'Value for money' review of £1.3bn university funding

Universities in England are to face a "value for money" review of how £1.3bn per year of funding might give more support to "priority" subjects.

Higher education watchdog the Office for Students (OFS) is understood to be launching the review in the spring.

But it will not consider tuition fees - with the government set to publish a separate response to calls to cut fees.

Universities UK warns it will matter "how much" funding is left after the review, as well as how it is allocated.

The Conservative manifesto has promised to tackle what it calls "low-quality courses" in university - and the review will examine how funding can be targeted for priority subjects.

While most university funding is delivered through tuition fees, the government still provides a significant direct stream of grants.

This includes subsidies for subjects that are more expensive to teach, such as medicine, science and technology.

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There is also money to improve access to higher education for disadvantaged youngsters.

At present the funding is widely distributed, to more than 300 higher education providers.

But the future allocation and focus of the money is to be examined by the OFS review.

The Russell Group, representing some of the UK's major research universities, says the annual grants represent 13% of funding for undergraduate places.

The university group has raised concerns about these grants being cut, arguing that funding for many courses is already stretched.

A separate consultation has already been launched on £70m reductions to next year's teaching grant.

But the OFS review has been backed by Education Secretary Gavin Williamson.

"I am strongly in support of this move to evaluate value for money and to consider the best way to target grant funding to the higher education sector in future," said Mr Williamson, in a letter to the OFS earlier this month.

The education secretary has told the OFS he wants to prioritise support for the government's industrial strategy, which aims to invest in "skills, industries and infrastructure".

There will also be a push for more effective ways to spend money allocated for recruiting disadvantaged students, and support for specialist institutions.

But Jo Grady, leader of the University and College Union, criticised how value for money was based on an "obsession with flimsy metrics" around graduate earnings.

"What can future employment or earnings potential really tell us about teaching quality?" she said.

But what remains unknown is how the OFS review will combine with the government's promised response to Philip Augar's review, which recommended reducing tuition fees from £9,250 to £7,500 per year.

The review, commissioned by the former prime minister, Theresa May, also called for further education and skills to have a fairer share of funding.

A spokeswoman for Universities UK warned that any changes to the teaching grant or fees could leave a "funding gap".

"The fundamental review will cover 'how' teaching funding will be allocated - what will also matter is 'how much' teaching funding will there be, particularly if the government is minded to make any changes to fees," said the spokeswoman.