To further the development of the strategic dialogue process initiated in 2013, the HEA undertook to consult the sector in relation to the introduction of performance funding for subsequent rounds.

The broad intention is that the process will allow for the allocation of performance funding based on the institution’s performance against its compact.

As part of the consultation process, the HEA commissioned a review of other performance funding systems, undertaken by Dr. Richard Thorn. Taking into account that review, as well as earlier consultation on strategic dialogue, the HEA set out its proposed approach to performance funding .

In 2014, each institution entered into a compact with the HEA, undertaking how it would contribute to national objectives from the position of its particular mission and strengths. The compacts provide for how performance is to be measured and a proportion of funding is contingent on performance.

This performance funding works in partnership with the core institutional funding, which provides a core base for institutions to manage their operation so as to deliver high quality outcomes in terms of student learning, research and wider engagement with society. In this instance each institution is required to set out the way in which core and other funding is being used by the institution, and the performance being achieved in this regard. In particular institutions have to set out high level strategic goals, which are aligned with the mission and capabilities of the individual institution and are also aligned with the national framework.