Higher Education Funding Council England (HEFCE)
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Consultation aims to improve the way costs are measured and reported in higher education

HEFCE has launched a consultation on improving the Transparent Approach to Costing (TRAC), an activity-based costing approach used by UK higher education institutions (HEIs).

TRAC supports long-term financial sustainability by providing costing on a ‘full economic cost’ basis that allows for maintenance of infrastructure and investment in the next generation of academics. It supports the understanding and management of financial sustainability of HEIs, and helps provide accountability for the public funding provided for higher education.

TRAC also provides important cost information for HEIs’ own use, including for benchmarking purposes. One of its aims is to minimise burden by meeting the needs of a wide range of stakeholders through a single system.

The Government’s 2011 White Paper ‘Students at the heart of the system’ (Note 3) asked HEFCE to consult the higher education sector on options for streamlining the reporting requirements of TRAC. This provides an opportunity to improve the current costing and pricing systems used by HEIs, and to better exploit the potential benefits. The White Paper also asked HEFCE to consult on how TRAC data might be used to promote transparency and inform the choices of prospective students.

A review group drawn from the higher education sector developed proposals for the consultation, and commissioned research (Note 4). The review found that there is widespread support for the continuation of TRAC. This suggests that TRAC is meeting a variety of stakeholder needs, and generating useful data which are widely used by HEIs. It is a single, consistent costing methodology used across the sector. The costs of operating TRAC, which are relatively low, would in any case be incurred by HEIs undertaking costing exercises for internal management purposes.

The review has sought to evaluate the burden caused by TRAC’s requirements, recognising that it is only one set of data requests of HEIs and their staff from across a range of stakeholders including the Quality Assurance Agency for Higher Education, the Research Councils, and HEFCE itself.

The consultation is wide-ranging and is structured under the following four themes:

  • the needs of stakeholders, now and in the future
  • the burdens and benefits of TRAC as a costing system for the HE sector
  • opportunities to improve and streamline TRAC and the associated reporting requirements, and to secure better use of TRAC information
  • providing greater transparency for taxpayers, students and prospective students.

It makes proposals about publishing data on how funding is spent in HEIs to increase transparency for taxpayers, students and prospective students, while recognising that the new Key Information Set (KIS) on the Unistats web-site provides the primary source of essential information for prospective students.

Although 65 per cent of HEIs use TRAC data for internal management purposes, some HEIs do not use it to provide management information or support decision-making processes. We invite respondents to the consultation to identify what changes to TRAC might improve its use as a costing tool for internal use.

We are not consulting on the technical details of TRAC methodology. Subject to the outcomes of the consultation, these will be reviewed by the TRAC Development Group before any changes are implemented.

Steve Egan, Deputy Chief Executive of HEFCE, said:

‘Maximising the benefits of TRAC whilst minimising the costs is the challenge of this review. This consultation offers universities and colleges, and others with an interest in the sector, an opportunity to help deliver improvements. We welcome feedback on all aspects of TRAC.’

As part of the consultation process, HEFCE will hold two half-day consultation events: on 8 November in London, and 16 November in Birmingham (Note 6). 


  1. Review of TRAC: Consultation on streamlining requirements and increasing transparency of the Transparent Approach to Costing’ (HEFCE 2012/28) is available on the HEFCE web-site. The closing date for responses is 11 January 2013.
  2. The Transparent Approach to Costing (TRAC) is an activity-based costing approach designed with and for the UK higher education institutions (HEIs). It supports the understanding and management of financial sustainability of higher education, and helps provide accountability for the public support provided to HEIs. It provides cost information for HEIs’ own use, including for benchmarking purposes. One of its aims is to minimise burden by meeting the needs of a wide range of stakeholders through a single system.
  3. The Government’s White Paper, ‘Higher education: students at the heart of the system‘, is available on the BIS web-site.
  4. The TRAC Review Group is chaired by a HEFCE Board member and has members drawn from across the key stakeholder groups. A list of members and the terms of reference and scope of the review are available on the HEFCE web-site at under HEFCE review of TRAC.
  5. Support for TRAC was evidenced in responses to the White Paper consultation and to HEFCE’s consultation on future arrangements for funding teaching (HEFCE 2012/19).
  6. Key Information Sets (KIS) are comparable sets of information about full- or part-time undergraduate courses, and are designed to meet the information needs of prospective students. KIS information is published on the Unistats web-site and on course pages of university web-sites.
  7. We expect the two consultation events to be of interest to heads of institutions and/or members of senior leadership teams including pro vice-chancellors, directors of finance, and registrars. Details of the events are given on the HEFCE web-site.

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