Part I - Overview

Section C: Managing for Sustainability

1. Institutions are required to take responsibility for their own financial sustainability, particularly in respect of research infrastructure.

Background

2. The Government has accepted TRAC data which showed a significant under-funding on publicly-funded research. This evidence base was supported by national studies of infrastructure carried out in 2001.^xi The 2002 and 2004 Spending Reviews awarded more money for research, both recurrent (QR and the Science Budget) and as capital through SRIF. Institutional responsibility for their sustainability was a condition for this, set out in several Government documents and embodied in the Financial Memorandum between an institution and its Funding Council.^xii
3. During 2003 and 2004, OST carried out a review and reform of the Dual Support System,^xiii at the same time working with other major funders (OGDs, charity, industry) to improve the sustainability of the HE part of the UK research base.^xiv As a result of this work, institutions will now prepare project applications to Research Councils and OGDs on a TRAC fEC basis, and those sponsors will pay a higher percentage of fEC.
4. These are major changes but they are not a final and sufficient answer to research sustainability, and some issues will continue to be debated. However, they immediately improved the cost recovery for every research-active HEI. Equally significantly, they are changing the climate under which research has been subsidised by institutions to an unmanageable extent, while public funders had been experiencing little pressure to pay the real costs of the work they fund.
5. There are wide implications and benefits for institutions. Research Council funding is not the only area where institutions need to improve their cost recovery. They also need to change the low price culture and make a convincing case to charities and other funders. The principles of using fEC to manage institutional sustainability apply to all activities. In England the HEFCE Financial Memorandum was amended to strengthen this requirement.
6. Teaching equally demands a full cost approach in the context of setting fee levels (where these are not fixed by the Government). TRAC fEC guidance focuses on the costing of externally-funded research, but can as well be applied to institution-/own-funded projects and to Other projects (e.g. consultancy). The principles and approaches can also provide the fEC of Teaching courses or modules. HEFCE are using TRAC to inform their Teaching Funding Model. In time, Research Councils may use TRAC to inform the funding of PGR student activity.