Select Committee on Science and Technology Second Report


69. HEFCE, faced with a budget with little flexibility, was clearly in a predicament when the improvement in ratings became clear. If it funded departments for 2002-03 using the same funding formula as for 2001-02, it would have needed a further £206 million, yet DfES came up with only £30 million extra. Broadly speaking, HEFCE had two choices: to fund universities for 2002-03 using the results of RAE 1996; or to apply a different funding formula and work within the existing budget. The AUT favoured the former option.[115] We believe that HEFCE was right to use RAE 2001: if you have a selective mechanism for funding it should reflect the current state of research. But we take issue with the way the cake was cut. We had a level of selectivity that seemed to be generally accepted, yet HEFCE's decisions concentrate funding still further.[116] 83% of funding will now go to departments rated 5 or 5*, in which 55% of 'active researchers' work. Only one piece of evidence submitted to us desired a greater selectivity in funding.[117]

Developing departments

70. In RAE 2001, a significant number of departments, not least in the new universities, that were previously rated 1, 2 or 3b in 1996 have increased their rating.[118] We are concerned that many improving departments will be stopped in their tracks by the decision not to fund 3bs, and to provide 3as with only £20 million. HEFCE says it is protecting the best, but they risk destroying the good who might be among the best in five years' time. There is no reason why the brunt should not have been borne equally. HEFCE's decision is compounded by the ending of CollR funding for the post-1992 universities. The University of the West of England suggested that funding for departments rated 3b and 4 should have been selective based on the return on previous investment.[119] There is much sense in this suggestion. We accept the need to maintain funding for excellence. But funding must also allow for the means to improve. We urge HEFCE to reconsider their decision not to fund 3b departments and to improve the level of funding to 3a departments.

71. There may also be also be a need to support new and developing departments at the lower 1 and 2 ratings, perhaps through a different funding mechanism.[120] It is very hard for new departments with little or no research record (such as the new medical schools) to get the funding required to get going.[121] The AUT's proposal of an annual seedcorn fund to fund these departments is attractive, though their figure of £100 million seems to have been plucked out of the air.[122] We note SHEFC's introduction of a Research Development Foundation Grant. We recommend that the Government introduce and resource a seedcorn fund to stimulate the development of research in new departments, as part of a strategic framework for research funding. We discuss this further in paragraph 88.

Cost weightings

72. Science and engineering subjects are generally classified as high cost UoAs. As a result of data collected from the Higher Education Statistics Agency, HEFCE has reduced the cost weighting of high cost research to 1.6.[123] Table 7 below shows that this has had a substantial effect on the grant allocations, to the disadvantage of scientific research.

Table 7: HEFCE's funding of high, medium and low cost UoAs

Cost Band
2001-02 Quanta (£)
Proportion of Total
2002-03 Provisional Quanta (£)
Proportion of Total
Percentage change
High cost subjects
Intermediate cost subjects
Low cost subjects
Total mainstream QR

73. We find it odd that HEFCE only has three bands and doubt whether university research costs can be so neatly categorised. Even slight inaccuracies in this weighting could mean millions of pounds lost to some subjects. We notice that science and engineering has already suffered in recent years: in the four years from 1995-96, arts funding grew faster (28.1%) than that in the sciences (27.5%), and much faster than in engineering (17.6%).[124] We recommend that HEFCE introduce a more sophisticated weighting system which accurately reflects the high costs of research in certain scientific subjects.


74. HEFCE says it had expected an improvement in the RAE results but the size of the

HEFCE says it had expected an improvement in the RAE results but the size of the increase exceeded its expectations.[125] Given that QR funding has risen only fractionally above inflation in recent years even a more modest increase in research ratings would have caused problems for HEFCE. We believe that HEFCE should have seen the problem coming and that more could have been done to minimise its impact, perhaps by holding back funds from other initiatives.[126] Sir Roderick Floud, of Universities UK, described the funding of RAE 2001 as a "slap in the face" for universities.[127] HEFCE should have warned them to duck. At least HEFCE recognises that the implications of funding RAE 2001 has caused "considerable anxiety".[128] While HEFCE cannot be blamed for the level of funding that is available for higher education research, it must bear primary responsibility for the way the RAE funding deficit has been handled.

75. Some responsibility for the funding decisions must lie with the DfES and with the Minister for Lifelong Learning and Higher Education. DfES says it sets the "overall framework and policy objectives for the Higher Education Funding Council for England. 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".[129] Mrs Hodge said "there are a lot of conversations that take place before those decisions are taken but, at the end of the day, the decision rests with HEFCE and it is theirs to take".[130] The RAE and the funding decisions based on it have major repercussions for the higher education system. We find it hard to believe that the Minister is prepared to delegate all of that power to an unelected quango. It cannot be in the public interest that she should do so.

76. The DfES must also bear responsibility for the financial dilemma which HEFCE has been facing. The extra £30 million found by the DfES in January 2002 is welcome but inadequate. We appreciate that the Government has a number of priorities in education, but it must not lose sight of the need to maintain and develop an excellent research base. We welcome the Minister's commitment to fight for a generous settlement for higher education in the Spending Review.

77. During our evidence session with the Secretary of State for Trade and Industry in December 2001, we asked about the RAE. Her view was that this was a matter for her DfES colleagues.[131] We fully accept that higher education is the responsibility of DfES, not of DTI, but we would suggest that the Cabinet Minister for Science should take a closer interest in the RAE and in the funding of higher education research, since it is vitally important to the future of science and technology in the UK.

The Spending Review

78. Discussions about the mechanism for the allocation for research funding are largely meaningless unless the under-funding of university research is addressed. Several submissions said money, or lack of money, was the main problem with the funding decisions based on RAE. The Spending Review 2002 will set government spending allocations for the financial years 2003-04, 2004-05 and 2005-06. Universities UK has said that HE should get £9.94 billion for the Spending Review period, of which £2.6 billion is to fund research.[132] There is a strong case for a substantial increase in the HE research budget. This should not be less than the £200 million a year required to fund RAE 2001 using the formula employed until recently and to restore the project funding/QR ratio to 1993-94 levels. Borne in mind should be the chronic underfunding in university research for much longer than this.

79. As part of the 2002 Spending Review, the Government is conducting seven cross-cutting reviews, one of which is considering science and research. One of its aims is to "review current funding mechanisms and levels, and to identify the priorities for resources across the funding streams held by the Office of Science and Technology and the Department for Education and Skills".[133] We welcome the science and research cross-cutting review and trust that it will spell out clearly for the Treasury the value of science and engineering research and its present parlous state of under-funding. The Government has stressed the need to get results from public services. UK university research is already among the best in the world without the funding it deserves. The Spending Review 2000 brought great benefits for the Science Budget. Now has come the time to put right the imbalance in the dual support system by delivering a significant increase in funding for higher education research.

115   Q 73 Back

116   Ev 94, para 20; Ev 89; Ev 104 Back

117   Ev 63 Back

118   Ev 87; Ev 111 Back

119   Ev 76 Back

120   Ev 87, para 6 Back

121   Ev 62, para 9 Back

122   Ev 27; Qq 95-97 Back

123   Recurrent Grants for 2002-03, HEFCE 02/11, March 2002 Back

124   Q 25 Back

125   Q 3 Back

126   Ev 41 Back

127   Q 118 Back

128   Ev 3, para 22 Back

129   Ev 48, para 3 Back

130   Q 28 Back

131   Minutes of Evidence, 19 December 2001, HC 459-i, Qq 54-60 Back

132   Investing for Success, Universities UK, 2001 Back

133   See 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 2002
Prepared 24 April 2002