Select Committee on Innovation, Universities, Science and Skills Minutes of Evidence

Examination of Witnesses (Questions 100 - 119)



  Q100  Dr Turner: On the face of it the 17.4% headline increase for the research councils is very good news, but we have actually got a PR disaster in practice. How do you think we got here?

  Professor Diamond: Let me start by saying very clearly that I think it is good news in the context of this spending review. It is an affirmation of the Government's support for science and, within that, a clear view that science can help to provide not only the brilliant science that we do but also economic impact and the quality of life improvements for the people of this country and indeed other countries. In saying that there is then a decision as to how that should be allocated and clearly some decisions were originally made around the funding for transformational medicine which were supported and secondly full economic costing was, in this spending review, fully involved in all the funding decisions. I think we have to go back to 2003 when the original consultation around full economic costing came in and at that time all senior managers in the university community, properly consulted, said they would prefer to have sustainability of funding through full economic costing than an increase in volume. I think it would be unrealistic to have expected that this spending review would have resulted in anything other, particularly as after full economic costing it was flat cash, than a reduction in volume. I have to say that across all research councils there is a degree of reprioritisation taking place and difficult decisions are being made. That there has been what you have described as a PR disaster I think is unfortunate.

  Q101  Dr Turner: I have the suspicion that the 17.4%, although looking quite an impressive figure, is not that impressive because inflation for scientific research is not the same as inflation in the normal economy.

  Professor Diamond: We would agree with that entirely.

  Q102  Dr Turner: It is in fact significantly higher. Is that a factor which is adequately factored into these sorts of calculations?

  Professor Diamond: It is a factor which we have to take within the research council community as an important issue when we are allocating our resources to our different funding areas. That is why across all research councils you will see reductions in success rates and reductions in volume. Having said that, more real money will be going into the universities for research because of full economic costing and the universities will have real increases in funds so long as they are successful in the competitions that take place. It is then for the universities to make strategic decisions on how this extra money, over and above inflation, is funded.

  Q103  Dr Turner: The implication of what you have just said is that unfortunately we are going to see a diminution in the volume of projects that get funded and in fact we are starting to creep back towards the situation which most of us came into this place where a depressingly small percentage of alpha-plus projects in 1997 were getting funding.

  Professor Diamond: I have to agree. I am absolutely clear in my mind that in every research council over the next few years there will be some of the most depressing letters that research council personnel have to write and that is, "I am terribly sorry, because of the budget we cannot fund this alpha-plus rated project". That is an incredibly difficult letter to write. You cannot explain why this grant was not funded, it is simply that a decision has had to be made that this falls slightly below the line. That means that world-class science will not take place. I have to agree with that, but at the same time extra money will be in the universities and the universities will have the opportunities to provide some kind of flexibility which may allow—but that will be for them to decide—some research to take place.

  Q104  Dr Turner: It is a message which needs to be sent back to government, is it not, that if government policy, ie to grow and enhance British science, is actually going to mean anything it is actually going to cost more than the Treasury has put in so far.

  Professor Diamond: In welcoming the amount of money that has come, I have no doubt in my mind that higher percentages would have resulted in very much more world-class science taking place. There is absolutely no doubt at all in my mind that all councils could very wisely spend more funds on truly world-class science. World-class is very much overused, but really cutting edge science. I am using science here right the way across arts and humanities, right the way through the piece.

  Q105  Mr Boswell: Is the logic of what you have just said that as we have started with what might be called a quite serious apparent situation in STFC—although you have explained the reasons for that—we can look forward to similar situations arising in other research councils, possibly on a predicted, possibly on an apparently somewhat random basis as they restructure their affairs to meet the new situation over the next year or two. Is this just the first of many?

  Professor Diamond: Each council has its own strategy and each council broadly has a flat cash after full economic costing settlement. That means that each council will need to be very careful about how it manages its affairs. I suspect there will be reductions in success rates across the board. The way in which that impacts on different councils and therefore on different individual disciplines may work in different ways so that for councils which have one responsive mode it would not impact on an individual discipline but on those at the margin, whereas those with specific areas—for example in STFC—it is perhaps a little more visible on a particular discipline.

  Q106  Dr Turner: Can you tell us something about the process of negotiating this research settlement? Were the heads of research councils involved in negotiating this? How did it evolve?

  Professor Diamond: Late in 2006 each council was invited to set out priorities in the broadest sense for the then Office of Science and Innovation. These were discussed in a set of bilaterals in late 2006 and early 2007. In May or June of 2007 each research council received a formal letter with a template for a draft delivery plan and as part of that each council was invited by DIUS (or it may still have been DTI) to provide four scenarios, each of them after full economic costing: one, how you would manage a 5% cut after full economic costing; secondly, how you would manage flat cash; thirdly, what you would do with an increase of 5%; fourthly, what you would do with an increase of 10%. Each council provided those scenarios by early July. The allocations were then announced, as you know, in October and we were invited by the end of October to submit the final draft delivery plan on the basis of those allocations.

  Q107  Dr Turner: So those of you like Keith, who have to take some fairly tough cuts, were invited to help construct their own decimation, as it were.

  Professor Diamond: We were all invited to provide a strategic plan effectively of how we would manage various scenarios of budget over the spending review period and that required some deep thought and some consultation within each council.

  Q108  Dr Turner: Keith's council is going to be immediately hit by the loss of protection against currency movements, over and above the pain that Swindon Town is already suffering, especially the pound against the euro, that is going to cost heavily. How did this come about? Who negotiated that?

  Professor Diamond: I think you would have to ask Keith about that particular issue.

  Professor Mason: Let me just describe the previous situation and the current situation. The previous situation was that the liability for exchange rate fluctuations, GPD variations fell on essentially the science vote in total so it was essentially top sliced at the RCUK level. Essentially AHRC would suffer if the subscriptions were to change. In the current round it was argued that it was more appropriate to put that risk onto the user councils, that is STFC and NERC, so we now have a situation where we are liable for the first £6 million of any variation and beyond £6 million there is negotiation at the next spending review basically to undertake how that is split more widely, with a wider base. Our risk is capped but it is at the £6 million level and it does contribute some £10 million over the three years to the so-called £80 million that we are talking about. In other words, we have to allow for that risk; we have to allow a contingency for that risk. The previous arrangement was that that risk was carried by all the research councils collectively. This does lead to some non sequiturs as I think I have described in one of my previous appearances in front of your predecessor committee. We are in the situation, as I think one of the earlier witnesses said, that if the economy of the country does really well we can actually do less science which does not feel right to me. There is no easy answer; it has to be borne at some level and it is a question of whether you see these subscriptions as something that benefits the physics community or something that benefits the nation and I can argue the case as you wish.

  Q109  Dr Iddon: There is something in this debate I do not quite understand. We have all supported full economic costings as being part of research grants; there is no argument about that. You are having to find the money to do that and it is causing pain, we can all see that. However, somebody was supplying the money to carry out that research at universities before. It may not have been as much money as you are now providing through full economic costs but the universities were actually supporting research. Where has that money gone that was supporting research previously? Has it been transferred to the science budgets? That is an argument I do not understand.

  Professor Diamond: The money that was in the universities or the fact that the universities were funding research.

  Q110  Dr Iddon: Yes, previously.

  Professor Diamond: You would need to ask the vice chancellors that. The one or two that I have asked have said they were running at a loss and managing at best they could. Now they are able to fund research as it should be funded. The one thing I can say to you is that the research councils are, as we have said over the last couple of years that we would always do, just about to start a review of full economic costing, its process and what it is being spent on. That report will report round about September or October 2008 and I would be delighted to send you a copy as soon as it is finalised. We are all very comfortable that the process is working but I think that will enable us to answer that question of exactly what the funds are being spent on now.

  Q111  Dr Iddon: Vice chancellors are always maintaining that teaching was subsiding research. We would expect to see the teaching budgets increase significantly this year if that is the argument the VCs have used in the past.

  Professor Diamond: I think you would have to ask the vice chancellors that question.

  Q112  Dr Turner: The Royal Society has suggested an independent group of experts to advise the Director General of Science and Innovation on science budgets. Do you support that suggestion?

  Professor Diamond: As I understand it that is a return to the position in the late 1980s and early 1990s. I have to say that my own sense is that this allocation has been undertaken extremely professionally and that the research councils were given the opportunity to present the case not only for the individual councils' science but also Research Councils UK presented a draft delivery plan, although there was a budget and the idea there being to highlight the cross-council priorities that were seen, for example, around some of the real cross-council programmes in energy and environment for example. The process was done incredibly professionally and used the budget in a reasonable way. Whether one would have got a different answer had there been a group of wise people advising the Director General, I am not able to say.

  Professor Mason: Let me just add to that that in my view I do not see evidence that the outcome would have been any different.

  Q113  Dr Turner: Finally, the Wakeham Review. We know its terms of reference and it is entirely possible that it will come up with some conclusions that will have funding implications but for the next three years you do not have any available. How do you see yourselves responding to the physics review?

  Professor Diamond: I think it is worth saying that no sooner has one spending review finished than the next one starts. Certainly the Wakeham Review will report as we are in the thrust of preparing the case for the next spending review and it will have an opportunity to feed into that case. The second thing I would say is that we will wait and see what the Wakeham says before answering firmly that question. I think it has an interesting and exciting set of terms of reference to enable us properly to look across the entire spectrum of what is physics research and how it contributes right across the five research councils which currently provide funding in physics.

  Q114  Dr Gibson: Why has it not happened before the Wakeham Review? None of this is new really. Physics has been having trouble for years, getting students at one time when you gave students new programmes and so on. Why are they putting it in now? Is it just a smokescreen for the real problems?

  Professor Diamond: RCUK, as I am sure you will have seen from our Health of Disciplines Annual Report, has looked very carefully at the health of all disciplines, particularly looking at the demography of the academic community.

  Q115  Chairman: Why do you need to do it again then?

  Professor Diamond: What we have not done until now is to have a really in-depth scientific cross-council review of the science and the medium term needs. I think it is important that this is now done across a range of areas because of the real importance of inter-disciplinarity and the need, if we are to accept inter-disciplinarity as being absolutely cutting-edge but applied across two or more disciplines, to ensure that we have a place to do that while maintaining the core discipline itself. Physics is a really important example that there is a really good reason for doing that and then to follow it with others.

  Q116  Chairman: Could you make this absolutely clear to Des and Ian's point, that the Wakeham Review will have no effect whatsoever on the current plans in the Delivery Plan proposed by STFC? It is totally detached from it; this is looking at something else.

  Professor Diamond: It is not the intention that this will impact on the budget of STFC in this spending review.

  Q117  Chairman: So waiting for it to be concluded and delaying these cuts until that point is not an option.

  Professor Mason: No, it is not an option.

  Q118  Chairman: It is not an option at all; it is just a smokescreen in that sense.

  Professor Mason: The Wakeham Review is, as Ian says, a valuable exercise but it was never intended to address the current situation.

  Q119  Dr Gibson: What do you think the Wakeham Review will find out that we have not known for ages? We know how important physics is. You were having trouble getting students; we managed to get round that and the student numbers are increasing, thank goodness. Physics is interacting with other subjects which it was not doing at some point in its evolution. Molecular biology evolved from physics; there is a huge great record there and I think that has been recognised. What I do not understand is what more is there to find out?

  Professor Diamond: I think you have just summed it up beautifully and perhaps your knowledge of the base is so great that we should invite you to be a member of the committee. It is important that we continue always to look at where disciplines are going and where the priorities are laying and physics, it seems to RCUK, is an area which not only has been through some difficulties but which is evolving extremely quickly, it is one of the most exciting areas of science. I think you need to look across the piece because there are five research councils funding physics and if you look at the funding of physics between the spending review of 2000 and the spending review of 2007 then you will see a 70% increase, broadly, in the funding of physics. I think we have to be absolutely clear that full economic costing does mean that more money across the entire research council base will be going into physics.

  Chairman: Of course the whole of the RC humanities research programme goes into grants which are affected significantly by full economic cost. The same applies to BBSRC; the same applies to every one of the other research councils. This is the only one that is suddenly praying in aid of full economic cost, which it has known about now for the last three years in terms of preparing for, to actually say that this is the big problem.

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