Select Committee on Science and Technology Appendices to the Minutes of Evidence


Memorandum submitted by the Higher Education Funding Council for England


  The 1993 White Paper sought to improve the nation's competitiveness and quality of life by maintaining the excellence of science, engineering and technology in the United Kingdom through:

    —  developing stronger partnerships with and between the science and engineering communities, industry and the research charities;

    —  supporting the science and engineering base to advance knowledge, increase understanding and produce highly-educated and trained people;

    —  contributing, according to the United Kingdom's strengths and interests, to the international and particularly European, research effort;

    —  continuing to promote the public understanding of science and engineering;

    —  ensuring the efficiency and effectiveness of Government-funded research.

  We believe that the approach was generally right, and continues, broadly, to be correct. It recognises the important reasons for public funding of research, the significant Return on Investment from such funding, the benefits of the discretionary application of funding by institutions, the need to encourage more applicable research, the inappropriateness of a National Plan and the necessity to support strategic decision making about research activities hosted by HEIs, the importance of partnership and the significance of highly trained individuals as a "research output".

  We consider that the major concern, that we do not capitalise on the strength of our science base and translate it into economic and quality of life improvements was valid, as was the concern that there should be greater public understanding of research.

  We consider that there has been a cultural change in respect of both these areas of concern. There is within HEIs a much improved ability, and greater willingness, of researchers to engage in knowledge transfer activities, and schemes have been developed to embed such activities within HEIs as a core mission.

  The most authorative account of the change that has occurred since 1993 is that provided by the 1998 PREST study which document increasing performance in a number of areas including the number of patents filed by HEIs; and the number, depth and variety of relationships between HEIs and commercial organisations. However, it did also identify that good practice was patchy; spreading and embedding good practice in this area is one of the key objectives of the HEROBC initiative we recently launched with DTI and DfEE. It is also clear that "pull" from industry needs to increase. Industry's investment in the UK research base is increasing at almost 10 per cent per annum—in recognition of the added value provided by the UK research base. However, as shown in table 1 below, in-house corporate R&D in the UK is low compared with that in other OECD countries. This evidence illustrates the need for an increase in the capacity of UK industry to engage in research and knowledge transfer.

Table 1

In-house business R&D as a proportion of GDP (1997)

1.2 per cent
1.6 per cent
1.4 per cent
0.6 per cent
1.0 per cent
2.0 per cent

  The Government's strategy to increase the academic-industry interface has been supported by the development of a number of initiatives:

    —  Co-operative Awards in Science and Engineering (CASE).

    —  LINK

    —  Teaching Company Scheme

    —  Faraday Partnerships

    —  University Challenge

    —  Enterprise Centres.

  The HEFCE has made its own contribution through the Joint Research Equipment Initiative (JREI) and HEROBC. Also, changes to the assessment process for the 2001 RAE, and those proposed for any future exercise, will further encourage applicable research. However, we do not believe that the assessment or funding processes should provide a premium for work with industry. Rather, we note the benefits of increasing HEROBC funding to support knowledge transfer.

  Another facet of the increase in the level of engagement with the world outside of HE is a significant improvement in the public understanding of science. In addition, there have been positive changes in the relationships between funders, and national international changes in the research landscape mean that it is timely for the White Paper vision to be revisited.

  We address below both the specific and general issues raised.


The annual publication of the Forward Look

As the science and engineering base becomes increasingly complex, and its importance as a source of knowledge to be transferred into business, and the community more broadly rises, it is vital that all stakeholders in the research base have a clear understanding of the Government's policies, as it still remains overwhelmingly the major funder and provides a solid structural basis for investment by others.

  We consider that replacing the annual review with the Forward Look has improved the ability of Government to communicate its aims and objectives, and signalling them to the research community and other funders and stakeholders helps to support coherence and complementarity.

  The Forward Look, as a single document containing most salient information about policy and performance, is particularly useful for those who wish to rapidly access and understand key information on how the research base is organised, how it is performing and how it is likely to perform in the future.

The creation of Foresight

  We believe that Foresight continues to be valuable in bringing together stakeholders in the science and engineering base. The refinement of its objectives and processes over time has produced an effective framework for identifying the significant problems we face in the future and how funders, researchers and users may act in concert to address these problems.

  We are pleased that the process has broadened, and developed a more thematic approach alongside the sectoral approach adopted in the first round, both of these enhancements will ensure a more considered and effective response to solving the problems we face as a society.

  The Council will continue to play its part in promoting Foresight. Many project funders have Foresight-related strategies and institutions need to build research capability in these areas. We are committed to ensuring that within the boundaries defining high quality research the RAE recognises work addressing Foresight and other Government policies.

  We remain committed to a very visible contribution to Foresight through our continuing sponsorship of the scheme we created in response to the launch of Foresight—the Joint Research Equipment Initiative. JREI has been running for three years with the primary aim of providing the infrastructure for high-quality research in HEIs, especially where relevant to Foresight priority areas. It has proved to be extremely effective with over £170 million of equipment purchased so far by HEFCE, with the assistance of matched funding from industrial partners.

New approaches to technology transfer initiatives and improving access for SME's to innovation

  We prefer to use the term knowledge transfer as a generic term to describe the wide variety of interactions between HEIs and users—we also recognise that this transfer may be much wider than to businesses, as important as that is, but also includes what is broadly described as the "community"—the voluntary sector and other not for profit organisations who make a vital contribution to social development of our nation. A broad definition is also necessary to include work involving government departments such as the Department of Health.

  We believe that there has been a fundamental change in the agenda for higher education since the publication of the last White Paper. HEIs are now widely acknowledged, within the sector and outside, to be central to society's attempt to address issues of profound economic and social importance, many of which have a significant regional dimension. This shift from a conception of the university as an "ivory tower" to one of universities and colleges taking an important and, in some cases, central role in delivering key public policy objectives is one of the most important underlying trends of recent years.

  An important part of HEFCE's strategy is to ensure that higher education is responsive to the needs of business and industry; HEFCE encourages partnerships between HEIs and industry, knowledge transfer, and the development of employment skills.

  For 1998-99, we allocated £20 million for the long standing Generic Research Initiative to provide incentives to institutions to collaborate with users on long-term research leading to expertise and knowledge which can be used by higher education, industry and the community at large.

  It is in part to spread and intensify much of the good practice that exists in the HE sector that we launched our most recent initiative, the Higher Education Reach Out to Business and the Community fund. This targeted funding for institutions will provide an incentive to build a sustainable and broadly based capability to respond to the needs of industry and the community.

  The emphasis on building general capability, to support the myriad of possible types of interaction between HEIs and users, distinguishes this approach from that of other specific funding initiatives in a parallel with the dual support system. Funding provided to HEIs under the proposed programme will lead to improvement not only in their delivery of knowledge and services to industry but also in their capacity to respond to related initiatives mounted by other agencies. It is also hoped that this approach will embed knowledge transfer within HEIs as a third core activity alongside teaching and research.

  It is clear that HEROBC should fund interactions that are more complex than HEIs working with major industrial employers. Technology transfer also needs to occur into SMEs, the public sector, and the community. Also, in making HEROBC a success, it will be essential that institutions with a smaller research base, but which demonstrably "punch above their weight" in terms of facilitating relationships with users (often these will be institutions interacting with SME's) are rewarded for their excellence in this area.

  We have also, as part of our recent Fundamental Review of Research Policy and Funding, developed a proposal to provide a modest amount of new funding for a "Capability-development" funding stream. This initiative would provide a framework for research that had a distinctive contribution but which might not be best supported by QR and the current approach to selectivity:

    —  emerging subjects requiring capability building;

    —  research of national, regional or local importance.

  Although we believe the case for HEROBC, newly established in partnership with DTI and DfEE, is clear, and that the capability development funding stream will provide significant benefits, overall we would prefer to see a reduction in the number of initiatives to which HEIs and others are subject. We therefore welcome moves on the part of DTI to simplify the structures under which companies can access help to innovate from Government. The panoply of schemes can be confusing even for the users who have individuals dedicated to interacting with the research base, it is even more confusing for SMEs who can not justify such staff.

  We also welcome the Government's recent move to provide tax relief for SME's investing in R&D. This is a significant change in policy from that outlined in the 1993 White Paper and will enhance the "pull" from industry, an area where we compare poorly with other OECD countries, at the same time as rising public funding for knowledge transfer increases the "push" from HE.

The re-organisation of the Research Councils and associated management changes

  We believe that there is considerable merit in the present RC structure, as it establishes research project funding organisations that can communicate effectively with, and provide funding intelligently to, their broad subject communities who differ somewhat in their requirements and organisation.

  However, as research becomes increasingly collaborative and inter and multidisciplinary, the RCs must function increasingly effectively at the areas where they interface with one another (and with the Arts and Humanities Research Board as their analogue in this area). We consider that there are particular benefits of HEFCE funding in facilitating the "joining up" of research funded by others. We expect individual project funders to be increasingly interactive with each other.

  Also, we would wish overall to reduce the accountability burden on institutions—to free up management and academic time—without reducing the appropriate level of scrutiny of those in receipt of public funding. We believe that significant gains can be made in this area if public funders work more coherently in partnership together, and

    (a)  do not ask for more information than is necessary;

    (b)  can agree to rely on data provided to others for their own purposes so that information is only provided once.

  We would wish to work closely with the individual RCs in this endeavour,

  It is vital that we continue to encourage applicable research—whether it contributes to wealth creation or quality of life—the explicit commitment to this objective in the missions statements of the RCs was therefore welcomed. We have made our own commitment in this area through the Guidance to Panels for the 2001 RAE and there are a number of recommendations to further encourage applicable research arising out of our Fundamental Review of Research Policy and Funding. As noted above, one of these recommendations is the creation of a "capability development" funding stream to support applicable research and research or local, regional or national relevance. However, we would caution funding research just because it is "relevant". It would be intolerable, for example, if in the RAE research were marked up because it was deemed to be "useful", or if high quality research were marked down because it was deemed not to have potential for application. It is notoriously difficult to assess the potential utility of much research, and there are ample examples of discoveries, which proved unremarkable at the time which subsequently had decisive impact. We see no dichotomy between quality and applicability—application is often just a question of time, and with the increasing speed to market of products based on research-led innovation this time is shortening. We are committed to ensuring that the RAE "sees" the quality in all research types of research—irrespective of its nature or purpose.

  Given the level of resources allocated by OST (including the contribution to training of researchers and costs of access to international and national facilities)—we believe it is essential that there is a Director General to oversee the coherent and co-ordinated development of funding policies between and within the Research Councils. We also believe it is important that there is someone who can speak with a single voice to Government, and others, on behalf of the Research Councils as well as listening to the views of stakeholders.

Increasing the public understanding of science

  We consider that public funders of the science and engineering base have a responsibility to encourage researchers to share their research with the public, and this encouragement should exist at all levels within the science and engineering base. However, we believe that this is most effectively done by reflecting the particular missions of funders, drawing on the natural leverage that they have, rather than adopting a one-size-fits-all approach.

  We consider it appropriate that the Research Councils have a range of approaches in this area—some specific initiatives with ring-fenced funding and other, more systemic approaches.

  The Higher Education Funding Council for England considers dissemination of research to be part of the core mission of all institutions. We encourage university researchers to disseminate their work not only to their peers in reviewed publications, but also to the general public more generally. We consider that by encouraging a more strategic approach to research, the Research Assessment Exercise (RAE) has increased both the quality of the research and its dissemination and impact. The Funding Councils have encouraged 2001 RAE panels to consider dissemination, and impact outside the discipline, as secondary quality indicators. Such an approach has been enthusiastically embraced by the education panel, for instance.

  As part of the fundamental review we commissioned two substantial pieces of work from the Higher Education Policy Unit of the University of Leeds that provide evidence of increased relative output, greater growth in national and international collaboration in the UK than in other countries, increasing interaction within industry, and greater correlation of industrial and public funding. This indicates that UK researchers are much more likely to communicate the outputs of their research. This, of course, is different from targeted attempts to improve the public understanding of science in specific areas like GM foods and the human genome, which is the legitimate role of the Research Councils (and Royal Society) but is powerful evidence of HEFCE policies contributing to an increasingly outward looking academic community that is engaged in the problems of today. In addition, the HEROBC funding stream rewards collaborative research with business and the dissemination of research results with a potential for commercial development.



We consider that one of the most significant changes to have occurred since 1993 is the increasing extent to which research funders, users and researchers have worked in partnership to achieve common aims. HEFCE has a unique contribution to make in this regard, as it funds across the entire research landscape and has access to information about, and ability to influence, institutional as well as disciplinary activities. Thus, for example, we established the Arts and Humanities Research Board—in partnership with the British Academy, SHEFC, HEFCW and DENI and we have established a number of joint task groups to address areas of concern—for instance with the Confederation of British Industry, Royal College of Veterinary Surgeons and Department of Health. In fact the latter has led to the creation of a strategic alliance with the Department of Health that outlines the basis on which the two organisations will work together to develop efficient and effective policies to support health-related research.

  The partnership with OST, along with the other Funding Councils, in support of the dual support system, is absolutely key to the effective development of the research base. In particular we consider that HEFCE funding has a unique role in sustaining research rigour and facilitating the "joining up" of research funded by others. The Science and Engineering Base Co-ordinating Committee plays an important role in supporting this partnership, recently enhanced through being joined by the Director of Research and Development for the Department of Health. Both the first and the current DGRC have been invited to become members of the HEFCE board, and there are in addition many other examples of cross-representation to ensure that research issues across the dual support boundary are addressed coherently and complementarily.

  We consider therefore, that the reorganisation of the Research Councils, and new management structures have improved the basis on which public funding for research is provided. However, we believe that the enhancement of the links between OST and HEFCE will continue and further augment the efficiency and effectiveness of the dual support system.

  However, we also recognise the importance of the Charitable sector in support of research activity and, increasing particularly through the Wellcome Trust in particular, research infrastructure. This contribution is not only extremely welcome generally, it is particularly important in, and may in fact in large part be responsible for, the very high levels of performance of the UK biomedical science community, a key area to support health care provision and economic development. We were delighted that by joining JIF we were able to build on the joint initiative we had previously established with the Wellcome Trust to fund research equipment in the life sciences. We consider that the importance of the charitable sector will grow and we have therefore recently commissioned a study to map links between HEIs and the charitable sector in order that best practice can be identified and then spread.

Efficiency and effectiveness of Government-funded research

  We believe that the evidence in table 2 below demonstrates that the provision of public funding for research in the UK is extremely efficient and effective. The dual support system has proved extremely resilient, despite the funding strains, and continues to support plurality, diversity and dynamism. Unfortunately, there is no mechanism to determine how much more successful the UK could have been if the system had been better funded, or what additional value would arise from greater efficiency and effectiveness.

Table 2


Papers per $ Million[21]
Citations per $ Million[22]
Papers per Researcher[23]
United Kingdom
United States

  Source:  Katz, 2000—taken from OECD, Main Science and Technology Indicators, OECD Statistics, 1999 and ISI National Science Indicators.

  As part of the Transparency Review announced in the previous Spending Review White Paper, new costing processes are being piloted at eight universities with the expectation that an agreed approach can be rolled out to the sector that will provide institutions with a much better understanding of their expenditure on different activities; and cost dynamics, so that the efficiency and effectiveness of their expenditure will be increased.

  However, there is a continued concern about research infrastructure in relation to our ability to compete in an increasingly global research base, and this will not be addressed by an increase in efficiency and effectiveness—this requires additional funding. We welcome the recent injection of capital funding by the Government and the Wellcome Trust via the Joint Infrastructure Fund (JIF), to which the HEFCE also contributes. However, we see a continuing need for further capital and recurrent support and a need to establish a proper and sustainable project/infrastructure balance. The announcement of £1 billion for the years 2002-04 from public funding and the Wellcome Trust is a very important contribution on the capital side, but the Funding Councils recurrent funding for these three years is not yet known.

  Another area of concern is the environment for, and experience of, research trainees, who may be working in less than optimal conditions. We also believe that financial constraints prevent the development of an appropriate research base in a number of significant emerging areas.


  As indicated in Table 2 above, the United Kingdom's HE research base, at a high level of aggregation, is very successful. On many measures, our performance matches that of the best in the world in terms of its quality, its impact and its efficiency.

  Other evidence we have collected as part of our Fundamental Review of Research Policy and Funding indicates that the application of a policy of selectivity over a long period has stimulated a constructive and coherent management response by institutional managers, who have become more strategic in their approach to research management. It has also produced an increase in concentration of research funding. As a result of these influences, the output of the most active universities has both increased and improved: they are delivering more, better research. Since both the volume and the quality of research have increased at a faster rate than the funding inputs, there has been a significant increase in efficiency. The timing of these changes in the productivity of the research base can be demonstrably linked to the inception of the RAE cycles and seems, therefore, in large part attributable both to the policy's funding effects, as Funding Councils and institutional funding has been targeted to encourage and reward high quality research, and to better management of resources.

  However, we consider that the present system of dual support, which allows a plurality of decision and funding points and permits institutions and individual academics to exercise judgements about what research to pursue, has also been essential in supporting this change. We believe there has been a powerful combined effect from the dual effects of selectivity on the one hand and changes in the structure of the Research Councils which have seen them become more innovative, focused on more appropriate and coherent disciplinary groupings, and taking a more strategic approach to funding which complements that of the Funding Councils.


  It is particularly important to build on the HE sector's success in working alongside industry to produce research that contributes to the economic development of the country, and to produce research that is of interest to users and other partners to enhance the health and social development of the nation.

  Evidence we have collected as part of our Fundamental Review demonstrates that closer correlation between public and commercial funding in the UK than in the USA, although the average industrial funding of USA universities is higher (11 per cent compared with public funds, whilst it is about 8 per cent in UK).

  In the UK, income for pure research (from public sources including Research Councils and charities) and applied research (from industry and commercial sources) is broadly correlated across small and large institutions, and this does not change much when small institutions are excluded (0.88 for all institutions, 0.86 after excluding minor research institutions). It appears, therefore, that those institutions most successful in attracting research grants tend also to be those most likely to attract industrial funding. There is no evidence of a separation of innovation and application. In the US, income for pure and applied research is only poorly correlated across small and large institutions.

  However, it is also clear from OECD statistics in table 1 that UK companies are not investing enough in their own innovation, outside the HE sector. The UK corporate spend on non-HE research in 1997 of 1.2 per cent of GDP, compares unfavourably with that in Germany (1.6 per cent), France (1.4 per cent) and the USA (2.0 per cent).

  We welcome the recent changes announced by the Chancellor to promote corporate investment in R&D, particularly by SME's but consider more needs to be done to increase the innovativeness of UK companies and their desire to "pull" from the science base.


  We consider that this should be a key aim, and is essential in order to reduce the confusion for academics and industry alike about the nature and purpose of public support for knowledge transfer—a recent HEFCE survey of schemes in this area identified that there were in excess of 60 publicly funded schemes supporting HEI—Industry interactions. Many of these schemes are too small and of too short duration, often seeking to respond to manifestations of problems rather than the underlying problems.

  Longer term, and more substantial support is required in this area to embed knowledge transfer activities within institutions as a core activity.


  Regional networks and collaborations between institutions will be an increasingly important feature of the HE landscape in the future.

  All regions present academics with research opportunities, either because organisations in a region sponsor, or collaborate in, research activity or because regional social, economic or other factors may themselves form a topic for research.

  However, we believe it is erroneous to suggest that there is a dichotomy between research of international quality and regional relevance. We do not believe that there is any inherent conflict between developing excellent research and engaging with the regional agenda. Rather that there are dangers that research can become parochial and inward looking if it is not linked to the wider research effort. In addition, excessive focus on incremental regional research may mean that transformational national or global developments are not embraced. The consultancy study we commissioned as part of our Fundamental Review of Research Policy and Funding confirmed that researchers do not see regional links as sufficient to sustain leading edge research capability on their own.

  In today's environment global companies can go wherever they wish to find the research they need: it is international excellence a region needs to attract such companies. Smaller technology-based companies also locate themselves where there is a research base of international excellence, or are spun off by institutions on the basis of excellent research. Evidence collected for us on collaboration between HEIs and user communities demonstrates that institutions also recognise that interaction with local and regional users makes a vital contribution to their own mission, not merely because industrial or commercial users have access to resources which can support fundamental research to international levels of excellence, but also because a balanced portfolio of fundamental and applied research is recognised as a necessary goal in itself, setting up two-way flows of information, people and skills to the benefit of researchers as well as users.

  Thus for global companies, who have the resources and knowledge to seek out the best research wherever it is found, in the UK or abroad, the distinction between national and regional locations is usually unimportant.

  There are also user communities, however, for whom locality is much more important. Companies without a history of engagement with the HE sector need to be able to commission research of relevance to their needs from a local institution without being forced to navigate the complex landscape of research in UK higher education. Local government and NHS Trusts need to be able to commission research relevant to local service delivery. This research must be good enough to meet the purposes of the users. In addition, we recognise that there are subjects that are regionally based—like health care delivery. This means that we must have a concern for the accessibility of internationally excellent research to sophisticated users, but we must also have a concern for the excellence of the research which is accessible to users with narrower horizons or less experience of interaction with the HE sector, who are less able to identify and access the best research or whose problems may not be demanding enough to engage the attention of the most advanced researchers.


  One of the principal outputs of the research base is a supply of trained researchers. These individuals may go on to pursue academic careers, but increasingly their skills and knowledge are valued by society more widely, and by industry in particular.

  RAE panels have been encouraged to place more emphasis on assessing the research culture in the 2001 exercise, and in this context they will consider factors related to postgraduate training. However, we consider that research training is a key indicator of sustainability and therefore warrants more explicit recognition in the assessment process. We will therefore be recommending as part of our Fundamental Review of Research Funding and Policy that research training be the subject of an explicit, but linked, assessment process involving minimum standards agreed with the Research Councils, Industry, Charities and others.


  A different issue as regards postgraduate research training is the number of PhDs being produced. We consider that an advanced modern society needs a significant number of students with higher degrees. As an indicator of R&D capacity the number of PhD graduates is particularly important. Such graduates are needed to underpin teaching in universities and colleges, particularly for third year work at bachelors level and for postgraduate programmes. They are also, of course, needed to carry out and develop research in universities, industry and the wider economy. Most importantly, it is from PhD students that the next generation of academic staff are drawn.

  Taking 1997-98 as the last year of fully compiled statistics, the UK produced 258,800 first degree graduates and 11,000 doctorates. There were 54,000 other higher degrees awarded. On average there are 4.2 PhD's produced for every 100 first degree graduates. This is well over the 1 per cent we estimate is needed for replenishment of the academic profession, although the general appeal of academic salaries and conditions of service now causes growing concern. But for some disciplines, which compete head on with outside professions, there is a serious shortfall of research trained university and college teachers. We have identified a significant number of subjects—some with significant student demand at first degree level—with hardly any PhD output at all.


  We consider that the UK science and engineering base is performing well on a global basis—in addition international collaboration is rising.

  However, the global research base is becoming increasingly competitive; globalisation is shifting the headquarters of previously UK domiciled companies to other countries; and UK industry invests a lower proportion of its income on in-house research than industry in most other OECD countries, thus reducing its ability to "pull" from the research base. And, despite the dramatic increase in recent years, there is still some way to go before knowledge transfer activities are embedded in all HEIs at an appropriate level.

  There are also structural problems to be addressed. In particular, an appropriate balance needs to be established between expenditure on projects and on the research infrastructure; and issues arising from human resources issues need to be addressed, particularly pay, career development and equal opportunities.

  There is therefore no basis for complacency.

17 June 2000

21   Higher education R&D expenditures in 1997 in $ dollar PPP. Back

22   Number of citations per paper from ISI National Science Indicators. Back

23   Number of papers per researcher, OECD sources. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 3 April 2001