England’s Office for Students has warned that it may have to cut funding for universities when it takes on responsibility for supporting new entrants to the sector.

issued by the new regulator says that it expects more providers to be eligible for public funding when it takes on its full powers next August. Any institution that joins the approved (fee cap) registration category will be entitled to apply for teaching grants and other support.

The OfS says that it is planning a “fundamental review” of its funding arrangements, alongside the Augar review of student finance in England, but that, in the meantime, in 2019-20 it will aim “to treat all eligible higher education providers consistently, including those that we have not been empowered to fund for 2018-19”.

“We will continue to apply existing funding methods until our review is complete, but will decide each year the balance of funding between different elements of grant to reflect the funding available to us and our priorities,” the OfS says. “This is likely to include changes to grant rates, but could also include changes to eligibility criteria for, or even discontinuation of, particular funding allocations, if this enables us to best prioritise within a constrained total budget.”

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The OfS guidance reveals that it is preparing to fund providers that do “not have any” students on recognised higher education courses at the moment. To determine their allocation, each of these institutions will be asked to provide “a forecast of the student numbers it expects to recruit for 2019-20”.

A considered by the OfS’ board in March sheds more light on the proposals, revealing that the OfS has initiated reviews of the National Collaborative Outreach Programme, which funds widening participation activities, and the student premium, which provides a higher level of funding to providers that enrol larger numbers of students who are considered to be at greater risk of dropping out.

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The paper says that the reviews will aim to ensure that support “is aligned with the OfS strategy and appropriate to the more diverse set of providers we expect to become eligible for funding” in 2019-20, and that the organisation’s “approach to regulatory pressure through access and participation plans and transparency data, and our support through funding, are mutually supportive”.

“We expect that we will have to fund additional providers from 2019-20 (those not currently funded but that will be eligible approved fee cap providers on the register) which will require us to carefully consider our funding priorities if no additional funding is provided by [the Department for Education],” the paper says.

Although the majority of English providers’ teaching income now comes from tuition fees, grant funding still makes up a significant proportion of revenue at some institutions.

However, it may be some time before funding arrangements are finalised. The OfS guidance says that its grants will need to reflect the outcomes of the Augar review, but these are not expected to be available until early 2019.

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chris.havergal@timeshighereducation.com