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.
THE PURPOSE
OF THE
RAE
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.
RAE AND FUNDING
AVAILABILITY
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 B 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.
FUTURE OF
RAE AND RESEARCH
FUNDING
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 2001
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