03 July 2015 
Matt Sisson, Projects and Membership Manager
A new report for HEFCE by Frontier Economics has shed light on the importance to the sector of HEFCE funding for capital expenditure. A Review of HEFCE Capital Expenditure finds a clear correlation between the level of capital expenditure and an institution’s ability to attract undergraduates, researchers, and research funding.
The report also found “clear evidence of the ongoing need for further capital investment in the sector, both by government and the sector itself”, after judging that current levels and sources of investment, reliant on the ability of institutions to return sizeable surpluses, are unsustainable. The report outlines that current levels of expenditure in the UK are barely half of the OECD average. Furthermore, “the huge variation in the level of capital expenditure across the sector means that not only does it appear that English HEIs spend relatively little, but that the average is driven by a handful of HEIs that spend large amounts, with the majority of other institutions lagging far behind”.
The report concludes by calling for a continuation of HEFCE funding for capital expenditure, using both competitive and non-competitive allocation methods. It suggests there are “clear risks of moving fully to a competitive funding mechanism. On balance, we recommend that an approach that combines the formulaic and competitive mechanisms is continued”.
