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The value of university led R&D to the UK research system

30 May 2024

CaSE is gathering evidence on the benefits of university-led R&D to the UK research system and the potential impact of the current financial situation facing universities on these benefits.

The role of university R&D in the research and innovation landscape

Universities play a pivotal role in the research and innovation landscape through their teaching, research and knowledge exchange activities. In towns and cities across the UK, these institutions are the hub of local partnerships that are driving cutting-edge research.

A thriving research system generates significant benefits for the UK, driving economic growth and societal advancements. Investing in university-led R&D activities delivers proven returns on public funds: every £1 allocated in England through the Higher Education Innovation Fund (HEIF) resulted in around £10 of value, and every £1 of public funding invested in Russell Group university research was found to generate more than £8.50 for the UK economy. Beyond the economic benefits they bring, the breakthroughs that university research develop also improve the lives and livelihoods of people across the country, for example through increased efficiency of public services (e.g. transport networks and wastewater treatment), the impact of the internet on productivity and connectivity, and the development of life-saving vaccine technology.

To deliver their role in the R&D ecosystem effectively, universities must be supported to achieve a sustainable financial model across both their teaching and research activities

The impacts of financial pressures facing universities

There has recently been a renewed focus on the long-standing financial pressures facing universities. When it comes to funding university R&D, UKRI commit to providing 80% of the Full Economic Cost (FEC) of their research grants, with the remaining funds needing to be sourced elsewhere within university budgets. However, this commitment is not being met, and UK universities are facing growing subsidy costs.

As a result, cross-subsidy of research from teaching budgets is common, especially from international student fees. Shortfalls in funds for teaching provision would likely affect the amount of money available for research, and these shortfalls are exacerbated by the recent changes to immigration rules making foreign students less likely to come to the UK. The combined effect of these changes and the recent uncertainty over the future of the Graduate Visa Route may serve as a deterrent to international students studying at UK universities, an issue that CaSE has recently highlighted and will continue to raise.

Financial difficulties for universities could have knock on impacts for the financial sustainability of the wider R&D sector. This in turn could reduce the quantity and variety of research conducted in the UK, as well as hinder the flow of new ideas and innovation into the system by restricting the number of postgraduate researchers a university can support. Therefore, the long-term financial sustainability of the research system is vital to ensure it continues to contribute to economic growth and improving the lives and livelihoods of people across the UK.

What CaSE is doing

After the General Election, the next Government must address the financial challenges facing universities. We want to make sure they have the most up to date evidence about the benefits universities bring to the wider UK research system, to make the case for the financial sustainability of the university sector, ultimately supporting a thriving and sustainable research system.

CaSE will convene our university, business and charity members and other stakeholders to consider the value of university R&D to the research and innovation landscape, considering areas such as business R&D, local and regional economies, the skills pipeline and the benefit of basic research more broadly to the economy and society. We will also explore the likely impact of the current university financial situation on diminishing these benefits.