Hugh Tollyfield HEFCE

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• Hugh Tollyfield HEFCE
• Special Adviser Employer Engagement

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The challenge I set last year

• How do we create an economy of explicit
  business driven demand for high skills from
  employers which is met by responsive, flexible,
  results focused delivery from highly adaptive
  suppliers?

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Since then weve had

• Leitch Review World class ambition
• The Review has concluded that the UK must
  commit itself to a world class skills base in
  order to secure prosperity and fairness in the
  new global economy
• exceeding 40 of the working population
  qualified to Level 4 and above by 2020
• Encompass the whole working age population
• Shared responsibility for funding employers
  individuals and the Government
• Focus on economically valuable skills
• Demand-led rather than centrally planned
• Adaptive and responsive to market needs

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And

• Sainsbury Review - The Race to the Top
• In todays global economy, investment in
  science and innovation is not an intellectual
  luxury for a developed, but an economic and
  social necessity, and a key part of any strategy
  for economic success.
• Although research is of great importance to any
  innovation ecosystem, little is to be gained from
  research in universities, research institutes and
  further education colleges if there are not
  strong links between the researchers and
  industry and that is why knowledge transfer, and
  incentives for it are so important.

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And

• John Denham speech to Universities UK
• My sense is that in the past engagement between
  business, government and universities has been
  disjointed. There has been one set of questions
  about knowledge transfer and innovation, and
  another about workforce skills. I hope we can
  bring this together.

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We arent starting from scratch

• UK HE is worth 45 billion to the economy on a
  public investment of 15 billion.
• Income in 2005-06 from
• Collaborative research - 440m
• Contract research - 555m
• Consultancy - 200m
• CPD - 335m
• And mainstream HE is already a major supplier of
  an economically valuable workforce.

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But we are tackling a new market
Around 12 million people in work, most of whom
wont progress to HE unless we innovate.
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HEFCE HE transforming workforce development
programme
Action research, to test employer market for
higher skills and HE response to supplying it,
together with building new capacity and
capability in the HE sector

• HE provider projects
• High Level Skills Pathfinders
• Sector skills development projects
• All supported through more flexible funding
• Foundation Degree growth
• Strategy and funding development for next SR
• Communications to drive change amongst employers
  and HE providers

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Co-funding

• In return for innovative, flexible, customised
  provision which responds to business and
  workforce needs - we ask employers to pay towards
  the cost
• Not the full cost because HEFCE will contribute
  half of what it would normally pay for a
  mainstream funded learner
• Therefore an employer only pays the difference
  between the amount of HEFCE funding for a
  co-funded learner and an HE providers price for
  a learner on that provision
• An HE provider delivering employer co-funded
  provision should develop a sustainable cost/price
  model which will at least cover its costs through
  the combination of employer and HEFCE funding
  contributions.

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How might employers pay?

• Contribution towards capital and recurrent costs
  of provision (e.g. shared funding of joint
  venture operation)
• A variant would be cost sharing through an agreed
  division of teaching, supervision, assessment and
  premises between provider and employer
• Pay agreed price per employee or per course
• Contributions/payments in cash or in kind or a
  combination of both
• Other possibilities not listed here
• The over-riding principle will one of
  sustainability. HE providers will be expected to
  develop sustainable cost/price models for
  employer focused provision which do not require
  the continued input of development funding in
  order to survive.

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Our current thinking for funding employer
co-funded projects

• Employer engagement capacity funding
• Ring-fenced within SDF
• Similar assessment and approval processes to SDF
• Criteria to reflect importance of capacity
  building alongside innovation

• To
• Facilitate creation capacity of capacity
• Support new operational infrastructure and
  posts
• Support new teaching and learning
  infrastructure and posts
• Reduce provider level risks of intervening in a
  new market
• Support Institutional Transformation
• Support innovation in curriculum and pedagogy

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Our current thinking for funding employer
co-funded projects

• Employer provision funding
• Fixed component
• Agreed at same time as capacity building funding
• Guaranteed funding for a core of provision
• Time-limited support for market-making employer
  discounts i.e. initial rate of assumed employer
  co-funding could be between 25-50, but must
  move to 50 before end of project
• Variable component
• Easy access to funds to cope with peaks of
  employer demand
• Assumed rate of employer contribution fixed at
  50
• Neither fixed nor variable components can be
  rolled into current mainstream funding, but
  successful projects would roll into new long-term
  employer engagement funding arrangements

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And for the long-term

• We cant continue with a project funding
  approach ad-infinitum. We are looking for
  employer engagement to be part of core mission,
  supported through a new mainstreamed approach to
  funding.
• How do you think this could be achieved?