Select Committee on Innovation, Universities, Science and Skills Written Evidence


Memorandum 38

Supplementary evidence from the Department for Innovation, Universities and Skills following oral evidence session on 20 February 2008

SCIENCE BUDGET ALLOCATIONS INQUIRY

Answers to follow-up questions provided by the Department of Innovation, Universities and Skills

1.  Please provide the Committee with details of the success rates (including n-values and percentages) for research grants at their prospective quality grades for each Research Council.

RESEARCH COUNCILS SUCCESS RATES

  The application success rates for all Research Councils for 2005-06 and 2006-07 are in the public domain and will continue to be monitored and reviewed by RCUK.

  The Research Councils publish annual figures on the funding rates of individual universities and research organisations.

  All Research Councils receive substantially more high quality proposals for research funding than they are able to support. The funding rates published reflect the level of demand balanced against the available resources during the year. The Research Councils seek to maintain an active dialogue with their research communities concerning levels of demand and funding rates and in disseminating best practice. Some Councils have received significantly more proposals in recent years, and/or applications for increased resources per grant, and both of these are relevant to success rates.

  The latest data can be found at:

http://www.rcuk.ac.uk/aboutrcuk/efficiency/demand/successrates/default.htm

2.  Please provide the figures referred to in Q 211-212 and Q 216-217 on exchange rate fluctuations.

  For a number of years the Department had an arrangement with STFC (and prior to STFC's creation, CCLRC and PPARC) and NERC under which some of the increase in their subscriptions to five international organisations (CERN, ESO, ESA, ILL and ESRF) was met centrally from the Science Budget. The arrangement covered increases due to exchange rate movements and, for CERN, ESO and ESA, changes to national net income (NNI) rates (a common feature of international subscriptions whereby contributions vary according to a country's relative wealth).

  The way the arrangement worked was that in each spending review period a part of the Science Budget was not allocated in advance but held by the Department to cover claims by STFC and NERC under the arrangement. These were made towards the end of the financial year, once the impact of exchange rate movements (and any NNI changes) were known. The sum initially set aside for this purpose from within the Science Budget was an estimate of what the increases might be.

  For CSR07 and subsequent spending review periods this arrangement has been modified to recognise that the STFC and NERC, with their fuller knowledge of the amounts and timings of these subscriptions, are in a better position to manage this financial risk. Under this change, the 2007-08 baselines for STFC and NERC were adjusted to include anticipated international subscriptions claims for that year and STFC and NERC took on the responsibility for meeting the full cost of international subscriptions. Following the guidance in the Treasury publication Managing Public Money the Research Councils are permitted to take out forward contracts for currency, which enables them to fix the costs of their annual subscriptions at an early stage in the year.

  It continues to be recognised that the volatility of exchange rates could be such that the increase faced by STFC and NERC in any one year might be excessively large compared to the size of their overall budget. Accordingly beyond a trigger limit (£6 million for STFC and £2 million for NERC), the two Councils can seek additional funding from the Science Budget. This is similar to the process that already exists for all Research Councils in respect of any unexpected major losses. If such a request were to be made in future, there would need to be discussions across all the Research Councils, amongst whom the Science Budget has been allocated, to establish how such a shortfall could be funded.

3.  When was the Minister first told of the nature of the cuts that AHRC has announced? What discussions has he or DIUS officials had with the AHRC on this issue?

  AHRC's Delivery Plan shows that in the period 2008 to 2011 the Council will fund a range of responsive mode and strategic programmes, including the research leave scheme, and a postgraduate programme. In order to respond to the national strategic cross-Council programmes which are being given priority in this period, the Council developed a 2008-09 budget which breaks down as follows:


Mechanism
£ million

Responsive mode research
43.52
Strategic/CSR07
16.26
Postgraduate
38.57
Knowledge transfer
5.93
Non-programme
7.39
Total expenditure
111.67


  It is important to recognise that for some years the Council's expenditure on postgraduate training has been increasing. The total number of postgraduates being supported has increased as follows:


2005
2006
2007

New commitments
1,490
1,490
1,456
Continuing students
2,631
2,803
2,928
TOTAL
4,121
4,293
4,384


  A key feature of AHRC's policy has been to increase their proportion of doctoral awards being given in recognition of the Council's role in supporting high quality research. Accordingly the number of new PhD grants it has awarded has increased by 16% in the last two years and 27% in the last four years. The result of this move to more awards lasting three to four years, instead of Masters awards mainly lasting one year, has been that at the end of each year there has been an increasing amount of financial commitment carried forward:


2005-6
£22.4m
2006-7
£26.0m
2007-8
£29.6m
2008-9
£33.4m


  In common with the other Councils, in June 2006 AHRC was required to make commitments across its budget as a whole based on a flat cash trajectory (FEC apart, and that is not relevant in relation to postgraduate training) for 2008-2011. The consequence of AHRC's decisions early in 2006 and 2007 in relation to their postgraduate training competitions is that a high level of committed money is projected to be carried forward at the end of 2007-08; a level which was always going to be challenging to manage against that commitment planning requirement.

  AHRC's Council has made its decisions on funding for 2008 shown above against that background. It is understood that the Council is continuing to examine the scope for flexible use of its budget in the CSR period to maximise its effectiveness.

  At the AHRC Council meeting last November there was some discussion of the level of new commitments to postgraduate training awards which could be afforded within their settlement, but as the reasons for the scale of decline in postgraduate training were unclear we sought further clarification of the position. Accordingly Ministers were advised of the revisions to AHRC's Delivery Plan which involved more emphasis on contributing to strategic issues, and they agreed in early December to a Delivery Plan being published which did not contain any specific numbers of postgraduate training awards. AHRC told officials on 4 December that they planned to reduce the number of new postgraduate awards to 1000 in 2008-9, but as we had already confirmed this was not part of AHRC's Delivery Plan announcement, officials intended to consider this issue further with AHRC in the New Year, to understand more fully why this reduction was necessary. This communication was not drawn to the attention of Ministers. Before this happened, on 15 January the AHRC published a statement on their web site without giving the Department any prior notice of its publication. More recently there have been helpful discussions between DIUS and AHRC officials about a number of aspects of the Council's programme.

4.  Please provide a timescale with precise dates, where possible, of the discussion that DIUS has had with the Treasury on the rules regarding profits made through intellectual property.

  There were various discussions with Treasury during May and June on this subject, leading up to the DTI's CSR settlement in June. A subsequent letter from the Treasury dated 12 July 2007 confirmed the arrangements for regularising the budgetary position of the MRC Commercial Fund. Since then there have been continuing exchanges with the Treasury over the precise implementation arrangements.

5.  Please provide figures on how much each Research Council received for FEC and on the relationship between flat cash and FEC (see Q 193).

  The allocations to Research Councils did not include any separately identifiable sum in respect of the estimated costs of 80% FEC in CSR07. The allocations took account of the collective advice from Research Councils that the additional FEC costs in CSR07 were estimated to be as follows:

FEC Additions


2008-09
2009-10
2010-11
CSR07 Total

AHRC
6,350
10,053
11,796
28,199
BBSRC
30,135
43,523
49,824
123,482
ESRC
15,236
22,005
25,190
62,431
EPSRC
73,479
106,124
121,486
301,089
MRC
29,079
41,998
48,077
119,154
NERC
14,154
21,810
25,413
61,377
STFC
12,139
18,487
21,474
52,100
Total
180,572
264,000
303,260
747,832


  It is expected that the move by Research Councils to funding at 80% FEC will be completed by the end of CSR07.

  The 2007-08 baselines for the Research Councils would be the flat cash sums for CSR07, which are shown in Table 2.1 of "The Allocations of the Science Budget 2008-09 to 2010-11" published in December 2007 and are as follows:

Table 2.1: Science Budget Allocations


£ million
Research Councils
2007-08

Arts & Humanities Research Council
96,792
Biotechnology & Biosciences Research Council
386,854
Economics & Social Research Council
149,881
Engineering & Physical Sciences Research Council
711,112
Medical Research Council
543,399
Natural Environment Research Council
372,398
Science & Technology Facilities Council
573,464
Total
2,833,900


  Department for Innovation, Universities and Skills.

March 2008




 
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