Short and longer-term measures to maintain stability in ÖйúAƬ have been introduced into the various elements which make up the 1996/97 funding allocations.

As a result, no institution will suffer a cash reduction on its formula allocations of more than 4.5 per cent compared with the equivalent funding in 1995/96.

The only exceptions are the School of Pharmacy and UMIST, which have slightly larger reductions because of rules governing safety-net funding.

The ÖйúAƬ Funding Council for England has reduced the units of funding for teaching and the total funds for research by 2.75 per cent in real terms.

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Teaching A total of Pounds 2,224 million has been allocated for teaching, of which Pounds 2,200 million is core funding, reflecting the Government's policy of consolidation in the sector and the need for stability. Core funding is subject to an average real terms cut of 2.75 per cent, but reductions will vary from 2 to 4 per cent between different areas of teaching activity, depending on how cheaply or expensively courses are run. This determines an institution's average unit of council funding in each area.

An additional Pounds 24 million has been provided as a non-consolidated bonus to core funding for teaching, allotted pro rata.

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Research Of a total Pounds 638 million earmarked for research, Pounds 602 million will be distributed according to quality criteria (QR). The remainder is divided between generic research (Pounds 20 million) and Pounds 16 million to encourage research development.

This year the council completes a three-year programme of narrowing the difference between the units of funding for research to within a band of 15 per cent around the average in each of the three QR subject families, medicine, science and technology, and non-science.

Another adjustment to research funding comes with revised weightings for the head count of postgraduate students affecting the volume of QR.

Recurrent and capital funding Last year's public expenditure announcement stated that funds available to the council for 1996/97 would be provided as a single undifferentiated grant. However, the council has still made separate calculations for the distribution of capital funding, which totals Pounds 173 million. To cushion the blow of big cuts set by the Budget, the council has set a 35 per cent maximum on reductions in capital, balanced by a 19.5 per cent minimum cut.

Total recurrent funding amounts to Pounds 3,146 million. Added to capital, the result is a 2.3 per cent cut compared with last year in cash terms, or a 5 per cent loss in real terms.

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Safety net Changes this year in the way transitional funds are allocated means that Pounds 2 million less has been distributed through the safety net. The council has decided to set the transitional funding threshold so that no institution's 1996/97 recurrent and capital funding combined is more than 4.5 per cent lower in cash terms than in 1995/96. Last year, institutions which fell below the 0.5 per cent cash increase line qualified for the safety net. Institutions which received transitional funding in 1995/96 will receive 50 per cent of that value in 1996/97, but these amounts will be included in non-formula funding allocations. Last year's de minimis clause that amounts below Pounds 20,000 are not paid still applies. This is why the School of Pharmacy and UMIST have not qualified for safety net funding, even though their cuts take them over the 4.5 per cent cash reduction threshold.

Non-formula funding The funding council has continued with its policy of reducing this element as much as possible, down this year to Pounds 0 million from Pounds 287 million. So far just over Pounds 108 million has been allocated, most of it in London weighting, which accounts for institutions in the capital taking most of this money. This element is also distributed to cover the cost of inherited liabilities of institutions previously under local authority control and provision such as libraries, museums and galleries.

Maximum aggregate student numbers This number, allocated to each institution, is the maximum number of home or EU award-holding students they are contracted to deliver in 1996/97. Institutions are being allowed to recruit up to 2 per cent above their MASNs without penalty for 1996/97 - an 0.5 percentage points increase on 1995/96. This is because most institutions have managed to keep within their contracted student number targets. Some institutions have had MASNs reduced as a result of failing to meet their targets. Any recruitment more than 2 per cent above the MASN level will be penalised so that the institution receives no extra income, and may suffer a cut in the 1997/98 allocations.

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Teacher training The Teacher Training Agency responsible for the teacher training allocations is continuing with its exercise of converging the cost of courses in schools and ÖйúAƬ institutions, applying efficiency savings ranging from 0 to 4 per cent to achieve an average 2 per cent built into its funds for 1996/97.

The agency is in the process of considering the impact of the HEFCE allocations on institutions before deciding whether to apply "buffer" funds to cushion institutions suffering big cuts.

Some institutions appear to have gained from a transfer of about Pounds 2 million from the TTA to HEFCE, as a result of teacher training courses being restructured from four-year BEds to three-year degrees plus one-year PGCE programmes. But they will have suffered an equivalent reduction in their TTA grant.

Institutions which have over-recruited on their primary teacher training intake targets will be penalised with a 2 per cent cut in grant, rather than 5 per cent proposed in December last year.

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