PRESSURES
ON THE
DUAL SUPPORT
SYSTEM
19. Lord Dearing told us that combined funding from
the Research Councils and the Funding Bodies for university research
had increased by some 14% in real terms between 1984-85 and 1994-95.[42]
Indeed the trend towards increased funding still continues; the
two legs will have increased expenditure on research in universities
from a total of £1374 million in 1988-89 to £1727 million
in 1998-99 (in 1994-95 prices).[43]
Nevertheless, it was not only the CBI who supported the NCIHE's
conclusion that "it is becoming increasingly clear that the
working of the dual funding system is less than adequate to meet
the needs of a modern research base".[44]
Others, too, pointed out that, while the dual support system itself
was successful, it had been made less effective by under-funding.[45]
20. Witnesses argued that several factors had served
to increase pressure on the dual support system even against a
background of increasing public funding. The abolition of the
so-called binary line between universities and polytechnics in
1992 approximately doubled the number of universities and increased
the number of students. This, coupled with a real growth in the
number of students entering higher education, has resulted in
the number of university students rising from 671,000 in 1979-80
to 1.6 million in 1996-97.[46]
The Robbins Report in 1963 identified roughly 22,500 academic
staff involved in research.[47]
In 1992 some 43,000 academic staff were entered into the RAE;
by 1996, with numbers bolstered by staff in the old polytechnics
who had historically received very little support for research
from the Funding Bodies, the total entered in the RAE was 48,000.[48]
Witnesses also argued that "research inflation is rather
higher than ordinary RPI";[49]
and that the costs of scientific and engineering research in particular
were ever increasing. Sir John Cadogan told us that continual
investment in research equipment was essential as new techniques
were discovered and introduced.[50]
Dr Mulvey of SBS and Professor Joyner, Director of Research at
Nottingham Trent University, stressed the detrimental impact on
research funding caused by the reduction in capital allocations
to universities since 1995.[51]
Professor Brook, Chief Executive of the EPSRC, told us that, in
some disciplines in particular, tighter health and safety regulations
had put further strain on resources.[52]
21. Despite these rapidly increasing demands on slowly
increasing funds, there has been no decrease in the volume of
research conducted in the UK's universities. Indeed, as the Dearing
Report acknowledged, it has increased.[53]
This, together with the increasing demands placed on dual support
funds, has resulted in what many witnesses referred to as a "funding
gap". Estimates of the size of the funding gap vary (the
Dearing Report refers to a range of estimates between £137
million and £720 million)[54]
but most witnesses agreed on how it manifests itself. Lord Dearing
told us that "in order to maintain ... output, resources
have been used for current expenditure" to the detriment
of long-term investment in staff, equipment, laboratories, premises
and central services.[55]
Professor Jack of the Wellcome Trust told us that "salaries
of university employees and researchers ... have gone down by
half compared with the national average wage and have barely kept
up with inflation".[56]
We were told that many researchers were working 60 or 70 hour
weeks and that others were performing inappropriate tasks, such
as secretarial work or cleaning, as they lack the necessary support
staff.[57]
22. Some witnesses argued that the difficulties caused
by these strains on the dual support system have been compounded
by an increasing imbalance between the funding available from
the Research Councils and that available from the Funding Bodies.
Sir Aaron Klug, President of the Royal Society, said in his anniversary
address "The science budget, which funds the Research Councils,
has been largely held constant ... but the other leg of the dual
support system, which is provided by the Higher Education Funding
Councils, is failing".[58]
Certainly there has been a shift towards more Research Council
funding-in the late 1980s the Funding Bodies provided over three
times as much funding for university research as did the Research
Councils. This situation was altered with the phased transfer
between 1992 and 1995 of £154 million from the HEFCs to the
Research Councils (a process commonly called "dual support
transfer") to allow the latter to make a contribution to
the indirect costs of the projects they support.[59]
Since then funds from the HEFCs have continued to fall in real
terms while those from the Research Councils have increased. By
1995-96 HEFC funding of university research was less than twice
that of the Research Councils. The imbalance created by these
factors has been compounded by a trend in the Research Councils
to spend more of their funds in universities rather than in their
own institutes. In 1992-93, 34.2% of the Research Councils' spend
on research and development was spent in universities; in 1993-94
this figure was 37.3% and by 1996-97 had reached 40.1%.[60]
Professor Joyner told us that the imbalance was so great that
"we are coming dangerously close to the situation where we
have only one funding source".[61]
23. We were not surprised, therefore, when witnesses
told us that it was those parts of the research base that relied
most on HEFC funding-basic research, infrastructure and long-term,
strategic management of research-that were most under-funded.
SBS argued that it was now almost impossible to conduct any research
on HEFC funding alone.[62]
This has the insidious consequence, as the Royal Society pointed
out, that researchers spend more of their time and their limited
HEFC resources on preparing and submitting applications for research
funding to Research Councils and other organisations.[63]
Professor MacFarlane told us "in some cases, where considerable
effort is being expended in raising funding from other sources,
a great deal of the time notionally supported by R money is in
fact being spent on this activity and a figure of as much as 85%
of some groups' allocation has been quoted as being consumed in
this way at one leading research university".[64]
Professor Webb told us of one of his colleagues who had refused
to join him in making an application because "he spent the
whole of the last three summers doing it unsuccessfully. It is
rather like a spot the neutrino competition".[65]
Research Infrastructure
24. We are concerned that there seems to have been
some confusion over the precise scope of the term "research
infrastructure" both in the Dearing Report and in the debate
surrounding it. In our use of the term we include standard modern
laboratory furnishings and apparatus, major items of equipment,
facilities and plant that is required for research in a particular
field and that would be expected to be in a laboratory carrying
out such research. We also include premises and their maintenance
at an effective level, support (secretarial and technical) staff,
libraries and information and communications technology and central
services.
25. Many witnesses agreed that the consequences of
the funding gap were felt most severely on research infrastructure.
Lord Dearing told us "if you are working in a building which
was designed for a different purpose and the infrastructure is
aged then you are not getting effectiveness out of the equipment
and the first class people" there.[66]
We accept Lord Dearing's point, that the poor state of research
infrastructure reduces the value for money the UK derives from
its investment in university research, but we do not consider
that this is the entire scope of the problem. Other witnesses
told us of the "potentially disastrous" and "parlous"
state of research infrastructure.[67]
Sir John Cadogan pointed out that under-investment in equipment
in particular meant that researchers would not receive research
contracts from, or be attractive as research partners to, industry
or research charities.[68]
As the ABPI told us, UK companies will "invest in research
excellence and ... will invest wherever [they] find that throughout
the world" and that they feared that UK pharmaceutical companies,
for instance, were already beginning to fund research overseas
because of the poor state of research infrastructure in UK universities.[69]
Inadequate research infrastructure clearly also puts the researchers
who depend upon it at a disadvantage when competing for Research
Council funding. Witnesses further argued that the problem was
not only chronic but urgent.[70]
As SBS told us, "leaving this for 12 or 18 months is going
to allow the damage to reach much too serious proportions. This
is a crisis".[71]
We agree.
REVOLVING
LOAN FUND
26. The NCIHE reached a similar conclusion stating
that "an immediate problem which affects the UK research
capability is the serious state of the infrastructure and equipment
needed to do it".[72]
One of the proposals it made to rectify the situation was the
creation of a revolving loan fund[73]
of £400 to £500 million which would "support departments
or institutions with a track record of conducting top quality
research".[74] (We
consider the NCIHE's other proposals concerning infrastructure
and the indirect costs of research at paras 36-59.) The NCIHE
envisaged that contributions to the fund would come from all those
with an interest in sustaining the research base-Government, the
Research Councils, the Funding Bodies, industry and research charities.
27. Witnesses raised three major objections to the
concept of a revolving loans fund:
- Firstly, on a matter of principle, many witnesses
felt that "Government should provide the infrastructure required
to sustain the long-term strategic research base";[75]
- Secondly, that industry and research charities
would be unwilling to contribute to a fund where they had no control
over the direction of investment and received no measurable benefit
and consequently would be unable to justify such contributions
to shareholders or donors.[76]
Indeed, as the AMRC pointed out, many charities may find legal
difficulties in paying into such a fund under the terms of their
trust deeds;[77] and
- Thirdly, that "until the financial state
of the universities improves ... it would be absolute folly to
encourage them to borrow money".[78]
We agree that it is Government's responsibility,
given its crucial importance in sustaining wealth creation and
quality of life, to ensure the future of the UK's research infrastructure;
contributions that industry and research charities do make to
research infrastructure in universities should be seen as additional
rather than replacement funding. Moreover we detect no willingness
towards, or even consent for, the scheme from the companies and
charities who would be expected to make contributions. For example
the ABPI said that it is not likely that "the pharmaceutical
industry will want to contribute to a shared fund scheme ... the
industry will not want to shift funds from its existing well-resourced,
directed programme of focussed and strategic research collaborations,
in selected centres, ... into a fund over which it had no direct
control".[79]
28. The NCIHE suggested that loans made from the
fund could avoid being counted in the Public Sector Borrowing
Requirement (PSBR) if the "power to appoint the managing
body did not rest solely with the Secretary of State and that
the Government did not require the board to operate as a Non-Departmental
Public Body".[80]
The Treasury have agreed that this was the case but added that
"any Government payment to, or receipts from, the fund would
affect the PSBR. All lending, on whatever terms, would increase
the PSBR when the loan was made and reduce it when the loan was
repaid."[81] The
intention of the revolving loans scheme is that once money is
repaid by one institution it is re-lent to another so any Government
contribution would not be repaid to the Government and therefore
would have to be counted in the PSBR.
29. We conclude that the NCIHE's proposals for a
revolving loans fund of this nature are "essentially implausible".[82]
We recommend that the Government reject the NCIHE's proposals
for establishing a revolving loans fund to support research infrastructure.
22 The
"Education Departments" are the Department for Education
and Employment, the Scottish Office, the Welsh Office and the
Department for Education Northern Ireland. The Higher Education
Funding Councils are the Higher Education Funding Council for
England (HEFCE), the Scottish Higher Education Funding Council
(SHEFC), the Higher Education Funding Council for Wales (HEFCW),
and the Department for Education Northern Ireland (DENI). Back
23 Both
the Funding Councils and the Research Councils also fund research
in universities in a number of supplementary ways but these are
by far the most significant. Back
24 Ev.p.
99. Back
25 The
Dearing Report, para 11.3. Back
26 HEFCE,
Main Grant Allocation, 1997-98; Scottish Higher Education Funding
Council, Main Grant Allocation, 1997-98; Higher Education Funding
Council for Wales, Main Grant Allocation, 1997-98. Back
27 Second
Report from the House of Lords Select Committee on Science and
Technology, Session 1993-94, Priorities for the Science Base,
HL Paper 12. Back
28 The
Dearing Report, para 11.4. Back
29 Parliamentary
Office of Science and Technology, Striking a Balance: The Future
of Research "Dual Support" in Higher Education,
p. 36, July 1997. Back
30 Ev.p.
85. Back
31 Ev.p.
85. Back
32 Q.
248. Back
33 Ev.p.
85. Back
34 Ev.p.
18. Back
35 Q.
475; Ev.pp. 18, 102, 197 and 216. Back
36 Ev.
p. 216. Back
37 Ev.p.
16. Back
38 Q.
506. Back
39 Q.
535. Back
40 eg
Ev.pp. 175, 179, 181 and 201. Back
41 Q.
299. Back
42 Q.
209. Back
43 Striking
a Balance, p. 7. Back
44 The
Dearing Report, para 11.15. Back
45 Ev.pp.
18 and 179. Back
46 The
Dearing Report, para 3.69;
Charts 3.1 and 3.2. Back
47 Committee
on Higher Education, Higher Education Report of the Committee
Appointed by the Prime Minister under the Chairmanship of Lord
Robbins, 1963. Back
48 The
Dearing Report, para 3.70. Back
49 QQ.
63 and 452. Back
50 Q.
39. Back
51 QQ.
63 and 65. Back
52 Q.
362. See also Ev.p. 1. Back
53 The
Dearing Report, para 11.16. Back
54 The
Dearing Report, para 11.17. Back
55 Q.
191. Back
56 Q.
469. Back
57 QQ.
63 and 272. Back
58 Sir
Aaron Klug, President of the Royal Society, Anniversary Address,
December 1997. Back
59 The
dual support transfer was phased over three years with a transfer
of £48 million in 1992-93, £125 million in 1993-94,
reaching £154 million in 1994-95. Back
60 Striking
a Balance, p. 26. Back
61 Q.
63. Back
62 QQ.
63; Ev.p. 18. Back
63 Q.
472. Back
64 Ev.p.
224. Back
65 Q.
474. Back
66 Q.
193. Back
67 Ev.pp.
178 and 184. See also Ev. pp. 55, 139, 175, 178 and 201. Back
68 Q.
39. Back
69 QQ.
135-6. Back
70 QQ.
159 and 478; Ev.p. 139. Back
71 Q.
90. Back
72 The
Dearing Report, para 11.32. Back
73 Under
a "revolving loan" scheme monies would be lent to institutions
for capital investments. The repayments made by the institutions
would then be used for further lending, hence the monies would
revolve around different institutions rather than be repaid to
those contributing to the loan fund. Back
74 The
Dearing Report, para 11.39. Back
75 Ev.p.
87. See also eg Ev.p. 173. Back
76 QQ.
226 and 313; Ev.p. 178. Back
77 Q.
426. Back
78 Q.
455. See also eg Q. 104. Back
79 Ev.pp.
55-6. See also eg Ev. 178. Back
80 The
Dearing Report, para 11.40. Back
81 Ev.p.
218. Back
82 Q.
59. Back
