After HEFCE's first annual meeting Brian Fender talked to Tony Tysome about planning a funding system responsive to society's needs.

Sir Ron Dearing has until summer 1997 to chart a future course for higher education. But decisions made now by Brian Fender, chief executive of the ³ÉÈËVRÊÓƵ Funding Council for England, will undoubtedly influence him.

HEFCE's ability to take soundings from institutions on their aims and concerns puts it in a powerful position to at least give Sir Ron's inquiry a steer, even if it cannot determine the final outcome.

Professor Fender is not only in the process of making vital decisions on the funding of teaching and research, but also has to prepare a well-argued case for an adequate level of funding in the next public expenditure round.

³ÉÈËVRÊÓƵ

Echoing Michael Bichard, permanent secretary at the Department of Education and Employment, who gave the after-dinner speech at HEFCE's annual conference last month, Professor Fender comments: "It would be foolish to think that the public spending round this time will not be difficult. But the arguments for HE are very powerful."

Perhaps the strongest of those arguments is a growing "investment gap" in higher education. It is increasingly difficult to maintain and improve buildings and equipment.The funding council argues that efficiency gains should be pegged at no more than 1.5 per cent to protect quality, and that the total pot of money available should allow for more investment. It is "unhelpful" to see this as arguing for no more cuts, Professor Fender insists.

³ÉÈËVRÊÓƵ

"The result does not have to amount to zero cuts. What I am saying is that you not only have to look at the level of recurrent grant necessary to maintain provision, but also at institutions' ability to invest out of that," he said. Whether the Treasury sees it that way, he admits, may be another question.

Undaunted by the general financial gloom, Professor Fender is planning a funding system intended to be more responsive to the needs of society and the direction being taken by institutions in modernising higher education.

This includes setting up a peer review panel to make judgements on bids from institutions for extra student numbers. The panel would consider how aspects of institutions' mission statements are helping to meet various regional and national needs. It would be up to universities and colleges to present a case for more numbers by pinpointing particular merits, such as filling geographical gaps in provision, offering courses in subject areas thought to be of extra value for economic or social reasons, or promoting access for non-traditional students.

Professor Fender explained: "It would mean institutions keeping a record of factors they want to have taken into account. They would say we think we should have more student numbers because there is a particular need we can fulfil. But it would require a peer review group to make judgements on whether what is being offered is beneficial to Britain as a whole."

³ÉÈËVRÊÓƵ

Several quality indicators could also be built into the system, he added. Some university and college heads were unnerved by suggestions from Professor Fender that a link between quality assessments and funding might now be possible.

"I am not supposing there would be a direct link between an assessment score in a particular subject and the money which went to support teaching in that subject. I am talking about a variety of quality indicators providing a basis for the allocation of students to an institution. Quality assessment could be just one of those factors," he said.

The plans are part of a move to build a funding regime that reflects growing diversity. But the system must also help iron out "unjustified" variations in funding levels for similar provision.

Professor Fender's vision for the future is not all about change. He expects an even level of quality assessment to be maintained across the sector, and he has a "hunch" that this Research Assessment Exercise will not be the last. But he does hope for a significant shift in the way higher education is perceived.

³ÉÈËVRÊÓƵ

"I would hope we will not only have a better funding regime, but that the public will be better informed about higher education."