The advantages the UK gains over other countries from its heavy use of block grant funding for research risk being eroded by budget cuts and shifts towards more applied projects, a new analysis has warned.
PwC was commissioned by the Russell Group of research-intensive universities to study research funding systems in comparator countries to the UK, to assess how they are designed and what impact this has on performance.
The report finds a key strength of the UK system is its use of quality-related (QR) funding – allocated via the Research Excellence Framework (REF) – which plays an important role in research quality.
Germany and the Netherlands – two of the countries analysed in the report – also both primarily fund research via block grants and scored highly for research excellence.
Canada and South Korea, however, provide limited block grant funding, instead preferring to allocate money to specific projects. Both have lower research excellence scores.
South Korea’s prioritisation of applied research has “resulted in a strong innovation ecosystem but has limited the country’s ability to lead as a ‘first mover’ in innovation, forcing instead a ‘fast follower’ approach,” says a Russell Group analysis of the results.
It points out that a 13 per cent increase in basic research funding in the country has attempted to rectify the issues but the impact is yet to be seen.
Canada’s deprioritisation of basic research has in turn “led to an observable decline in research intensity”. Attempts to reverse the trend have so far not succeeded, demonstrating the “long-term impact of reductions in discovery research with expertise in cutting-edge areas difficult to re-establish once lost”.
The UK risks following a similar path, the analysis warns, as QR funding has reduced in real terms by 16 per cent since 2010.?The funding stream has also recently come under pressure as the government reviews its spending in a difficult economic environment.
Combined with a reduction in the costs covered by external research grants to 69 per cent in 2022 – against a target of 80 per cent – these shifts have resulted “in the UK’s block grant funding being redirected away from the more unique, strategic activities which have been attributed to strong research systems in the comparator countries,” says the analysis.
It recommends the UK can therefore drive further research excellence by addressing the declining value of QR funding and prevent future erosion by linking it to inflation.
The country should also avoid prioritising applied research at the expense of basic research funding, the Russell Group recommends, saying its analysis “suggests that both are necessary, and it is important not to prioritise short-term economic gains from applied research over long-term investments in basic research”.
The report further points to how research in some countries is slowed down by “excessive administrative burdens”.
Canada scored highly for efficiency given its funding is managed largely through one central body, the Tri-Agency, while Germany, with its “highly decentralised system, with overlap and duplication” was given a lower score.
The Russell Group recommended the UK therefore continues efforts to improve coordination in its system and reduce inefficiency and duplication, taking forward recommendations in the Tickell Review to streamline the funding application process.
Tim Bradshaw, chief executive of the Russell Group, said the UK could also learn a lot from other countries’ approaches to incentivising industry-university engagement to drive innovation.
“The link we’re seeing between research excellence and flexible funding streams such as QR also underlines why we are so keen to address the decline in this funding stream, a vital part of the UK’s successful dual support system,” Bradshaw added.
“If we want the UK to maintain its position as a global R&D leader, restoring the value of block grant funding and investing in funding streams that encourage university-business collaboration will both be crucial in raising the UK’s research and innovation excellence.”
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