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BEIS has published its allocations to UKRI’s Councils for the next three years. What did we discover? 

  • 1 June 2022
  • By Stephanie Smith

On Thursday, 9 June 2022, HEPI will host its Annual Conference in central London. Titled ‘Challenges for the future?’, the day will include the launch of the Advance HE / HEPI 2022 Student Academic Experience SurveyRegister here.

This blog was written by Stephanie Smith, Head of Policy (Research and International) at the Russell Group.

What did we learn? 

Overall, this is a good outcome for UK Research and Development, and UKRI more generally. The release by the Department for Business, Energy and Industrial Strategy (BEIS) states that UKRI’s budget will grow from £7.8bn in 2021/22 to £8.9bn in 2024/25; core budgets for all the Councils, including Innovate UK, will also rise during this period. Research England and Innovate UK are particular winners – signalling the Government’s ongoing commitments to innovation and (hopefully) fundamental research.

More interesting data can be found in the UKRI’s useful accompanying ‘data explainer’. This shows that 95 per cent of UKRI’s 2022/23 budget is already committed – at least for the beginning of this financial year. This means money will be tight at first, potentially putting pressure on Council budgets. The good news is that this headroom rises to £2.5bn in uncommitted spend over the course of 2022/23, which should allow UKRI to begin implementing its new strategy – the first in its history, given that this is the first time it has been given a three-year settlement to plan with.   

This headroom of uncommitted spending nearly doubles over the course of 2024/25, which should tee up UKRI nicely for the next spending review period, at which point the organisation will need to make its next bid for funding. The hope is that UKRI will be able to use this funding to strengthen the resilience of the UK’s Research and Development base, especially given low recovery rates on the full economic costs of research grants, resulting in a deficit of £4.6bn a year at sector level.

As well as setting out the overall budget allocations for the next three years for each of the Councils (and Innovate UK), UKRI has tried to make what is happening to these budgets over the next three years more transparent – a relief to policy wonks who have been struggling to uncover where national productivity investment fund (NPIF), talent and official development assistance (ODA) spending may be masking real term falls in core Council budgets. 

In doing this, the scale of the Government’s science and innovation ambition is laid bare – while Innovate UK will see uplifts of 54 per cent to its core budget, from £631m to £970m in 2024/25, the Arts and Humanities Research Council and Economic and Social Research Council budgets will see only modest rises (£61m-£70m and £114m-£122m, respectively). With significantly more funding for infrastructure, talent and cross-Council funding allocated outside core Council budgets, the hope is that UKRI will be able to find other ways to support these strategically vital disciplines. 

Other Councils will also have a rocky start, with the Biotechnology and Biological Sciences Research Council, the Natural Environment Research Council and Research England having to cope with declines in funding at the start of 2022/23, before seeing overall rises in later years.

What didn’t we learn? 

The data release sets out overall budgets for each of the Councils but does not indicate how funding will be allocated across individual budget lines. Those wondering how institutions’ quality-related (QR) allocations will play out will have to wait until later this year, when Research England and the other Councils publish their new strategic delivery plans.  

Given that the higher education sector as a whole improved its performance in the REF this year, many have speculated that QR funding – and its equivalents in the devolved nations – will need to increase significantly in order to recognise the increase in world-leading research across the UK.  

With Research England’s budget set to fall by 2.4 per cent (£42m) in 2022/23, this appears hard to achieve. But there are several reasons to remain positive. The position for 2023/24 is much better, with its budget set to increase by £433m.  

Even better, while funding allocations to UKRI have been made on a financial year basis, Research England distributes QR funding on an academic year basis. This gives it some flexibility in how to treat the upcoming year and should help it to smooth over some of these transitions.  

Further, UKRI’s budget explainer sets out several commitments to provide stability to the sector by maintaining the balance of dual support ‘at around’ 64 pence in the pound. This should mean, in theory, that for every pound the Research Councils (and cross-UKRI activities) spend between 2022/23 and 2024/25, QR funding should receive about 64 percent.  

Whilst this commitment is very welcome, there will be an opportunity in the run up to the next Spending Review to make a case for a further uplift to QR given the funding stream was worth 80 pence in the pound in 2007 and has declined in real-terms since then. This will be crucial to supporting the financial resilience of the UK’s research base and delivering on the Government’s science superpower ambitions.  

The elephant in the room 

The allocations made on Monday have been set in the absence of a decision on the UK’s association to Horizon Europe. In this vacuum lies much uncertainty, especially around UKRI’s plans on talent and global collaborations spending. 

SHAPE subjects (Social Sciences Humanities and the Arts for People and the Economy) in particular are reliant on EU funding for support, given the relatively small sizes of their Councils, and UKRI will have to consider how to support these strategically important disciplines if Plan B is implemented.

Overall, though, the outlook is positive. All UKRI Councils will see growth in their budgets over the next three years. Although funding will be tighter for the beginning of 2022/23, the allocations on Monday signal that improvements across all the Councils are on their way.

The new allocations also signal another positive change – a winding down of Industrial Strategy Challenge Funding and other national productivity investment fund allocations, which were highly controlled by the Treasury. The way funding has been allocated for this Spending Review period is quite different – and is designed to give UKRI a great deal more freedom and autonomy going forward. Combined with UKRI’s new five-year strategy, this hopefully signals a new show of faith in the Government’s main funder of Research and Development – and should put UKRI in a stronger position coming up to the next Spending Review.

Register here for HEPI’s annual conference on Thursday 9 June 2022.

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