UK research takes £8K from each foreign student
Hepi report calls for chancellor to tackle research underfunding. Simon Baker reports
Research is so underfunded in the UK that overseas students are in effect subsidising it through their fees to the tune of £8,000 each, according to a Higher Education Policy Institute report.
The eye-catching finding is from a report that shines fresh light on the surpluses from student fees that are used to fund research at UK universities, including previously unpublished data about varying levels of cross-subsidy at different universities.
The study says that, despite attempts over several years to deal with the fact that research is not fully funded by grants from public funders and charities, the losses being made by research seem to be getting worse.
As a result, the report calls for urgent action in the government’s autumn Budget on 22 November to close the estimated £3.3 billion deficit in research funding, which it says means that £1 in every £7 spent on research comes from surpluses made from teaching.
The report – How much is too much? Cross-subsidies from teaching to research in British universities – highlights data already in the public domain from the UK’s Transparent Approach to Costing initiative. This shows that teaching UK and European students generates a small surplus of about £200 million across the sector (although this masks large cross-subsidies from some subjects to others).
However, the teaching of overseas students is the main source of crosssubsidy for research, offering a surplus of roughly £1.8 billion. The study calculates that £3,800 of the average annual tuition fee paid by international students goes to funding research, which is more than £8,000 over the course of an average degree.
The report also contains new figures from three unnamed researchintensive universities showing how overseas students at some institu- tions are propping up research activity by an even greater amount.
At one of the universities, less than half the full costs of research are recovered, while two of the three institutions make a return on overseas students that is almost double the cost of teaching them (see graphs above).
Vicky Olive, a postgraduate economics student at the University of Oxford, who compiled the report, said that she thought international students would be surprised by the findings.
“International students know that they pay above cost price to study in the UK, but not what their fees pay for,” she said.
“Most would be shocked to find out how much goes towards funding research, although students prefer that their money funds research rather than bureaucracy within their university.”
She added that key to the debate was more transparency on crosssubsidies as students may not be “averse” to a proportion of fees going towards research “so long as it filters through to teaching quality”.
Hepi director Nick Hillman said that while some cross-subsidies were “inevitable, even desirable” in UK higher education, the transfer from
teaching to research “looks less sustainable than it did”, especially given the heightened focus on tuition fees and whether they should be lowered for domestic students.
The report also contains an analysis of which funding sources are better at covering the full costs of research, which include not only the “directly incurred” costs such as staff and equipment used specifically for a project, but also the cost of shared equipment and staff and even less tangible elements such as the use of library and administrative services.
The analysis highlights how research councils and other government funders contribute on average more than 70 per cent of the full costs of research, but for European Union funding this figure falls to 65 per cent and for funding from charities just 60 per cent.
It says that, for the government to meet its target of increasing spending on research development in the UK to 3 per cent of GDP, £6.3 billion a year extra would be needed. The report calls for the government to announce an extra £1 billion for research in this month’s budget and for support to ease the deficit on charity funding.
In a foreword to the report, David Coombe, director of research at the London School of Economics, calls for funders to meet the full cost of research and says that the trend for matched-funding schemes was exacerbating the issue.
“The problem is not only in the volume of funding; it is the practice of research funders to demand more than they are willing to pay for,” he writes.
“Institutions have no real choice but to accept the terms offered. Few can turn down grants which serve their missions and enhance their reputations. But as every [university] finance director knows, with each grant comes yet further strain on already-stretched institutional research infrastructure.”
Phil McNaull, director of finance at the University of Edinburgh and chair of the British Universities Finance Directors Group, said the government “must accept” that if it could not meet the full cost of research through grants, institutions should be able to cross-subsidise from teaching or other sources.
“The government could help by recognising the important contribution from overseas fees to the portfolio of funds required to support research activity in universities.
“Practical steps could include removing overseas students from net immigration targets and scaling back efforts to break up the cross-funding activities of universities through selective focus on tuition fees.”
Jo Johnson, the UK’s minister for universities and science, loves the figure of £4.7 billion. It’s like a technicolor dreamcoat to him, and he parades it whenever he can, admiring the way that it shimmers in front of covetous fellow ministers. He’d better watch his back.
The sum of £4.7 billion is, of course, the amount of additional funding that the government has committed to spend on R&D up to 2020-21, billed by Johnson at a recent conference as “the single biggest increase in R&D expenditure in nearly 40 years. We really recognise that our economic future has to have science and innovation at its absolute core. And we’re matching our rhetoric with resources.”
Well, up to a point. In its latest report, the Higher Education Policy Institute reveals the dirty secret at the heart of publicly funded research in the UK: it is desperately underfunded and is being cross-subsidised unsustainably by student fees – particularly international fees.
The issue of underfunding has long been recognised. In 2005 the then Labour government moved to rectify this, introducing “Transparent Approach to Costing” to more clearly identify the true costs of undertaking research. It subsequently instructed the research councils to fund 80 per cent of the overall full economic costs of projects.
Five years later, the Wakeham Review tried to fill the gap by encouraging the “efficient” use of resources, including the sharing of assets. This was partly successful, but 2015’s Diamond Review still contained warnings of a looming need for cross-subsidy.
The Hepi report confirms the bad news, stating that, on average in 2014-15, research councils and industry were funded at just 72 per cent of full economic cost. As a result, the research “deficit” rose from £1.8 billion in 2010-11 to £3.3 billion in 2014-15. Teaching, on the other hand, made a £1.3 billion surplus, and, as the Diamond report predicted, this went towards funding 13 per cent of all university research. Put another way, £1 in every £7 spent on research came from surpluses on teaching.
The report points a finger at research funders’ recent shift towards “challengeled” approaches. The Global Challenges Research Fund is a good example, seeking match-funding from universities that can’t even recover the full cost of their own research, let alone offer a subsidy to what is in effect the UK’s development budget.
Such strains come at a time when most universities can ill afford to bear them. The introduction of the teaching excellence framework has applied additional pressure to demonstrate the value of teaching, and to show exactly where students’ fees are going. Although most institutions claim that their teaching is informed by research, many students would be unimpressed at having to borrow money to subsidise it.
While a welcome contribution, Technicolor Johnson’s £4.7 billion is still too little. It equates to £2 billion a year; if the research deficit is
£3.3 billion a year and rising, there is still a £1.3 billion hole in the budget.
In addition, much of the extra funding will come through the industrial strategy, which also demands matchfunding. However, as the Hepi report notes, institutions have little choice but to accept the terms offered. All are scrabbling to increase their research income even if it ultimately results in a loss, particularly as research output affects their position in rankings and the research excellence framework. Yet the strain is showing: the recent Elsevier report for the government on the comparative performance of the UK research base notes that there is cause for concern on several fronts.
The authors of the Hepi report hope that it will convince the government, ahead of the next spending review, to increase unallocated block funding for research. It’s a clarion call to protect the unique position of R&D within the UK economy.
However, at a time when the public purse is being squeezed by the twin demands of austerity and Brexit, and when universities are perceived as being out of line with the public mood, it will be hard for the government to stay strong on its principles. Let’s hope that Joseph is listening and not dreaming – and that he still has the ear of the pharaoh.
The dirty secret at the heart of UK research: it’s desperately underfunded and is being crosssubsidised by student fees