The UK’s research funding boost must not overlook the overheads

At his March Budget, the UK Chancellor of the Exchequer said that annual public spending on research and development will increase from its current £9 billion to £22 billion by 2024-25. The Treasury now has to cope with the financial pressure of the coronavirus but, on the face of it, the huge promised investments will change both the shape and the scale of the UK’s efforts in research and innovation.

Some of the extra research spending is supposed to help “level up” less prosperous parts of the UK. The idea is to create virtuous circles in which academic research and business investment expand each other, as they seem to do in major research clusters around the world.

But what does it mean to level up research funding when that funding doesn't pay the full cost of research?

Project grants cover only the direct costs of the project, such as researchers’ salaries and lab materials. They don’t cover all the overheads: infrastructure, facilities, office administration and the like. According to the Office for Students, that leaves universities to find about 30 per cent of the cost of research via other means.

Those means include the quality-related research block grant (QR). But this has not kept pace with rises in grant income, and should also be supporting emerging research ideas, early career researchers and many other things beyond overhead costs. In any case, even with QR, there was still a total research funding gap of £4.3 billion in 2017-18 across the UK.

Let’s imagine that the policy works: research funding from government doubles, and this leverages twice as much university research income from other sources, such as business and charities. If funders continue to provide an average of 70 per cent of research costs, that would see the UK research funding gap double to more than £8 billion per annum. As a recent report from the Higher Education Policy Institute put it, “expanding loss-making activity merely increases any losses”.

Moreover, if most of the funding increases are focused on left-behind regions, in pursuit of levelling up, this is where the funding gap will grow the most. Some universities have sizeable income from other sources, including fees from international and postgraduate students, but others don’t. According to the Higher Education Statistics Agency, over a third of fees in London and half in Scotland come from international students, while in the north west, Yorkshire and the East Midlands the figure is less than a quarter and in Wales and Northern Ireland less than a fifth. In some universities, extra research funding could be a poisoned chalice.

Let’s take the University of Dundee. It ranked second in biological sciences in the 2014 research excellence framework, and Times Higher Education’s 2020 World University Rankings for life sciences put it in the UK top three for both citations and industry income. Yet, in a recent report, it described itself as “financially vulnerable due to the structural issue of underfunding of research in the UK” and declared that, as a result, “we will not be targeting growth in research income”.

Meanwhile, the universities and science ministerial brief has been split between two government departments, while QR funding is already devolved across the four UK nations. This makes it difficult to take a coordinated view of university finances and regional development during a steep rise in research funding.

Across the Atlantic, things are changing. Last year, five of the wealthiest grant-giving foundations in the US pledged to cover more of the full cost of research. For example, 29 per cent of every grant from the MacArthur Foundation now goes towards overheads.

Much has been written about the economic and social benefits of a strong research base. The role of universities as engines of economic growth is clearly visible in towns and cities across the nation, and the government’s focus on levelling up wealth and opportunity has been widely welcomed. But to deliver sustainable changes in the distribution of UK research, we need a long-term funding model and sizeable support for infrastructure and administration. Exciting new projects won’t work without them.

Grace Gottlieb is research strategy and policy officer and Graeme Reid is chair of science and research policy at UCL.