the students inUniversity ‘A’ because they would have more fees-only places which do not attractteaching funding from SHEFC.

While the ‘fees-only’ concept is relatively complex, it can essentially be seen as alegacy of an earlier funding situation (from the late 1980s) where the emphasiswas on increasing the number of students at marginal cost without necessarilyhaving the resources to pay for all of them at the same level. SHEFC estimatesthat there are about 10% fees-only places in the system at present.

Some of the subjects SHEFC funds are described as controlled, some as priority:Controlled subjects – where the number of funded places are determined bygovernmental needs e.g. teacher training and undergraduate medicine.Priority subjects – traditionally subjects where the government wanted to increasethe number of students coming through, e.g. maths and science

Finally, another important factor to consider in terms of overall funding to HEIs, isthat institutions also receive a secondary stream of funding from SHEFC, knownas the RAE grant: the Research Assessment Exercise-based Grant. This can beseen as a merit-based grant which rewards academic excellence in research.This means that not all institutions have the same funding available, for example,when employing staff who conduct both teaching and research or buyingequipment which may be used for both teaching and research purposes.

THE NEW PROPOSALSSHEFC is concerned that there has not been a review of its basic fundingmethods since 1993/4. Changes to this system have been outlined in aconsultation document - ‘Review of Teaching Funding: Third Stage Consultation’- which invites responses by the end of March 2001. One of the main ideas floatedin this document is that instead of having 22 subject groups, the subjects shouldbe aggregated into 6 broader groups. SHEFC believes that such a process wouldbe more flexible, simpler, and would lead to greater equity by having the sameprice for subjects with broadly similar costs. It would be up to institutions to decidehow to fund individual subjects within the proposed wider groups. Becausesubjects have a price value, there will obviously be funding implications if thesesubjects are now being grouped with other subjects which have disparate prices.In calculating the new price structure, SHEFC provided4 the following explanation:

“The price structure proposed is based on the weighted average of the existingprices for the existing funding subject groups within each broader subject group. “

4 SHEFC Circular Letter No: HE/04/01


5

To illustrate, Table 3 5 shows the proposed new funding group structure, and wouldappear to indicate a drop in funding for some subjects, particularly in Group 4.However, SHEFC is keen to stress that this effect is largely due to the proposedmovement of one funding subject group, Pharmacy, from Group 4 into Group 3,which accounts for 7% of the apparent change in Group 4. Overall, the proposedmovement of resources would result in approximately an 8% rise for clinical andveterinary subjects, and an average 1% drop for all other subject groups.

Table 3: Proposed Funding Subject Group structure and pricerelativities, based on funded places for 2000-01


Estimated changefrom funding

announced for 2000-01

1. Clinical and VeterinaryPractice

£12,114 3.29 8.3%


3. Subjects requiring significantprovision of laboratories orworkshops and specialistequipment

£6,259 1.70 2.5%

4. Subjects generally taught insmall groups and requiringaccess to specialist equipment

£5,523 1.50 -8.4%

5. Subjects requiring access tospecialist equipment

£4,713 1.28 -1.0%

6. Other subjects £3,682 1.00 -1.2%

All Groups 0.0%

The second major proposal is that the volume of activity funded by SHEFC shouldbe ‘re-based’ to include all the fees-only students. The rationale6 behind thisproposal is as follows:

"Most of the ‘fees-only’ student places presently in the system are needed in orderto achieve the Scottish Executive’s existing planning targets of total studentnumbers for the sector as a whole. Therefore, it is appropriate for the Council toconsider whether and how to include this provision within the teaching funding

5 Table 3 and Table 4 are both detailed in ‘Review of Teaching Funding: Third Stage Consultation’ SHEFC,08/00.

6‘SHEFC supplementary circular 04/01


6

method. There are about 10% ‘fees-only’ places in the system. This means there isnot a direct relationship between the teaching provision being funded by the Councilthrough the funding method and the provision being delivered by the sector. TheCouncil has decided that it needs to consider whether the relationship between theteaching provision being funded and the provision being delivered should bestrengthened so that the funding method can promote policy effectiveness andefficiency in the use of resources."

If, as proposed, funding is now to also include these fees-only places, this wouldalter the funding structure again, providing a different set of prices to thoseoutlined above. Table 4 details how funding would change. Again, SHEFCstresses that the size of the apparent change in Group 4 is due to the proposedmovement of Pharmacy from Group 4 to Group 3, which accounts for about 8% ofthe change.

Table 4: Proposed Funding Subject Group structure and pricerelativities, based on all students eligible for funding in 1999-2000(Step 2)


Estimated changefrom funding

announced for2000-01

1. Clinical and VeterinaryPractice

£11,628 3.53 8.1%


3. Subjects requiring significantprovision of laboratories orworkshops and specialistequipment

£6,193 1.88 4.5%

4. Subjects generally taught insmall groups and requiringaccess to specialist equipment

£4,645 1.41 -9.6%

5. Subjects requiring access tospecialist equipment

£4,414 1.34 -1.1%

6. Other subjects £3,294 1.00 -4.3%

All Groups 0.0%

SHEFC is also keen to point out that both of these tables contain only notionalfigures illustrating the effect if you were applying the proposed changes to prices


7

that were paid in 2000-01 and were not making any other changes to the fundingmethod. The additional major factors that will change the outcomes are that:• Any proposed teaching grant changes would not be introduced until academic

year 2002-03. By this time, resources for teaching will have risen by around9%

• The amounts of grant per subject and per institution will be different, as theywill be based on student numbers at the time of introduction

• Other proposed funding changes will affect grant levels, such as introducing a5% increase in units of funding based on the number of students from areascurrently under-represented in higher education

• The proposed changes will be influenced by the responses to theconsultations

• There will if necessary be transitional arrangements to make changesmanageable for institutions.

SHEFC has not yet made up its mind about these changes – the consultationperiod runs until the end of March, while, if accepted, changes would not start tocome into effect until August 2002.

While this note has looked exclusively at the proposed changes to the mainteaching grant, there are other higher education issues. For example, SHEFC isalso carrying out a separate consultation exercise into the way research is funded,while the Quality Assurance Agency is changing the way it assesses the quality ofteaching in the UK. The Council is also currently assessing applications fromsome Scottish higher education institutions for ‘small specialist institution’ status.This would help offset the effects of the teaching funding proposals by recognisingthe extra costs involved in small-scale, intensive operations.

THE TIMETABLE

1998 – SHEFC decides it is time to review the method of funding teaching provisionwhich has remained largely unchanged since 1993/94.

October 1998 - review initiated with the launch of the first stage consultation paper.

Circular letter 31/99 - announces the creation of two working groups, including thePrices Working Group (PWG) which is to look at the prices paid for teaching activity.The PWG’s recommendations are informed by a separate independent report by JMConsultants.

February 2000 – release of a second consultation paper on teaching funding.

June 2000 – SHEFC sets up the Advisory Group on Teaching Funding (AGTF) toconsider responses to the consultations and the recommendations of the workinggroup. The AGTF also considers the funding methods used in England and Wales.

September 2000 – JM Consultant’s report.

November 2000 - AGTF provides SHEFC with its recommendations on the revisedteaching funding method.

30 March 2001 – deadline for responses to 3rd stage consultation


8

THE RESPONSEIt is fair to say that SHEFC’s proposals have met with a mixed response, withhighly critical comment from some HEI representatives in the nationalnewspapers. For example, Douglas Weir, the Dean of Strathclyde University’sJordanhill Campus has pointed out that individual courses may be under threat7:

"What is the point in gearing up to take large numbers of extra teachers only to findour funding is to be eroded? My nightmare scenario is teachers come to us to saythey want to go on an accredited course for their chartered teacher portfolio and wehave to tell them we cannot afford to run the courses."

Meanwhile, Frank Gribben, Head of Planning at Napier University, has warned8

that the Executive’s broader economic strategy may be undeliverable:

“SHEFC's proposed redistribution among subjects will also damage the ability ofinstitutions to support vital sectors of the Scottish economy. Given the importance ofbusiness and financial services, tourism, engineering and technology, and thecreative and cultural industries to the Scottish economy, it is extraordinary thatSHEFC plans to cut over £5m per year from the funding of business studies, £1.3mfrom tourism and hospitality, more than £3m from engineering and technology, andmore than £5m from art, design and the humanities.”

Finally, there have even been warnings that individual institutions may be forcedto close. For example, Professor Seona Reid, head of the Glasgow School of Arthas claimed that the school could stand to lose more than 14% of its current cashfor teaching:

"That could mean that we are so compromised in the quality of our educationprovision that our governors would have to consider whether we could continue.The last thing we would want to do is to reduce quality."

The Association of University Teachers (AUT) – the union that representsacademic staff – has pointed out that:

“Even within a university which is perceived as an overall winner, there will beinternal subject winners and subject losers, with major shifts of resources andassociated restructuring and job loss.”

While there has been criticism from individual institutions or departments, some ofSHEFC’s proposals have also been welcomed. For example Universities Scotland– formerly COSHEP, the Committee of Scottish Higher Education Principals –supports both the principle of moving to a smaller number of funding groups, andthe abolition of fees-only students. However, Universities Scotland has also calledfor greater engagement with the sector on the proposals and the need to have aproper dialogue through the formation of a joint task-force with its members andSHEFC’s.

Finally there have been relevant recent PQs on the funding proposals:

7 A Denholm, ‘Cash cuts threat to plans for extra teachers’, The Scotsman, 17th February 2001, page 10.8 F Gribben, ‘Come clean about these crippling cuts’, The Herald, 6th February 2001, page 19.


9

Alex Neil (Central Scotland) (SNP): To ask the Scottish Executive whether allinformation regarding the Scottish Higher Education Funding Council’s proposedfunding plans, in particular the amount of money each institution will receive, willbe published.(S1W-13215)Ms Wendy Alexander: The allocation to individual institutions of formula-basedgrants for 2001-02 academic year, which cover the majority of the funding to beallocated, will be published by the Scottish Higher Education Funding Council inMarch. There will be some further allocations for particular grants throughout theyear.In-principle decisions on the total SHEFC budget for 2001-02 were made at theCouncil's November 2000 meeting and announced in "Highlight" on its website inDecember. Detailed decisions on the overall allocation of funding made by theCouncil at its February meeting will be published through the same medium laterthis month.SHEFC is also currently undertaking a Review of Teaching Funding to informfuture years' allocations. Any recommendations for change would not beimplemented before 2002/3. A consultation paper was published on 19 Decemberand a further paper was published on 9 February providing the rationale for theCouncil's proposals and technical descriptions of how illustrative figures werederived to inform discussion and response to the consultation.

Mr David Davidson (North-East Scotland) (Con): To ask the Scottish Executivehow many Scottish universities had a financial deficit in 1999-2000; how many arecurrently in deficit, and how many are expected to have a deficit in 2001-02.(S1W-12975)Ms Wendy Alexander: In 1999-2000, nine higher education institutions recordedan operating deficit, six of which recorded a historical cost deficit. Finalisedaccounts are not available for 2000-01 and 2001-02.Mr David Davidson (North-East Scotland) (Con): To ask the Scottish Executivewhat steps it is taking to address any financial difficulties in the higher educationsector.(S1W-12976)Ms Wendy Alexander: At almost £660 million, planned funding for 2001-02 issome 8% (5.6% in real terms) above this year's allocation and our spending plansfor higher education. This is a significant investment and demonstrates ourcommitment to building a learning nation and our belief that a high quality,dynamic and diverse lifelong learning market will help to underpin the developingknowledge economy and secure Scotland's social, cultural and economicprosperity. By the FY2003-04 we will increase the amount available to SHEFC fordistribution to the sector to almost £700 million. This results in an extra £108million being invested in higher education over the next three financial years.


10

Appendix 1 - current and proposed funding subject groups

New FundingGroups

Existing Funding Subject Groups

1. Clinical and Veterinary Practice

Clinical Medicine A3 Clinical MedicineClinical Dentistry A4 Clinical DentistryVeterinary Science D1 Veterinary Science

2. Conservatoire Music

Conservatoire Music W3 Music (this funding subject group is used solely by RSAMD for part of its W3 provision)

Pre-clinical Medicine A1 Pre-clinical MedicinePre-clinical Dentistry A2 Pre-clinical DentistryScience B2 Pharmacology

B3 PharmacyC Biological SciencesD Agriculture & related subjects

excl. D1 Veterinary ScienceF Physical Sciences

Engineering & Technology H, J Engineering & TechnologyComputing & Information Science G5 Computing Science

P2 Information ScienceBEd Music; BEd Technology X (part) EducationBEd Physical Education; PGCE

Other Health & Welfare B Subjects Allied to Medicineexcl. B2,B3 Pharmacology, Pharmacy

L5 Social WorkCatering & Hospitality Management N7 Catering & Institutional ManagementArt, Design & Performing Arts W Creative ArtsBEd Primary X (part) EducationIn-service Teacher Ed & Other Ed

5. Requiring access to specialist equipment

Built Environment K Architecture, Building, & PlanningMaths, Statistics & OR G1 Mathematics

G4 StatisticsG9 Other Mathematical SciencesN2 Operational Research

Comb Degrees in Ed leading to GTC Regn X(part) Education

6. Other Subjects

Business & Admin Studies N Business & Admin Studiesexcl N2 Operational Researchexcl. N7 Catering & Institutional Management

Social Sciences L, M Social Studiesexcl. L5 Social Work

Humanities, Language & Mass Communication P Mass Communication & Media Studiesexcl. P2 Information ScienceQ, R, T Languages & Related Disciplines

V Humanities

Table supplied by SHEFC

HESA Classification of disciplines in Education(HESACode)

3. Subjects requiring significant provision of laboratories or workshops and specialist equipment

4. Subjects generally taught in small groups and requiring access to specialist equipment


11

If you have any comments or questions about this Research Note, please contact Terry Shevlin onextension 85087 or [email protected] .

Research Notes are compiled for the benefit of Members of Parliament and their personal staff.Authors are available to discuss the contents of these papers with Members and their staff butcannot advise members of the general public.

ANNEX DREVIEW OF TEACHING FUNDING:THIRD STAGE CONSULTATION

COMPOSITION OF PROPOSED FUNDING SUBJECT GROUPS

New FundingGroups

Existing Funding Subject Groups

1. Clinical and Veterinary Practice

Clinical Medicine A3 Clinical MedicineClinical Dentistry A4 Clinical DentistryVeterinary Science D1 Veterinary Science

2. Conservatoire Music

Conservatoire Music W3 Music (this funding subject group is used solely by RSAMD for part of its W3 provision)

Pre-clinical Medicine A1 Pre-clinical MedicinePre-clinical Dentistry A2 Pre-clinical DentistryScience B2 Pharmacology

B3 PharmacyC Biological SciencesD Agriculture & related subjects

excl. D1 Veterinary ScienceF Physical Sciences

Engineering & Technology H, J Engineering & TechnologyComputing & Information Science G5 Computing Science

P2 Information ScienceBEd Music; BEd Technology X (part) EducationBEd Physical Education; PGCE

Other Health & Welfare B Subjects Allied to Medicineexcl. B2,B3 Pharmacology, Pharmacy

L5 Social WorkCatering & Hospitality Management N7 Catering & Institutional ManagementArt, Design & Performing Arts W Creative ArtsBEd Primary X (part) EducationIn-service Teacher Ed & Other Ed

5. Requiring access to specialist equipment

Built Environment K Architecture, Building, & PlanningMaths, Statistics & OR G1 Mathematics

G4 StatisticsG9 Other Mathematical SciencesN2 Operational Research

Comb Degrees in Ed leading to GTC Regn X(part) Education

6. Other Subjects

Business & Admin Studies N Business & Admin Studiesexcl N2 Operational Researchexcl. N7 Catering & Institutional Management

Social Sciences L, M Social Studiesexcl. L5 Social Work

Humanities, Language & Mass Communication P Mass Communication & Media Studiesexcl. P2 Information ScienceQ, R, T Languages & Related Disciplines

V Humanities

HESA Classification of disciplines in Education(HESACode)

3. Subjects requiring significant provision of laboratories or workshops and specialist equipment

4. Subjects generally taught in small groups and requiring access to specialist equipment

EL/01/09/3

1

SHEFC funding policy for teaching and research:evidence to the Enterprise & Lifelong Learning Committee

Introduction

Universities Scotland welcomes the opportunity to present both written and oral evidence to theEnterprise and Lifelong Learning Committee concerning the funding policy of the Scottish HigherEducation Funding Council (SHEFC) for teaching and research. This paper constitutes our writtenevidence. Our oral evidence will be given on 21 March 2001 by Professor Andrew Miller, Principaland Vice-Chancellor of the University of Stirling, and David Caldwell, Director of UniversitiesScotland.

Funding of teaching

As members of the Committee will be aware, SHEFC is currently reviewing the method of fundingteaching in Scottish higher education. The review has now reached its third stage, and aconsultation document (HEC 08/00) was issued in December 2000, with a request that responsesbe returned by 30 March 2001. Universities Scotland has already submitted its response, in theform of a letter dated 27 February 2001 from its Convener, Professor Sir Stewart Sutherland.Our evidence to the Committee is based on the content of this response.

Universities Scotland agreed with SHEFC that there should be a review of the method for fundingteaching. The present arrangements have been in place for some years, during which timecircumstances have changed. Moreover, it was generally accepted that the existing system hadcertain weaknesses, and we believe that it was timely to conduct a thorough review with the aim ofintroducing improvements.

We also agree with SHEFC about some of the changes which are desirable. In particular, we havesupported in principle a simplification of the arrangements by reducing the number of separatesubject funding groups, and we have similarly supported in principle the abolition of the “fees-only”category of student. However, we have criticisms to make of the specific proposals on these twoimportant aspects as set out by SHEFC in HEC 08/00. We have a further criticism of the way inwhich the third phase of the review has been conducted, and believe that defects in the processhas been reflected in flawed proposals.

The reason for the existence of different funding groups is that some subjects are intrinsically moreexpensive to provide than others. There are currently over 20 different funding groups, eachattracting a different unit of resource, i.e. the amount of funding per full-time equivalent (FTE)student. The higher education sector shares SHEFC’s view that this is too large a number ofseparate groups, and that it is difficult to justify the various different units of resource. Wetherefore enthusiastically supported the development of an evidence-based approach todetermining a smaller number of groups and the units of resource appropriate to each of them.We consider it essential that the new system has a sound evidence base, in contrast to theexisting system which is largely historical and represents a compromise adopted when the pre-1992 university sector and the former centrally-funded sector were merged in 1992.

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2

SHEFC followed the evidence-based approach during the first two phases of the review, butabandoned it in the third phase, arguing that the evidence was insufficiently robust. We agree thatthe work was incomplete, but consider that good progress had been made, and that the workshould have been brought to a conclusion. Instead, it was aborted, and as a result the fundinggroups and units of resource proposed in the consultation paper do not have an evidence base.For the most part they are merely regroupings of subjects, with the new unit of resource for eachgroup being calculated simply by averaging out the previous units of resource for the subjects nowgrouped together. The main exception to this is an increase in the unit of resource for clinicalmedicine and reductions in the units of resource for other subjects to pay for this. The view ofUniversities Scotland is that, in the absence of evidence to support the proposals, there is nosound basis to proceed with the changes as currently proposed.

The consultation document also contained a proposal to convert “fees-only” into fully-fundedstudents. The existence of these two separate categories is one of the peculiarities of the currentsystem, and in principle Universities Scotland supports the abolition of the “fees-only” category. Atpresent, institutions have an approved FTE student number for each funding group in which theyare providers, and receive a full unit of resource for each FTE up to this limit. They may takefurther students beyond that number, but for these additional students they receive only the feeincome, which is on average only about 20 percent of the full unit of resource. It might be said thatno institution is obliged to take these extra students, but the fact is that the achievement of theoverall student number targets set by the Executive depends on institutions taking approximately10% of their students on a fees-only basis, since the number of fully-funded students is onlyaround 90% of the Executive’s target. A change that results in all students being fully fundedwould therefore be welcome, particularly if it meant that institutions received the full unit ofresource at its present value for the those students for whom they now receive only fees.However, this is not what is proposed. Instead, the unit of resource in each funding group wouldbe reduced in order to meet the cost of assimilating the “fees-only” students into the fundedcategory. The result of this is that the proposals, like those for new funding groups, could havevery substantial redistributive effects.

The weakness in SHEFC’s review of this aspect is that it failed to consider alternative means ofachieving what is generally accepted as a desirable outcome. Different means would havedifferent consequences for institutions in the sector, and therefore need to be carefully considered.In this case, as with the new funding groups and units of resource, we believe that there is morework which needs to be done. There needs to be a thorough exploration of the options, and thesector should then be consulted on all those which are viable.

As already indicated, our view is that these shortcomings in the proposals are a directconsequence of a flawed process, and in particular SHEFC’s failure in the third phase of the reviewto engage in dialogue with the sector. This engagement had been an integral part of phases oneand two, and we believe that had this approach continued a much sounder set of proposals wouldhave emerged in phase three. We have therefore proposed to SHEFC that a joint task group beestablished of appropriate SHEFC officers and representatives of Universities Scotland, and thatthis group address urgently and in an open and transparent manner the key issues we haveidentified above. The involvement of the sector is of critical importance, particularly when changesmay have significant redistributive effects. Provided that proposals themselves are transparentand are based on sound evidence, and provided they have been formulated through an opendialogue with the sector, they are likely to enjoy credibility and to be accepted as legitimate. In theabsence of these conditions, the system will lack the legitimacy and consent which is vital to itseffectiveness.

We are hopeful that SHEFC will respond positively to our suggestion, and that this will result inwhat we consider an important piece of work being put back on track.

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3

Funding of research

SHEFC is conducting a parallel review of research policy and funding. A consultation document(HEC 09/00) was also issued in December 2000, with responses due by 30 March 2001. Thedocument has been considered in detail by Universities Scotland’s Research andCommercialisation Committee, and (as in the case of the consultation on teaching funding) aUniversities Scotland response has already been sent in the form of a letter dated 9 March 2001from the Convener. Our evidence is based on the Committee’s work and on the Convener’s letter.

It is the strongly held view of Universities Scotland that research in the Scottish higher educationsector must be resourced to a level which ensures that its quality and volume, compared to that inother countries, is at least maintained and preferably enhanced. This is critical to the internationalcompetitiveness of the Scottish economy, and therefore to the welfare of the Scottish people. Ittherefore should be an important principle of the funding system that it supports good qualityresearch wherever it is found. Moreover, this should apply both to basic research and also toresearch which is more applied in character.

Research funding comes not just from the funding council but from a variety of sources, includingthe Research Councils (which have a UK-wide remit) and a range of charitable and private bodies.We support the continuation of this system. Of the support that is received from SHEFC, themajority is allocated to institutions on a formula basis related to the results achieved in thequinquennial Research Assessment Exercise (RAE). The RAE rates research by subject unit from1 (the lowest rating), through 2, 3b, 3a, 4, and 5, to 5* (the highest). The higher the ratingobtained, the higher is the unit of resource allocated.

A key issue which has arisen in relation to the current RAE is whether it is possible both tomaintain the unit of resource for subject units rated 4, 5 and 5* and to continue to fund those with3-ratings. In the last complete RAE, units with ratings of 3b and above were funded. SHEFC hasnot made a final commitment on this issue, but has indicated that its expectation is that, in order topreserve the funding for the more highly rated units, it will not be able to fund units rated 3a and 3bfrom 2002/03 onwards. This contrasts with the position of the Higher Education Funding Councilfor England (HEFCE), which has indicated that, while it will treat as a priority the preservation ofthe unit of resource for subject units rated 4 and above, it still expects to be able to provide fundingfor units rated 3a and 3b. Like SHEFC, we believe that it is vital to maintain the unit of resource forsubject units rated 4 and above, but we also believe that it is an issue of serious concern if SHEFCis not able to fund research as favourably as is HEFCE.

There are two particular reasons why it would be unfortunate if SHEFC does not fund units rated3a and 3b. First, there is clear evidence from previous RAEs that units with 3-ratings can improveto 4 and above in the course of one RAE cycle. However, without funding, this is much less likely.Second, if units with 3-ratings are not funded, there may be some subjects which receive noresearch funding at all in Scotland. The SHEFC proposal to address this through a £5 millionDevelopment Fund is unsatisfactory, both because it is less transparent than the current system,and because it would represent a reduction to only a quarter of the present level of funding.

This issue is not only important but also urgent. RAE submissions are due by 30 April 2001, and itis essential that institutions know before they make their submissions whether units rated 3a and3b will be funded, since in a number of cases this may materially affect the content of submissions:the rating awarded represents an average rating for the quality of research work in the unitconcerned, and therefore, because some units that achieve 3-ratings may include some work at ahigher level, an institution might decide to submit a smaller unit for assessment if it knows that a 3-rated unit will not be funded. It is to be hoped therefore that SHEFC will indicate a firm decisionwithout delay, and that it is able to reconcile the need to preserve funding for units rated 4 andabove with the desirability of continuing to support units with 3-ratings.

DCC, 13.03.01

Association of University Teachers (Scotland) WrittenEvidence on SHEFC funding

IntroductionThe Association of University Teachers (Scotland) represents nearly 6,000 academicand academic-related staff in Scottish higher education institutions. We welcome theopportunity to give evidence to the Enterprise and Lifelong Learning Committee onthe consultations by the Scottish Higher Education Funding Council (SHEFC) onfunding.

The consultationsThe bulk of the funding allocated by SHEFC is via the formula driven fundingstreams for research and teaching although there are other minor elements of thefunding that are distributed via other means.The consultation process has been conducted separately on each of these streams butalso includes the other elements under the appropriate heading of research or teaching.The formula driven streams of the funding have remained unchanged since theformation of the SHEFC in 1992 and were based on the inherited system. Therefore,there is a strong historical factor, particularly in the teaching funding formula, whichare unnecessarily complicated, lack clarity and are in need of review1.However, the timing of the reviews and the considerable changes they will bringabout is a cause for concern. The Association of University Teachers (Scotland)wrote to SHEFC to express concerns over the review and issued a press release2.The most worrying aspect of the review is the anticipated timings of the changes inthe funding formula. Not only will both funding streams be changed at the same timebut this will also occur when the funding is altered due to the results of the 2001 RAE.Each of these factors individually would lead to a large change in funding butcombined together will lead to massive changes in funding that could have seriousimplications for institutional budgets.

Teaching fundingThe changes in the levels for teaching funding simplifies the formula but seems tohave been carried out in a statistical manner without regard to the implications or tothe proposed policy for teaching funding. The consultation document seeks torationalise the number of different subject area funding levels and incorporate thefees-only students into the fully funded numbers.The levels of funding seem to reflect the relative costs of the different types ofprovision. However the large increase in the medical subjects may produce problemsfor other subject areas. Whilst Scottish medicine may be under funded compared tothe rest of the UK, this massive one step increase seems elitist as it would result in adecrease in the unit of resource for other subjects.The system of fully funded and fees-only students was overly complicated and hid thereal cost of teaching for each subject. The move to re-base the unit of resource allowsthe true picture to be obtained as well as making the funding formula much simpler.The effect of these changes are shown in Table 1, which shows the effect of applyingthese changes on the most recent SHEFC allocation for 2000-01, this does not takeaccount of the expected increase in funding for the coming years.

Of the other proposed changes the impact on funding will vary depending on thesuccess of the institution in recruiting students of a particular background. The mostsignificant of these is the supplement for access students. Extra costs are required tomeet the increased needs of 'wider-access' students and it is proposed this should bemet with a 5% supplement through the main teaching funding formula. This doesproduce complications to the formula, which should be set out in a transparent mannerbut it is more progressive than just a bidding system for specific schemes.

Research FundingThe most significant change in the research funding consultation is the proposal tokeep funding for 4 and 5 rated departments at the same relative funding, this couldmean that 3 rated departments will either lose all their funding or have it considerablydecreased. However this is not a matter for consultation in the document.The main source of research funding of institutions is from the research councils andis highly selective. There is no need for SHEFC to compound this selectivity byrestricting funding to 4/5 rated departments. SHEFC research funding is not just areward it is also to build up the infrastructure to enable institutions to continue to bidfor research funding. Too much selectivity will reduce this capability.The RAE has a built-in element of irreversibility and self-reinforcement: a departmentthat fares badly in one assessment loses funds and status and will find it extremelydifficult to re-establish itself before the next assessment, with the consequence that itthen receives a further reduction in its research capacity and potential. The RAE alsoaffects the ability of departments to compete for research support from outsidesources, and so the trend towards concentration of funding is greatly strengthened. Asthe first SHEFC research consultation document pointed out, in 1999-2000, 87 percent of SHEFC research funds were allocated to just six higher education institutions.The association is also, of course, very concerned about the effects of researchselectivity and the RAE on the profession itself. There is a divisive impact of RAEselectivity on the university system with staff in departments rated 3b and even 4under pressure to leave their jobs, voluntarily or compulsorily, or to take teaching-only contracts, leading to an under-valuing of their contributions to other academicactivities.There should be a ‘seedcorn’ fund available to university researchers for starting upnew programmes. This should be aimed at counterbalancing to some extent theconcentration effect of research selectivity. The present RAE ratings are a crudemechanism for evaluating departments. A low departmental rating can stifle researchopportunities for all its members, even though some of them may have great potentialand exciting ideas. The proposed SHEFC Research Development Foundation Grantmay help in this respect.Both consultations propose moving funding for research students from the teachinggrant to the research grant. This may seem insignificant but if this funding is alsobased on the RAE outcome, it will further decrease funds to those same institutionswho are funded least in terms of research.

1 T Axon. Scottish higher education funding; Proceedings of the Scottish trade union research networkconference; 1999.2 Press release attached as an appendix.

Appendix

Academics warn of funding destablisation

The Association of University Teachers (Scotland) today called upon the ScottishHigher Education Funding Council (SHEFC) to reconsider the timing of its currentreviews of teaching and research funding, which threaten to destabilise the sectorahead of a major strategic review.

David Bleiman said:

“ In recent weeks there has been enormous concern from universities about the impacton institutional funding of the proposed changes in subject funding for teaching.There is also a danger, less widely understood, that even within a university which isperceived as an overall winner, there will be internal subject winners and subjectlosers, with major shifts of resources and associated restructuring and job loss.

“ Alongside the review of teaching funding, SHEFC is also running a review ofresearch funding. Here they have signalled that in future they may have to restrictresearch funding to only the highest rated departments (those rated at 4 and 5 in theUK wide Research Assessment Exercise). We oppose this further twist to a systemwhich is already highly selective, with 87% of SHEFC research funds going to just sixuniversities.

“ Our biggest concern is one of timing. Not only will SHEFC be changing the groundrules for funding teaching and research but this will happen at just the time when theresults of the UK Research Assessment Exercise bring good news to somedepartments and disaster to others. I think that the SHEFC view is that all of thesechanges may balance each other out. Unfortunately it is equally possible that thechanges will amplify each other, bringing a few universities to their knees. Even ifthe changes do balance out at the institutional level, the amount of internal adjustmentas funding for every department, for teaching and for research, changes substantially,is frightening- destabilisation is not too strong a word.

“ In November Wendy Alexander announced that there would be a major strategicreview of higher education. The launch of that review, which is not now expecteduntil May or June, would surely be prejudiced if all the key decisions aboutresources- who gets what for teaching and research- have already been taken bySHEFC. The Minister’s strategic review could pose major challenges to the Scottishuniversities and if we can develop strategies which maximise the contribution ofhigher education to Scotland, of course resource should follow these priorities. Butthe current SHEFC exercises could put so much change into the system so quicklythat we are all too busy firefighting restructuring and redundancy to lift our heads andconsider a higher education strategy for Scotland.

“ SHEFC initiated its reviews of teaching and research funding before the Ministerannounced a wider higher education review. The situation has changed and it wouldbe reasonable for SHEFC to reconsider the timing.

Comparision of funding methods Table 1Formula funding for Teaching: 2000-01

InstitutionMain

TeachingGrant

New proposed Teaching

GrantDifference Difference

£ £ £ %(1) (2) (3) (4) (5)

Aberdeen, University of 34,606,000 34,571,185 -35,259 -0.1%

Abertay Dundee, University of 12,850,000 13,480,239 630,435 4.9%

Dundee, University of 28,761,000 29,353,862 592,785 2.1%

Edinburgh College of Art 5,464,000 4,704,044 -760,444 -13.9%

Edinburgh, University of 63,831,000 64,097,155 266,151 0.4%

Glasgow Caledonian University 35,050,000 34,899,394 -150,462 -0.4%

Glasgow School of Art 6,018,000 5,123,541 -894,642 -14.9%

Glasgow, University of 66,559,000 69,903,883 3,344,695 5.0%

Heriot-Watt University 19,821,000 18,877,806 -943,689 -4.8%

Napier University 29,183,000 28,180,701 -1,001,809 -3.4%

Northern College of Education 5,825,000 5,769,380 -55,287 -0.9%

Paisley, University of 22,055,000 22,900,812 845,853 3.8%

Queen Margaret University College 9,215,000 9,041,462 -173,980 -1.9%

Robert Gordon University 23,362,000 21,827,390 -1,534,594 -6.6%

Royal Scottish Academy of Music and Drama 3,858,000 3,616,667 -241,085 -6.2%

St Andrews, University of 16,150,000 16,684,207 534,423 3.3%

Stirling, University of 16,697,000 16,962,399 265,791 1.6%

Strathclyde, University of 47,411,000 46,801,974 -609,127 -1.3%

Total 446,716,000 446,796,099 79,753 0.0%

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THE EDUCATIONAL INSTITUTE OF SCOTLAND

UNIVERSITY LECTURERS’ ASSOCIATION (EIS-ULA) EVIDENCE TO THE MEETINGOF THE ENTERPRISE AND LIFELONG LEARNING COMMITTEE, WEDNESDAY 21

MARCH 2001

“REVIEW SHEFC FUNDING POLICY FOR TEACHING AND RESEARCH IN HIGHEREDUCATION INSTITUTIONS”

The University Lecturers’ Association of the Educational Institute of Scotland represents lecturing staffin all but one of the “New” University sector institutions in Scotland and a considerable number in the“Old” University sector since the onset of merger of Teacher Training Institutions with Universities.

The EIS-ULA is very pleased to be invited to submit evidence to the Enterprise and Lifelong LearningCommittee on the implications of proposals contained in the SHEFC documents “Third StageConsultation on Funding of Teaching” and “Review of Research Funding and Policy: Second StageConsultation”. The EIS-ULA hope, having considered the concerns raised here as well as thosepresented in oral evidence, that the Committee will be minded to recommend a reconsideration of theproposals to the Funding Council.

In order to bring some coherence to the paper the sub-headings used will mirror those used by SHEFCin both consultation documents.

Section 1 - Review of Teaching Funding

Subject Prices

EIS-ULA recognise and support the need for a transparent and fair system of funding and in principlehave no difficulty agreeing that the different funding groups should be identified by cost as long as thecost of the revised subject groupings are set appropriately. EIS-ULA support Higher EducationInstitutions having greater flexibility to determine their own priorities and suggest removal of theunnecessary restrictions that apply to the movement of funded places between subject groups andlevels.

The EIS-ULA remains seriously concerned that the eventual reductions in the unit of resource fallsmostly in areas of provision currently provided by the post 1992 sector. The effects of the proposedchanges would be so drastic in some institutions and subject areas, with cuts of 14 or 15% in fundingthat they could seriously destabilise the sector. Proposals that would shift a large amount of resourcesfor teaching from post 1992 institutions to pre 1992 universities would in our view merely exacerbatethe already present inequalities within the higher education sector. EIS-ULA believes it is incumbentupon the Funding Council to ensure no detriment in funding to any institution if the proposals for arevised arrangement of funding are introduced. The EIS-ULA has long been concerned with theamount top-sliced from the block grant by SHEFC for add-ons and special initiatives and believes the

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guidance it has received from the Minister to reduce this proportion of resources would ensure a modestincrease in the total amount allocated as core funding for teaching.

The EIS-ULA is concerned that no unnecessary damage is caused to the reputation for high qualityacross the breadth of Scottish higher education and that the subject prices proposed have theconfidence of all Institutions and are supported by transparent, robust data which assist in understandingthe rationale for change. It would appear that the new subject groupings represent an additional layerof reporting, thus far from reducing the bureaucracy and cost, the revised method will be moreexpensive to administer than the present funding method.

The EIS-ULA believes these proposals will not adequately cover the actual costs associated withflexible delivery modes vital to the rural communities and that this might lead to a negative impact on theprovision of flexible, modular provision. It is also believed that the proposed change in pricing wouldbe potentially very damaging from the perspective of teacher education at a time when the ScottishExecutive is seeking to increase intakes significantly to meet nationally identified needs and priorities.The EIS-ULA believe there is no justification for including Initial Teacher Education in the subjectpricing group proposed; no account appears to have been taken that Initial Teacher Education isalready subject to stringent and costly national guidelines and is quality assured through systemsadditional to and more costly than those applied in other subject areas.

Volume Controls

EIS-ULA supports the concept of rebating the unit of funding to include all “fees only” students butsuggests that the proposed method and timing of implementation will introduce distortion across thesystem particularly in controlled areas unless it can be applied equitably within such areas. EIS-ULAsuggests the effect of this arbitrary change would be to introduce substantial inequity to the funding ofhigher education teaching in Scotland.

EIS-ULA is concerned that the proposals could be interpreted to suggest that those institutionsoperating in controlled areas currently with a high proportion of “fees only” students will not bepenalised and may even be rewarded. This would not be consistent with the Funding Council’sprevious position whereby institutions were subject to financial penalties if they were running with morethan 10% of students in the “fees only” category. Also, as medicine is a controlled subject area, noinstitution in Scotland should have any fees-only medical students. Accordingly, the fact that someinstitutions have over-recruited in medicine and SHEFC has failed to exercise the control available to it,leading to a disparity in funding per student between Scotland and England, is hardly compellingevidence for a large increase in the unit of resource for medicine, particularly when that increase is to befunded at the expense of other subject areas.

EIS-ULA suggests that a separate consultation initiative be undertaken by SHEFC focusing specificallyon different ways in which additional funded places might be allocated among Higher EducationInstitutions which also sets out the rationale for change.

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Prices for Different Types of Student

EIS-ULA support the proposal to provide additional support for “wider access students”. However,EIS-ULA would argue that a much wider definition of “social exclusion” must be adopted to includestudents who are excluded from HE by virtue of geography. Such students may choose to study byDistance Learning or other flexible means because they live and work in remote areas where they haveno access to higher education provision locally. This applies particularly to the rural communitiesthroughout the north of Scotland.

EIS-ULA believes that retention of wider access students is a continuing difficulty for all HigherEducation Institutions and therefore sees the incremental increase from 5% to 10% as the courseprogresses as a useful innovation which reflects the increase in resources often required to supportstudents in this category.

Students with Disabilities

EIS-ULA welcomes this proposal and believes a 10% supplement would appear reasonable forstudents with disabilities. However, EIS-ULA would wish to see the count of students with disabilitiesbe those reported in the HESA return as having a disability, and not restricted only to those who have adisability and who are in receipt of the Disabled Students’ Allowance. EIS-ULA believe that studentsunder-report disability and would suggest it is unnecessarily restrictive to limit the count of thosestudents with disabilities to those who have been assessed for and awarded the DSA.

Prices for Different Levels of Study

EIS-ULA believes that individual Higher Education Institutions are well placed to respond to thedemand from students and employers for different types of provision. The present restrictions provideno benefit to the sector and simply prevent Higher Education Institutions from adapting and respondingto changing patterns of demand. EIS-ULA is concerned that the specific proposal put forward torestrict the funding of postgraduate research students to departments achieving ratings of 4 or higher inthe 2001 RAE would seriously damage the research base in post 1992 institutions.

Prices by Mode of Learning

EIS-ULA supports the continued development of provision through distance learning, however, suchprovision is expensive. It will, therefore, be essential to create flexible courses that can be offered andaccessed in flexible ways by full-time professionals. EIS-ULA believes it is very important to maintainand extend part-time provision and recommends that an additional supplement of 10% be granted forsuch provision.

Measuring Wider Access and Disabled Students

EIS-ULA believes that the proposed postcode database is an inappropriate and limited measure ofwider access, which underestimates the problems of access in rural communities. EIS-ULA supports

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measures to encourage wider access from under-represented groups and strongly urge the Council togive equivalent support and recognition to courses that provide wider access to students in remote ruralcommunities who may not fall within current postal code identifier methodology. EIS-ULA would preferto see a methodology which is more clearly tied to measures of deprivation than to indicators ofparticipation, since one based on the latter might fail to take into account the success of a local institutionin recruiting students from non traditional backgrounds.

Section 2 - Research Policy and Funding

EIS-ULA is concerned that the proposals contained in this paper will severely set back research in post1992 Higher Education Institutions in Scotland and will have a potentially detrimental effect on the futureof research in Scotland and on the Scottish economy. EIS-ULA cannot accept the proposal to removefunding for any area graded beneath RAE 4 as this will have the effect of choking off many existingareas of developing research and will also act as a significant barrier to the development of new areas inthe future. The proposals will recreate the pre-1992 binary divide in Scotland, which will be to thedetriment of the overall experience of Higher Education for the 35% of students who study at modernuniversities in Scotland.


EIS-ULA do not support these proposals and believe them to be at variance to the stated position ofthe Higher Education Funding Council England. This in itself is worrying as so much else in theseproposals will align the two systems. The proposal to withdraw from 3-rated departments will have theeffect of recreating the pre-1992 binary funding divide where Polytechnics were ineligible to receiveresearch funding as well as ensuring the stifling of development of new research areas and of research ininstitutions which had only been in receipt of funding for nine years. EIS-ULA believes theconsequences of removing post 1992 institutions in Scotland from research funding is academically andsocially divisive. Collectively this part of the sector has performed a vital role in fostering social inclusionand this has been underpinned by their research role.

EIS-ULA has always been concerned at the overall inequality of funding between pre and post-1992institutions and is convinced that these proposals will mean that some academic staff will never be ableto become research active at the level implied by RAE-4 and will cease to teach in modern universities.Research at RAE-3 is defined as that of “a quality that equates to attainable levels of nationalexcellence in over two thirds of the research activity submitted, possibly showing evidence ofinternational excellence”. EIS-ULA is highly concerned that research groups at this standard thathave only been able to receive funding for some eight years will now be punished rather than rewardedfor their achievements.

EIS-ULA would consider it deeply damaging for individual institutions and the Scottish sector as awhole if post 1992 institutions in Scotland were to be disadvantaged in comparison with similarinstitutions in England. EIS-ULA believes it is incumbent upon SHEFC to maintain funding for researchfor 3-rated departments, to enable the Scottish higher education sector to compete on even terms with

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the English sector for project-based funding from UK Research Councils and other sponsors ofresearch.


EIS-ULA is concerned that with the removal of core funding it will be harder to produce bids which willsatisfy the requirements or sustain them after the period of initiative funding. Also, while thecollaborative nature of the existing Research Development Grant has been a strength, the overall effectof the revised system will be to consign post 1992 institutions to the role of junior partner, or preventthem from bidding at all.


The five million pounds proposed for the Foundation Grant seems something of a ‘sop’ compared to the£22.5 million currently distributed to departments graded at 3a and 3b. EIS-ULA believe it would befar better to use the available funds as part of a pool of funding which will ensure that 3-rateddepartment continue to be funded through the Main Quality Research Grant.

Funding for Research Students

EIS-ULA is seriously concerned that these proposals will have the effect of removing funding forresearch students from most post 1992 Higher Education Institutions in Scotland and would not supportsuch proposals. Again funding would be removed even from departments that are showing substantialevidence of national excellence and some of international excellence. The effects would again be to stifleresearch development in the post 1992 institutions.

Marian HealyFurther & Higher Education Officer

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EIS-ULAMarch 2001