Support for research does not only entail making sure research students can survive. As Wellcome has recognised, it also involves providing the working conditions researchers need. Universities and research institutes need money too.
In the great US research universities undergraduate schools subsidise graduate schools. Here it is the other way round. Since British universities cannot make money from home undergraduate students, postgraduates and overseas students, a growing proportion of whom are also graduates, are seen as an essential source of revenue. But recruiting overseas undergraduates is going to become more difficult (page 11). At the same time home students will be paying. They will become more demanding but the universities will be no richer since the revenue is to be clawed back through the block grant and used to pay for additional loans.
This is what is biting the members of the Russell group of British universities who have implicitly warned the government (page 7) that they will not be able to maintain their research quality if their revenue is to remain capped.
It is understandable that a Labour government, which has taken the unpopular step of requiring universities to charge for tuition, cannot stomach the thought that some might charge an additional premium. Hence the muddled attempt in the Teaching and Higher Education Bill to achieve their objective - Pounds 1,000 fee for all, subject to means test, and not a penny more - without running into the legal minefield of removing universities' power to set their own fees. Hence also the extraordinary decision not to change the additional student subsidy for Oxford and Cambridge: they dare not risk provoking these two universities into revolt.
The corollary of these decisions, taken in the interests of equity and access, is that more money is going to have to be put into the research side of the university funding equation if the government wants to protect excellence in research and innovation in the way it says it does.
Universities not allowed to raise money themselves will need additional subsidies if they are to remain competitive. Giving additional subsidies to Oxford and Cambridge alone is not enough. Britain needs more than two universities funded to a level that will enable them to support world-class research work.
Perhaps a bargain is possible - a university peace process. The Teaching and Higher Education Bill is in trouble, as Baroness Blackstone's letter to Lord Tope (page 1) reveals. It is in any case flawed. Agreement to let it go through in an amended form, with a time limit set on the secretary of state's power to intervene over fees so that this power is reviewed in five years' time, might be bartered for a promise from the Treasury of additional funding for research.
The answer will be, of course, that we must wait for the outcome of the spending review in July. In that case, their Lordships might wish to ensure that the legislation likewise awaits the outcome of the spending review.