Annex A
Dual support funding
1. Public funding for research can most
easily be justified under the two headings of `wealth creation'
and the `quality of life'. While research and hence knowledge
are sometimes perceived as a mark of a civilised society, the
more usual association between research and the quality of life
is through improved health, social and living conditions where
research has had evident successes. (Even so, while few would
deny the improvements that have come from a better understanding
of disease and its treatment, benefit measurement for health services
remains a real challenge for those seeking to determine how NHS
R&D funds should be used.)
2. If there is evidence that research can
be linked to innovation that leads in turn to wealth creation,
then why should public funding be used for investment that creates
real returns? The principal reason is market failure. Commercial
risk assessment dictates that investments should provide an acceptable
rate of return. As research projects become more speculative so
they tend to have to jump higher hurdles on rates of return in
the private sector. If there were no public funding then much
of this research would not take place because the gap between
the knowledge base and the putative market is initially too great,
the uncertainty of outcome too high.
3. A further justification for the public
funding of research in one country is in order to create the intellectual
capacity to understand the intellectual property (IP) generated
in another country. The growth of the Asian `tiger' economies
was dependent not only on their ability to exploit IP generated
originally but not fully exploited in the West, but also on their
ability to understand what exploitation might be feasible. This
in turn depended on a sound understanding of the underlying technologies.
Similarly, even if it does not lead in a field, the UK's ability
to enter an area of new technology requires a sufficient initial
platform of technological and research competency to exist.
4. A further argument in favour of public
funding of research is that key knowledge is then held independently
of interested parties. This allows a more objective judgement
to be made in the public policy interest in such areas as telecommunication
hazards, food quality or prescribed drugs. Policy decisions can
be based on sound and independent advice, which may lead via regulation
to profound effects on the wider economy. It is difficult to see
how such advice could sensibly be taken solely from the private
sector.
5. The Dearing Committee report on the future
of higher education in the UK (NCIHE, 1997) concluded:
6. `Within the aims and purposes of higher
education, there [are] four main roles for research and reasons
for supporting it in higher education institutions:
a. To add to the sum of human knowledge and
understanding.
b. To inform and enhance teaching.
c. To generate useful knowledge and inventions
in support of wealth creation and an improved quality of life.
d. To create an environment in which researchers
can be Y given a high level of training.'
TWO FUNDING
STREAMS
7. Under the dual support system, with the
exception of monies paid under specific contracts from Government
departments and other public bodies, all public funding for research
work done by HEIs comes from one of two funding streams:
a. As part of the block grant from the UK
HE funding bodies (HEFCE, HEFCW, SHEFC, and DELNI) based on past
performance as measured by the Research Assessment Exercise.
b. Project grants allocated to a particular
researcher by the OST Research Councils (BBSRC, EPSRC, ESRC, MRC,
NERC, and PPARC) in response to proposals for programmes to carry
out future work.'[13]
8. Within that context, the benefit of dual
support funding is that it:
— provides institutions with an essential
degree of flexibility in managing their research
— allows institutions, as employers
of those who carry out research, to cope with the sometimes short-term
and unpredictable character of Research Council funding
— supports institutions, in their management
of research income in the wider interests of research, for example
in revitalising departments that are in decline, or initiating
new interdisciplinary initiatives that were possible on their
campus
— provides the only way of funding
the unconventional or unfashionable field, or the unknown researcher
who does not yet have the reputation to compete successfully for
Research Council grants.
HISTORICAL CONTEXT
9. At the outset funding body and project
funding streams were complementary, and broadly in balance—in
that the capability created by the funding body element was sufficient
to support the projects commissioned.
10. It was widely assumed within Government
that the dual support system was there to support Research Council-funded
research only (cf. para 7(b) above), although this had never been
made an explicit tenet of Government policy. Charities, however,
would point to the support given to the research they funded by
the HEFCE's predecessor (UGC) to argue that prior to 1992 they
too were included within the mechanism. HEFCE funds are also used
to support research outside the formal Research Council ambit,
namely in arts and humanities.
11. With the passage of time, however, and
following the unification of the HE sector in 1992, both the volume
of research and the range of sponsors increased. These included
other government departments, business, and more importantly the
voluntary sector. Today, the Wellcome Trust has a larger research
budget than the Medical Research Council. Although the level of
funding via the funding bodies has increased, it has not done
so at the same rate as the increase in the volume of project funds
for research. The dual support system has consequently become
unbalanced, and research infrastructure has not been maintained
at a pace commensurate with the increase in project funding.
12. Research[14]
suggests that this imbalance is more acute in the medical and
biosciences sector, where although the Department of Health makes
contributions towards infrastructure costs via NHS medical schools
located on HEI campuses, the weight of research project funding
renders the funding available to support the infrastructure inadequate
to the demands placed upon it by those projects.
13. The Wellcome Trust has of course contributed
to infrastructure costs via the Joint Infrastructure Fund (JIF)
and the Science Research Investment Fund (SRIF). Nevertheless,
charities generally have been reluctant to contribute to all infrastructure
costs, arguing that these have already (and anyway should be)
funded by Government. However, the JM Consulting study suggests
that the under-recovery of costs by HEIs is broadly constant,
whatever the source of project funding.
14. Against the background of these developments,
there is now a need for all parties—Government, HEIs, funding
bodies and charities to clearly agree the purpose of the dual
support system and which research sponsors it is designed to support.
Clarification of this point will be a necessary precursor to establishing
a stable (and long-term) equilibrium within that system.
13 Coopers & Lybrand report on indirect costs
of OST Research Council projects and programmes, March 1998. Back
14
Interactions between HEIs and charities, unpublished work in
progress by JM Consulting. Back
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