Select Committee on Science and Technology Minutes of Evidence

Memorandum submitted by the Department for Education and Skills

  1.  In the UK, as in all advanced countries, the Government has a substantial role in providing funds for research. Research is a public good with substantial benefits both economic and social. Although industry and commerce have a large research commitment, their research investment is, quite rightly, mostly near-market. Business does not tend to engage in speculative basic research, where the returns are often uncertain, long-term, and difficult for one company to capture. Government investment is required to provide the basic new knowledge on which further research can build. A strong publicly funded knowledge base also has benefits in ensuring a supply of highly skilled people with the capability to carry out research in the public and private sectors, to innovate and to make use of new knowledge not just from the UK but from across the world.

  2.  In its strategy to 2006, "Delivering Results", the DfES has set out its commitment to ensuring that the country has higher education institutions that can compete with the best in the world in research. Strengthening research excellence is a key objective for the Department, together with other objectives for higher education which include:

    a.  increased participation and fair access

    b.  excellent teaching and better completion rates

    c.  world class technology transfer and links to business and regional economies.

  3.  To strengthen research excellence, the DfES sets the overall framework and policy objectives for the Higher Education Funding Council for England (HEFCE). The Council is then responsible within that framework for devising funding mechanisms which will achieve those policy objectives, and distributing resources provided by DfES to institutions. It is HEFCE and the other Higher Education Funding Councils that designed and carried out the Research Assessment Exercise (RAE). The DfES also works in partnership with the Department of Trade and Industry, in particular with the Office of Science and Technology (OST), to ensure a co-ordinated Government approach to the funding of research. The OST's science budget, via the Research Councils, is the other main route for public funding of research in higher education.

  4.  Together this funding comprises the "dual support system":

    a.  HEFCE's research funding is to provide for the research infrastructure in HEIs (including permanent academic staff salaries), to cover most of the costs of basic, pre-competitive research undertaken by HEIs, and to contribute to the substantial fixed costs of postgraduate research education, particularly staff, premises, equipment, libraries and other essential facilities

    b.  Research Council funding (for science, engineering, technology and social sciences) and funding from the Arts and Humanities Research Board provides for direct project costs and makes a contribution to indirect project costs.


  5.  If Government funding is to encourage and support world class research in the UK then the funding must be used selectively and must be targeted where it is most likely to deliver top quality results.

  6.  The RAE is the mechanism developed and used by HEFCE to pursue the Government's overall objective. Since its development in the late 1980s, the RAE has enabled selectivity in funding, and has motivated institutions to improve the quality of their research.

  7.  The 2001 RAE results show a higher proportion than ever of UK researchers operating at international levels of excellence. An element of the improvement could well be due to institutions getting better at presenting themselves for the RAE. However, separate work, looking at the strength of UK research as measured in citations of academic papers, also shows a substantial improvement in the UK's research standing since the mid 1990s, suggesting that a good proportion of the improvement shown in the RAE results is a result of genuine improvement in quality.


  8.  The total funding available for higher education is decided as part of the Government's spending review process.

  9.  Funding is then allocated to HEFCE to be provided to higher education institutions, with guidance where necessary. For example, in the most recent grant letter the Government asked HEFCE to at least maintain its funding for research in real terms to 2003/04.

  10.  HEFCE's responsibility is then to distribute the funding it is allocated by DfES. The memorandum from HEFCE explains the quality related research (QR) funding mechanism developed by HEFCE to distribute the bulk of research funding, using quality and volume measures to share out the total among higher education institutions.

  11.  The 2001 RAE results have shown departments improving their ratings, and highly rated departments growing in size—both desirable developments in themselves. However, the improvements meant that, within the existing funding, it would not be possible for HEFCE to continue to provide the same amount of funding as before for a given volume and quality.

  12.  The DfES supported HEFCE's decision, announced in December, to:

    a.  use the results of the RAE 2001 as the basis for funding research in 2002-03

    b.  maintain the unit of resource for 5* departments (broadly, this means the same level of funding per researcher)

    c.  provide some funding for 3-rated departments (the lowest rating currently funded) on a basis still to be decided

  13.  Moderate the outcomes for total funding in the first year with a system of safety nets and caps to enable institutions to manage any changes in funding.

  14.  Funding for 2003-04 onwards is currently being examined as part of the Spending Review. But there was a need to look again at resources for 2002-03. HEFCE will need to make allocations for next year before the results of the Spending Review are known, while the longer term funding situation is unclear. In order to avoid good quality research being held back or harmed next year, the DfES is making available £30m in one-off additional funding. This funding is to help HEFCE protect funding levels for 5 rated departments, and will help institutions to avoid restructuring their best research departments in advance of the Spending Review outcome.

  15.  Meanwhile other Government funding initiatives will also help to support research in institutions:

    a.  the Science Research Investment Fund will provide funding for buildings and equipment—£600m of Government funding has been allocated to HE institutions in England

    b.  funding mechanisms to support knowledge transfer such as the Higher Education Innovation Fund are helping institutions to share their expertise more widely, including translating their research findings into commercial applications

    c.  ring-fenced resources for higher education pay and human resources development, amounting to £50m in 2001-02, £110m in 2002-03, and £170m in 2003-04, are helping institutions to recruit, retain and develop the staff they need to improve both teaching and research.


  16.  The Government continues to believe that research funding should enhance excellence. Higher education institutions should continue to improve the quality of their research following the excellent progress in the last few years. However, the way in which the assessment and funding system operates may need to be revisited so that the system allows selectivity to take place.

  17.  There are some further questions to consider, for example:

    a.  the future development of selectivity, and whether it would make sense in future to discriminate even between departments currently rated 5*, for example, to identify those departments whose international competitive position needs to be maintained and enhanced in the interests of the British economy.

    b.  how we can ensure that funding mechanisms do not provide perverse incentives, but instead encourage good management in institutions, for example, investing in the physical infrastructure required to maintain and improve research excellence in the longer term.

  18.  The results of the 2002 Spending Review will also be important in setting the context for future research funding. These will be announced in the summer.

January 2002

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