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Select Committee on Science and Technology Fourth Report

3 Funding

33. RCIs are funded through a variety of modes, including core grants and responsive mode grants from Research Councils, Government grants and commissioned research and commissions and sponsorship from third parties. Funding for some capital costs can be applied for separately, either from the Research Councils directly or from OSI funds. Not all of these modes apply to all RCIs and in each individual case, the balance between their sources of funding will vary. For example, MRC institutes are fully funded by the Research Council whilst some BBRSC institutes receive higher levels of investment from Government departments than from their parent Council. Third party funding, whether from the European Union, other international funding organisations, charities, universities, industry or other sources, is clearly an important contribution to the overall sustainability and success of an institute, but in this chapter we concentrate on funding arrangements concerning the two major players, the Research Councils and the Government.

Research Council funding

34. Research Councils are allocated a global sum from the Science Budget by the OSI and are then free to distribute this funding as they choose between support for RCIs and grant funding for other research. Planned expenditure by the Councils for 2006-08 gives an indication of the balance between these activities across the piece.

Table 1: Planned expenditure by the Research Councils 2006-08

%

Grants 41%

Research institutes 22%

Training 14%

International subscriptions 8%

Capital 9%

HQ 3%

Other costs 3%

100%

Source: Ev 1

The figures for individual Councils show the wide variation behind these averages;

Table 2: Expenditure on research by Research Councils in 2004-05

2004-05 (£M) AHRC3 BBSRC ESRC3 EPSRC MRC NERC PPARC4

HEI expenditure1 28.8 157.5 58.2 233.2 138.0 59.2 78.1

RCI expenditure2 2.8 69.9 14.1 18.7 217.4 98.5 20.2

RCI expenditure as % of (RCI +HEI) expenditure 8.9 30.7 19.5 7.4 61.2 62.5 20.5

¹ Non-RCI expenditure in HEIs. NB This includes MRC Research Centre expenditure and NERC Time-limited Collaborative Centre expenditure.

² RCI expenditure including that provided to centres in HEIs (except MRC Research Centres and NERC Time-limited Collaborative Centres).

³ All AHRC and ESRC Research Centres are based in HEIs, but expenditure is shown as RCI expenditure.

⁴Based on PPARC gross expenditure

Source: Ev 111

It should be noted that these figures are only a snapshot for one particular year as the amount awarded to the RCIs will change in accordance with the decisions made by the Research Councils on strategic need and whether new institutes are opening or older ones are closing down. The budgets for each institute are set every four or five years, taking into account the overall funds available to each Council and its strategic plan. In NERC's case this is done by setting funding proposals against criteria in each of ten funding categories.[78] The general trend is for the amounts allocated to RCIs to be increasing. For example, BBSRC gave £85 million to its RCIs in 2000-01 compared to £105 million in 2005-06, with a projected increase of £13 million over the next four years.[79]

35. The core strategic grant is fundamental to the existence and structure of the RCIs and, as been seen above, is perhaps the key factor which enables them to exploit their distinctive advantages as research centres by ensuring their financial stability. In the case of the MRC institutes, it is the only form of MRC research funding which they can access since they are not eligible to apply to the Council for responsive mode funding. The MRC Chief Executive told us that "in general we expect core support for the institute to be providing the wherewithal for the basic work of all the scientists in the institute".[80] BBSRC and NERC, on the other hand, operate "a mixed model" whereby their RCIs can apply for direct grants in competition with universities.[81] This is a new development in the case of BBSRC, which recently decided to allow its institutes to apply for a capped amount of responsive mode competition funding.[82]

36. BBSRC's decision was supported by those giving evidence to us, such as the Biosciences Federation.[83] Others were more equivocal. The University of Leeds considered that the idea of RCIs bidding against universities for some of their support was a good one but also noted that "the success rates of RCIs with BBSRC … are much higher than that of universities which is not necessarily consistent with their relative research quality".[84] BBSRC not surprisingly disagreed, although its Chief Executive did accept that part of the success of institutes might be down to expertise in producing the grant applications.[85] This raises the question of the balance between core funding and grant funding and whether it is perceived as fair to both RCIs and the HEI sector. The Research Councils stressed that even proposals for core funding were subject to rigorous review as to the quality of the science. For example, Professor Blakemore told us that:

"We, like NERC and BBSRC, have tried to devise mechanisms for tensioning the bids from institutes and the bids from universities for grants directly so that it is a transparent process of comparing quality. When proposals come to boards for renewal, the quinquennial review of institutes or units, their quality is expressing precisely the same terms, the same ranking mechanisms, peer review and so on as the grant applications that the same board is looking at in the same session. I think this transparency is very important to convince the university sector that continuing investment in institutes is worthwhile, the quality of the science is exceptionally high and therefore in the long run it is in their interests that that investment should be continued."[86]

This is undoubtedly true, although all the evidence we have received suggests that the university sector values the RCIs and can see that a strong RCI sector is good for the health of the UK science base.

37. On the other hand, the Prospect union BGS (British Geological Survey) Section wrote to us with their suspicions that "NERC has an agenda of reallocating funding from its institutes [...] to universities".[87] This refers to NERC's commitment to introducing "more flexible funding methodologies" in order "to improve the cycle of strategic objective setting, commissioning research and evaluation of outcomes, all informed by stakeholder input".[88] We note the assertion by Professor Thorpe of NERC that "some of our institutes are rather successful at bidding for other NERC grants and funding",[89] and we do not see the changes underway at NERC as against the interests of its RCIs. Nevertheless, we will be interested to see the changes in the allocation of NERC funds between RCIs and universities in the next few years. We believe that the best science should be supported by the Research Councils regardless of whether applications originate from universities or institutes, and that RCIs should not be barred from applying for responsive mode grants.

38. One particular concern raised with us by RCI directors was the rationale behind the Research Councils' policy on who could apply for funding to which Council. There has been a recent agreement between BBSRC, MRC, Wellcome Trust, the British Heart Foundation and Cancer Research UK that "institute staff, supported by those organisations, can be eligible to apply for research support from any of the other funders".[90] Professor Blakemore implied that this development might lead to a change of MRC's policy on disallowing applications from MRC institutes for MRC grant funding.[91] Elsewhere, however, there are restrictions on which Research Council might be applied to for funds. For example, a CEH scientist may apply to BBSRC and NERC but applications, passed by peer review, have been refused by EPSRC in at least one case and CEH employees are no longer eligible for MRC funding.[92] This is an issue which is overseen by RCUK, the umbrella body for the Research Councils. The CEH Director commented that she found "RCUK's attitude to funding not helpful, particularly for interdisciplinary science" and that "I do not see the reasons why research councils do not fund the best science; I do not understand why they put up barriers."[93] When we asked Professor Sir Keith O'Nions about this issue, he said that there were "quite good reasons" why RCIs could not apply to any of the Councils: "There are eight of them and you could sprinkle your proposal to eight different Research Councils".[94] Given the current emphasis on multidisciplinarity, this does not seem sufficient reason to prevent the best scientists receiving funding for the best proposals. We recommend that RCUK review its policy on eligibility of scientists in RCIs to apply to any of the eight Research Councils. To encourage interdisciplinary research, we recommend that there should not be a limit or bar to RCIs being able to apply to any of the Councils for funding.

FUNDING FOR COLLABORATIVE AND MULTI-DISCIPLINARY CENTRES

39. The funding mix for cross-Council research centres is naturally even more varied than for those with a single parent Council. The Tyndall Centre, for example, receives core funding from NERC, ESPRC and ESRC as the first tripartite collaborative centre. It was originally awarded funding for a five year period but when this was reviewed towards the end of that time, the Centre received funding for only three years. The experience of multidisciplinary centres such as the Tyndall Centre is valuable to this inquiry in view of the increasing emphasis placed on multidisciplinarity and the likelihood that more such institutes will be developed in the future. We therefore treat it as a warning call that the Tyndall Centre had many criticisms to make of the review process which it had to undergo to secure further funding. The Tyndall Centre director expanded on this in oral evidence, telling us that:

"there is some learning that is still being done about how research councils make joint decisions and I think the Tyndall Centre has pushed at some of those limits or some of those obstacles to making a joint decision. Certainly, when we were negotiating the second contract, the feedback we were getting from three different research councils was on occasions different and on some occasions contradictory. One research council wanted our proposal to move in one direction and another research council came back and said, 'No, no, we want it to move in a different direction.' Rather than having one steer, we were getting multiple steers, and of course that makes things difficult. So there is learning to do. I think that is recognised generally within research councils but it is genuinely difficult to find good and effective decision processes and mechanisms to make those sorts of cross-council decisions on interdisciplinary research."[95]

We are concerned by the experience of the Tyndall Centre in securing an extension to its funding and we expect the Research Councils to seek mechanisms to ensure that similar issues involving interdisciplinary research might be handled more effectively in the future.

40. The range of other funding the Centre receives and the implications of this for its future are worth noting. The Tyndall Centre's director told us that at the moment "there is an expectation that we would match our core funding from the research councils with an equivalent stream of funding from government, civil society, organisations from business and so on".[96] It could be that in three years' time the centre will "no longer have core funding from research councils" and "in that case, we would secure funding from a variety of other sources, from government, from business, from Europe and international agencies".[97] This ambition is an indication of the Tyndall Centre's strong reputation and brand leadership and it shows that a successful centre like this can thrive without core funding in perpetuity from the Research Councils.

Government funding for RCIs

41. In addition to the Science Budget administered by the OSI, RCIs may also receive Government funding from departments through either core funding or commissioned work. The amounts involved can be quite significant, which means that the individual departments are key customers of the RCIs and therefore, to varying degrees, in a relationship of mutual dependency. As the recent RIPSS report on sustainability acknowledged, "in some cases [e.g. NERC and BBSRC RCIs], a Government department may be the single largest customer for the research services of a RC institute (an integral part of the SEB [science and engineering base]) in a strategically interdependent relationship".[98]

42. The outstanding example of this is the relationship between Defra and some of the BBSRC and NERC institutes. In the early 1970s, the Government's research and development programme was reformed in accordance with what became known as the Rothschild principles, which recognised the need for applied scientific research to be governed by the 'customer-contractor principle' under which 'the customer says what he wants; the contractor does it (if he can); and the customer pays'.[99] This reform led to joint funding by the Ministry of Agriculture, Fisheries and Food (MAFF), as it then was, and the Research Councils of the key RCIs operating in the environment and animal health areas. Despite changes in funding patterns, three of BBSRC's seven institutes still have significant funding from Defra. The importance of this relationship was reflected in the RIPSS report which recommended that where a Government department procures 15% or more of an RCI's turnover, that department's Permanent Secretary, working through its Chief Scientific Adviser, should be jointly accountable with the Research Council Chief Executive "for developing joint scientific and investment strategies for their cross-boundary research interests."[100] This applies in the case of Defra and the BBSRC to three institutes since at the time the policy was agreed, Defra procured about 40% of the turnover at IGER, 20% at Rothamsted Research and about 20% at IAH.[101]

43. We will discuss in a later chapter the relationship between Defra and RCIs and the problems currently experienced within that relationship. Here these figures illustrate the strength of the financial links between the Government and the institutes and hence the importance of the continuation of funding from this source to the stability of the RCIs involved. We were therefore concerned to see figures indicating that direct Government funding to the BBSRC and NERC RCIs, for example, has been steadily falling over recent years (see tables 3 and 4 below).

Table 3: Annual Government support for BBSRC RCIs

Institute Income from Government sources excluding BBSRC (£M) 2000/01 to 2005/06

£m 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06*

Income Defra/FSA 31.6 29.9 29.2 28.4 30 24.3

Income Other Government 7.4 9.3 7.9 8.1 7.7 5.7

Total Government Income (excl BBSRC) 39.0 39.2 37.1 36.5 37.7 30.0

Institutes Gross Income 142.6 143.6 151.8 149.0 163.0 171.1

% of Gross Income 27.3 27.3 24.4 24.5 23.1 17.5

Source: Ev 125

Table 4: Annual Government support for NERC RCIs

2001/02 2002/03 2003/04 2004/05

NERC 63.6 64.9 72.7 75.3

Govt departments 12.5 13.7 12.2 11.9

Other research contracts 15.4 18.6 16.2 22.5

Other income 6.3 7 6.2 6.9

Total 97.8 104.2 107.3 116.6

(NB data assimilated from additional information supplied by NERC in response to Committee request)

At a time when more emphasis than ever before is being placed on scientific evidence and when the science budget has been increasing, this decline in departmental funding requires some explanation. Part of this lies in pressures on departmental spending. While the science budget as a whole is ring-fenced and therefore protected, the individual science budget within each department is not and so is liable to be cut when economies are needed. This perhaps provides another piece of the explanation in the lack of ownership felt by a department of the means by which its science needs are delivered.

44. This raises questions of who should take responsibility for funding the science which is needed by departments. Evidence presented to us suggests that some of the difficulties faced by certain RCIs at this time are due to changes in funding mechanisms by the Government. The Campaign for Science and Engineering, for example, argued that scrutiny of how funds are spent has meant that "blurred edges in the funding mechanisms are being sharpened up" and "it is no longer possible to assume that the Research Councils will pick up the tab for any piece of science just because another part of Government wishes to see it performed but is not prepared to fund it".[102] If neither the departments nor the Councils are able to pay, then there is a grave danger that certain types of basic research would be lost. This could include long-term datasets and monitoring which are currently maintained by individual RCIs as part of their overall strategy but which are liable to fall victim to further cuts in funding or to disappear altogether when those institutes are closed. Examples would be datasets on biodiversity or hydrology at CEH or the Park Grass Experiment set up by Rothamsted Research in Hertfordshire in 1856.

45. We are deeply concerned by the issue of who should pay for nationally-important basic research, facilities and policy-driven research. It is clear that the departments can only do so if they are given the funds specifically for this tasks. One solution would be to ring-fence funds for activities such as long term datasets and thereby take them out of mainstream funding. Sir Keith O'Nions told us in relation to ring-fencing funding for this purpose that he was "thinking about it".[103] We should like to see a positive outcome to these deliberations. We recommend that the OSI examine mechanisms for identifying and providing guaranteed funding for nationally important datasets and long-term monitoring activities in order that this vital information will continue to be available to inform future research and policy. This would be particularly important in the case of closure of institutes where responsibility for such work may have to be transferred to a new body but it may also help to maintain the sustainability of existing RCIs by giving security of funding for part of their operations. This is closely linked to our recommendations concerning the role of the OSI in monitoring the health of the sector outlined below (see paragraph 151). Another suggestion that we have heard is that, just as the science budget itself and departmental capital budgets are ring-fenced, research budgets within Government departments should also be ring-fenced so that they cannot be raided to address funding problems elsewhere.[104] The remit of this inquiry has not allowed us to examine this idea in sufficient depth to offer a firm recommendation but we believe that it should be examined further. We recommend that the Government examine the proposal that departmental research budgets, once set, should be ring-fenced for the spending period.

THE COOKSEY PROPOSALS AND MRC INSTITUTES

46. While this inquiry was under way, Sir David Cooksey published his proposals for the new administrative arrangements for the joint MRC and National Health Service research budgets. A new body, the Office for the Strategic Co-ordination of Health Research, is being established to oversee the funding priorities of MRC. We were keen to establish whether there would be any impact on the MRC's institutes as a result of these changes. OSI told us that there would be "no change" in the funding or accountability lines for "the majority of MRC's institutes and units" as a result of the Review, although there may be implications for nine MRC units involved in health services research, clinical trials and/or applied research.[105] We also understand that there will be no change to the way MRC receives funding from the OSI in the form of grant-in-aid through the Science Vote.

Conclusions on funding

47. The funding arrangements for RCIs are undoubtedly complex. Even in cases where they receive core funding on the basis that this should support the whole range of their activities, as with MRC institutes, in other cases they are expected to attract other grants from additional sources. Indeed, as the Biosciences Federation told us, "some Research Councils (especially the BBSRC) expect Institutes to use Councils' money as leverage for additional funding" and that "BBSRC institutes are given targets for commercial income".[106] One witness suggested that the entire dual funding system, including presumably third party funding of any sort, "has outlived its usefulness and that consideration should be given to replacing it with some form of block (core) funding".[107] However, we believe that the complexity of funding sources is not necessarily a problem as long as the core income of an institute is guaranteed for its five year period. This gives it the stability the institute needs to carry out its mission to the best of its ability and to meet the expectations of the Research Councils and the science community, as well as its direct customers. We note that all witnesses, including Sir David Cooksey in his review of funding arrangements for health research, have stressed the importance of core funding to the RCIs.[108] We can see the value of extra-Council commissioned research, especially from Government departments, but we are concerned that the commissioners of this research should be aware of the need to support the core facilities and skills underpinning it in order to ensure the sustainability of the institute involved.

48. We consider that the balance between core funding and responsive mode funding available to RCIs works well at present and that there is no evidence that inappropriate levels of support are given to RCIs in preference to universities. We are also strongly of the view that core funding is the best way to ensure that an institute remains viable and capable of delivering its mission. We are concerned that the financial difficulties which have been experienced for some time by certain BBSRC and NERC institutes indicate that not all stakeholders are prepared to acknowledge the part they have to play in ensuring the sustainability of this part of the research base.

78 Q 56 Back

79 Ev 120 Back

80 Q 56 Back

81 Q 51 Back

82 Q 27 Back

83 Ev 100 Back

84 Ev 81 Back

85 Q 52 Back

86 Q 48 Back

87 Ev 153 Back

88 Ev 141 Back

89 Q 28 Back