Welcome slide

Future third stream policy

Manchester, May 2008

Alice Frost,

Head of Business and Community Policy

a.frost@hefce.ac.uk

The third stream journey

• Where did we say we were going?• Where are we now?• How far have we gone in the journey toward

our destination?• The spatial dimension

Where did we say we were going?

HEROBC 1999

• 3rd stream of funding, complementing T and R

• Responding to business and wider community

• Developing culture, capability etc

• Each HEI develop.. appropriate to its circumstances

• Core belief..all HEIs should be engaged

• Achieving wealth creation [not income generation]

Evolution of third stream funding

CULTURECAPABILITY

CAPACITYOUTPUT

OUTCOMEIMPACT

HEIs - and their activities - will be at different stages on this trajectory…...

Refresh, refine and review

Sustainable Strategy

Time of transition

Where we have come from… Where we are going to…

STEM focus All disciplines

Simple ‘transmission’ model of knowledge Dynamic exchange model

Wealth creation Innovation, productivity, quality of life, cultural enrichment, civic dev,community regeneration etc.

Large, multi-national businesses Spectrum from global to local/regional and all users

• ‘If universities are to have a key social and economic impact, then the required values must be internalized at the institutional level’ (HEPI report 2005, Hatakenaka)

‘For research universities truly concerned about their economic impact, as exemplified by universities such as Stanford or MIT, the culture within the university does not consider it good enough for research results to be academically valued; they care that their research results have a real impact on society’ (HEPI report 2005 Hatakenaka (Community engagement - San

Francisco State University)

Finland: University Act (2004 amendment)

(1) The mission of the university shall be to promote free research and scientific and artistic education, to provide higher education based on research, and to educate students to serve their country and humanity. In carrying out their mission, the universities shall interact with the surrounding society and promote the societal impact of research findings and artistic activities. (Amendment 715/2004)”

Where are we

now?

Chronological Funding View

99 0200 01 03 04 05 06 07

HEROBC

HEROBC

Transitional

HEIF 1

HEIF 2

HEACF

BUSINESS FELLOWS

HEACF

KTCF

08 09

‘HEIF 3’

3 rd s

trea

m f

orm

ula

fu

nd

ing

‘This [Higher Education Innovation Fund (HEIF)] ..now a permanent part of the University funding landscape, will increase to £150M per year by 2010/11.’

» Innovation Nation, March 2008

HEIF 4 – Funding available

2008-09 £112 million*

2009-10 £134 million

2010-11 £150 million

(HEIF 3 2007-08 £111 million)

* Plus £8 million for existing Centres for Knowledge Exchange

HEIF 4 (2008-2011): method overview

• 100% formula funding• Based on HEIF 3 formula• Broad distribution across the sector • Incentive for SME engagement• All HEIs receive allocation £100k - £1.9M pa• Released against an institutional strategy

HEIF 4 – Formula

Formula:• First component (40%)

– Capacity building and potential– Academic staff numbers (FTE)

• Second component (60%)– Performance– Value of B&C services– (SME income double weighted)

• Min allocation (£100k; transition funding (0.8 x HF3); relative and absolute caps (2.5 x HF3; £1.9M)

» Purpose of formula funding

HEIF 4 – Purpose of funds

• Support a broad range of KT and enterprise

• With all - private, public and third – sectors

• Global, national, regional, local..

• Resulting in economic and social benefit

• Engagement to develop core T and R

HEIF 4 strategy

• HEIF 4 funds released against a strategy• HEI’s own statement of ‘third stream’ strategy• Use of HEIF funds within strategy• Specific contribution of HEIF• Indicative HEIF expenditure• Management – KPTs, risks etc

Timetable

Oct 07 Sainsbury review, Science Budget

Nov 07 Final formula; indicative allocations

Jan 08 Circular request institutional strategies to release funds

March 08 Final allocations (HEBCI/HESA data)

14 April Strategies submitted to HEFCE

Mid-July Final assessment complete

August Funding begins

Selected third stream indicators

2000-01

2001-02

2002-03

2003-04

2005-06

Number of disclosures 2,159 2,478 2,710 3,029 3,268

Consultancy income (£M) 117 136 181 221 236

Collaborative research income (£M) 470 521 515 566 606

Required contracting system for all staff-business consultancy (% of UK HEIs) 60% 65% 66% 68% 74%

An enquiry point for SMEs (% of UK HEIs) 83% 85% 89% 90% 92%

Regeneration income (£M) 129 134 150 216 208

Facilities and equipment related services income (£M) 25 56 72 84 89

HEIs providing short bespoke courses on companies’ premises (% of UK HEIs) 62% 67% 78% 80% 84%

HEIs providing distance learning for business (% of UK HEIs) 52% 52% 66% 66% 70%

HEBCI Survey results 06-07

How far have we gone in the journey?

The evidence

Outputs from HEIF 4 assessment (1)

• Confirmation of funding• Feedback to all HEIs• Commended strategies• Innovative flagship projects

• Potential failure

Outputs from assessment (2)

• Overview report - July:– Progress on strategy and embedding– What HEIF is spent on and its contribution in mix– Methods of managing risks, KPIs etc– Sharing views on risks and lessons learnt –

celebrating excellence and innovation

• Potential thematic networks, good practice opportunities etc

Evaluation

“to evaluate what has been achieved by HEFCE/OSI 3rd stream funding to achieve culture change and embed capacity toward optimising the direct and indirect economic impact of HE [assumed baseline 1999]"

Focus is on HEROBAC, HEIF (all rounds), UC/SEC

Two key aspects: internal: culture change within an institution; external impact it has on organisations HEI works with (likely to be more of former than latter, but should see latter in former)

Conducted by: Consortium of PACEC and Centre for Business Research (Cambridge University)

Module 1: A top down ‘macro’ analysis of existing survey-based data (all institutions)Module 2: Case study research of individual HE institutions (~ 30 institutions)

Aim to comment on vfm of third stream investment to date

Timetable: started September 2007; final report June; publish September 2008

Emerging findings (evaluation)?

• Impact appears additional - and substantial• Increased ability to innovate; access to new funding• Strengthened links between T, R and 3rd stream• Dynamic increasing returns per £ - ‘engagement

multiplier’

• Barriers – constraints of capacity; patchy academic embedding; perceived demand problems

Emerging findings (strategies)?

• Very high standards• Thoughtful/high level engagement• Authentic – a university’s or college’s own

third stream journey• More strategic coherence – and with T and R• Inter-play of innovation and enterprise• Multiplier effect

The future?

• In the hands of our universities and colleges?

Spatial dimension

• “A university as an institution constitutes a place which needs to be situated within a wider space. Universities, as places, are constituted as a result of the operation of these contesting spatial forces acting upon them.’

• Increasingly HE shaped by ‘blurring the distinction between the different geographical scales’

(Fumi Kitagawa, Hitsotsuhasha University Japan, Entrepreneurship, HE Management and Policy, OECD 2005)

New University Challenge(Innovation Nation March 2008)

• Widen participation and unlock talent• Contribute to social cohesion• Help drive economic regeneration• Create highly skilled workforce for local

business community• Engage with business to boost innovation

New Partnerships for Innovation (Innovation Nation March 2008)

• Bring together public, private and third• Develop innovative solutions to local and

regional challenges• Build links between public finance, innovation

investments and private finance• LAs, business, RDAs and HE and FE

Thank you

Welcome slide