Capital funding

Capital funding is additional funding provided by the government to support sustainable investment in higher education.

It supports capital expenditure – that is, money used to acquire or maintain fixed assets, such as land, buildings and equipment, which is normally capitalised in the provider's audited annual accounts. It does not include expenditure on rent, or hiring or leasing of equipment and facilities.

Our approach

Following consultation in 2021, we adopted a new approach whereby capital funding is distributed through two mechanisms:

• Firstly, a small annual formula allocation to all eligible providers
• Secondly, the majority of capital funding is allocated in response to bids in a competitive exercise.

We are continuing with this same broad approach for the period 2022-23 to 2024-25.

The capital funding available for distribution is specified in the guidance letter from the Secretary of State. For financial years 2022-23 to 2024-25, this sum is £450 million. We expect about £50 million (over the three financial years) will be required to meet existing commitments, support national facilities and regulatory initiatives, and fund the annual formula capital allocation to providers registered with the OfS in the Approved (fee cap) category.

Following the completion of the competitive bidding process in 2022, we will distribute total funding of about £400 million over the three financial years (1 April to 31 March) 2022-23 to 2024-25 to 100 successful providers.

Full details of the decisions and outcomes of this competitive bidding process can be found in our Capital funding for financial years 2022-23 to 2024-25 publication.