Higher Education Funding Council England (HEFCE)
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Burden of providing costing information to be reduced

A review of TRAC (the activity-costing method used by UK universities and colleges) has found strong support for the method across the sector, but suggests some important improvements to streamline the process and save money.

HEFCE has agreed with Research Councils UK a change to dispensation compliance requirements. From 2013-14 the threshold at which higher education institutions (HEIs) will be eligible to claim dispensation from the need to comply with the full TRAC requirements will increase from £0.5 million to £3 million. This significant change will allow up to 60 institutions across the UK to benefit from reduced compliance requirements.

The Transparent Approach to Costing (TRAC) is an activity-costing methodology which has been used by UK HEIs since 2002. The purpose of the review, which was carried out by the TRAC Review Group, was to provide greater transparency for students and taxpayers, and reduce the administrative burden to universities of providing the information.

HEFCE welcomes the Review Group’s report and endorses its recommendations. We have asked the TRAC Development Group to lead a programme of improvements to better meet the information needs of HEIs, and to publish new TRAC guidance to make it easier and more efficient to complete TRAC returns.

TRAC will be streamlined in a number of ways:

  • the dispensation threshold for HEIs with lower levels of research will increase. This will mean that around 50 HEIs in England (rather than the current 28) will be eligible to be released from over half of the TRAC requirements (for example, in relation to time allocation methods and choices of cost drivers). HEIs eligible for and claiming this dispensation will thus be released from requirements for calculations of indirect costs and estates rates for research council projects, and will instead use a set rate based on sector data
  • improvements will be made to the time allocation requirements, including reinforcing the message that the existing methods are flexible
  • requirements for reporting on research facilities will be simplified
  • requirements for reporting on laboratory technicians will be simplified.

The TRAC Review Group recommended that HEFCE should reiterate its commitment not to publish individual HEIs’ TRAC data and to publish only data aggregated at sector and peer-group level. The sector strongly supported this proposal.

HEFCE does not plan to combine annual TRAC and TRAC for teaching (TRAC(T)) reporting in a single return at this stage, but will explore options for combining annual TRAC reporting with the Annual Accountability returns.

There was no evidence of demand for detailed information on higher education providers’ costs from students or those representing student interests, including the Quality Assurance Agency’s Higher Education Student Advisory Board and the National Union of Students. There were strong arguments that the data were not helpful for students and that there were other, better sources of information.

HEFCE is committed to ensuring that the information needs of students are met in a way that is clear, helpful and user-friendly. We have invited HEIs, the National Union of Students and sector bodies such as the British Universities' Finance Directors Group and the Higher Education Statistics Agency to work with HEFCE’s Financial Sustainability Strategy Group to secure better use of financial and non-financial data about the higher education sector and HEIs, and to develop good practice in presenting and publishing information for students and taxpayers.

Steve Egan, HEFCE Deputy Chief Executive, said:

‘We welcome the outcome of the review and the constructive and positive engagement from universities and colleges. The proposals for future development of TRAC will continue to provide robust information for universities and colleges while reducing burden and recognising the importance of information for students.’

Professor Rick Rylance, Chair of Research Councils UK, said:

‘We are pleased to have worked with HEFCE and the higher education sector on the review of TRAC. In driving efficiency, the streamlining of TRAC underpins our commitment to working with HEIs to design processes that do not present a significant burden but are efficient, effective and useful.’

Dame Professor Julia Goodfellow, Chair of HEFCE’s Financial Sustainability Strategy Group and member of the TRAC Review Group, said:

‘The review of TRAC has given us the opportunity to consider whether costing information may be useful to students. We did not find any strong demand for detailed cost information. The HE sector will keep this under review.’

Professor Stuart Palmer, Chair of TRAC Development Group and member of the TRAC Review Group, said:

‘We look forward to improving and streamlining TRAC, and to developing and simplifying the TRAC guidance to reflect the new requirements.’


  1. 'Review of TRAC: Outcomes of consultation and report to the HEFCE Board from the TRAC Review Group' (HEFCE 2013/09) was published on the HEFCE web-site today.
  2. The Government’s White Paper (June 2011) invited HEFCE to consult the higher education sector on ‘radically streamlining the reporting requirements of TRAC’.
  3. HEFCE established the TRAC Review Group, chaired by an independent HEFCE Board Member, to oversee the review.
  4. TRAC is an activity-based costing system adapted to an academic culture in a way that also meets the needs of the main public funders of higher education. All HEFCE‑funded HEIs are required to implement TRAC and to submit both an Annual TRAC return and a TRAC(T) return each year under the terms of the financial memorandum between HEFCE and institutions. Institutions with low levels of publicly funded research are eligible to claim dispensation from the need to comply with the full TRAC requirements but they are still required to submit annual TRAC and TRAC(T) returns each year.
  5. TRAC is a UK-wide system, implemented in all UK HEIs. HEIs in Scotland, Wales and Northern Ireland are also required to implement TRAC and report annually. HEIs in Wales are not required to implement TRAC(T). Further education colleges are not required to implement TRAC, nor is it a requirement for other higher education providers.
  6. The TRAC Development Group (TDG) is the sector-led, UK-wide, stakeholder group responsible for the approving changes to the TRAC requirements and for maintaining and updating the TRAC guidance. The group also supports the understanding of financial sustainability in the HE sector through its role in developing and disseminating good practice in costing and pricing.
  7. The Financial Sustainability Strategy Group (FSSG) is the sector-led, UK-wide stakeholder group which supports institutional sustainability, and provides oversight of the work of the TDG.
  8. Review of TRAC: Consultation on streamlining requirements and increasing transparency of the Transparent Approach to Costing’ (HEFCE 2012/28) was issued in October 2012.
  9. The review and consultation was informed by two key reports, ‘Review of time allocation methods’ and ‘Review of Transparent Approach to Costing: A report by KPMG to HEFCE’, both available on our web-site.
  10. The increase in the threshold for eligibility for dispensation releases HEIs from the need to comply with the full TRAC requirements, and is designed to reduce the administrative burden of compliance for HEIs with relatively low volumes of publicly funded research activity. All HEIs, whether eligible for dispensation or not, are required to submit annual TRAC and TRAC(T) returns. HEIs eligible for and claiming dispensation will apply the dispensation default rates for pricing research project proposals for Research Councils for funding from April 2014. The dispensation rates for indirect costs and estates rates are set annually, at the lower quartile of the UK HEI rates.

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