Funding regimes23

2.41 Higher education institutions and further education colleges receive funds from a range of sources. The main single source for all institutions is the Exchequer, through a number of bodies, chiefly emanating directly from, or via, The Scottish Office. In addition, all institutions are encouraged, and seek, to maximise their funding from external sources. Table 2.1 shows the income sources of Scottish higher education institutions in 1995-96.

2.42 Since its establishment in 1992, the Scottish Higher Education Funding Council (SHEFC), as a statutory body, has provided financial support, on behalf of the government, for teaching, research and related activities in 21 of the 23 higher education institutions. The Scottish Office Education and Industry Department (SOEID) provides support for all provision, including higher education, on offer in the 43, of the 46, further education colleges and the Scottish Office also directly funds the Scottish Agricultural College. The Open University in Scotland is part of the UK Open University and is funded via the Higher Education Funding Council for England (HEFCE).

2.43 As Table 2.1 shows, SHEFC distributes approximately 550 million on behalf of government per annum for the purposes of teaching, research and related activities in the institutions it funds. Approximately 350 million is allocated to teaching, 100 million to research and the remainder to capital grants and special factor funding in pursuit of particular aims and objectives.

Grants for teaching from SHEFC to the institutions it funds are shown in Table 2.2. In distributing recurrent grants for teaching, SHEFC aims to encourage and enhance existing diversity and flexibility and also to reinforce the distinctive strengths of higher education institutions.24 Institutions achieving an 'excellent' rating in 1996/97, as a result of the SHEFC Teaching Quality Assessment (TQA) process will receive, as a reward, an additional five per cent more funded student places in the relevant subject area.

Working within the Government's continuing policy of consolidation of student numbers, the Scottish Higher Education Funding Council (SHEFC) has been concerned to ensure that opportunities to undertake higher education should not diminish for students from non-traditional backgrounds including students and prospective students with disabilities and those from ethnic minorities and social classes III, IV and V. In pursuit of this, SHEFC has funded the Support for Students with Disabilities initiative and the Women into Science Engineering and Technology initiative. Related to participation, and in order to meet objectives for ensuring flexibility in programme arrangements, SHEFC has also funded: a Flexibility in Teaching and Learning Scheme, designed to promote responsiveness, diversity and different modes of teaching delivery; the Extended Teaching Year programme, which has piloted the use of the weekend and the summer for credit-bearing teaching; and a range of initiatives aimed at the promotion of the use of communications and information technology in learning and teaching.

Research, whether basic, strategic or applied, is an essential component of higher education in Scotland. It contributes to the advancement of knowledge, informs and enhances teaching, and also makes a significant contribution to the wealth, wellbeing and economic competitiveness of the country.

2.47 The Scottish Higher Education Funding Council (SHEFC) makes research grants to institutions to support a basic research capability in Scottish higher education institutions. These grants enable institutions to maintain a research infrastructure to which other funders can add in pursuit of their own priorities. Table 2.3 shows the distribution of SHEFC research funding in 1997-98. This funding is allocated selectively on the basis of the quality of research in institutions, as determined by findings of the UK-wide Research Assessment Exercise (RAE). It shows that 63 per cent of SHEFC research funding is concentrated in three higher education institutions.

2.48 In the 1996 Research Assessment Exercise (RAE), Scottish higher education institutions offered submissions in 68 of the 69 subject areas. The number of Scottish institutions submitting within each of these areas varied from one in Mineral and Mining Engineering and one in Linguistics to 12 in Computer Science and in Business and Management Studies. The performance of Scottish institutions in the RAE is shown at Table 2.4.

2.49 This table shows that, in total, over 150 Scottish departments received research ratings of 4, 5 or 5*. This compares favourably with the RAE outcomes in 1992 where only 102 Scottish departments received equivalent ratings.25 It also compares favourably in terms of overall improvement as set against England (781 in 1992 and 974 in 1996). Departments achieving 5 or 5* ratings included a broad range of subjects from the sciences, arts, humanities and medical sciences.

Note: The outcomes for departments with ratings of 5*, 5 and 4 are summated as all of the ratings include considerable areas of international research excellence. The scores for departments receiving 3A and 3B have been summated as have those departments rated 1 and 2 since the former will receive funding next year whereas the latter will not.

(+) % active research staff in brackets.

2.50. Table 2.5 shows outcomes from SHEFC's 1997 Research Development Grant initiative. This new competitive grant scheme, funded within the 100 million distributed by SHEFC for research, is designed to help institutions improve the fit between their research capability and the long-term needs of society and the economy as indicated by such processes as Technology Foresight.

2.51 There are strong research links between Scottish higher education institutions and industry. Table 2.6 indicates the magnitude of these links in terms of income from research grants and contracts in 1995-96. The table shows that higher education institutions attracted over 21 million from UK industry, commerce and public corporations in this year. Whilst a sizeable income, this represents slightly less than eight per cent of all research income. Notably, almost 90 per cent of funding from these sources was shared between seven institutions, one of which was the Scottish Agricultural College. We believe that this link can, in future, be made stronger.

2.52 The Enterprise network and other organisations have promoted links between employers and higher education which have become firmly embedded. These links have helped to broaden the higher education research funding base in recent years. For example, in 1990-91 approximately 65 per cent of higher education funding came from the Funding Council and Research Councils. By 1994-95 this figure had fallen to 58 per cent. It is anticipated that while total research income in Scotland is expected to be about 300 million in 1996-97, only 33 percent will come from SHEFC.26

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