11.23 We have sympathy with some of these arguments. However, we heard a large body of opinion, virtually unanimous in the case of institutions most involved in research, and from the National Academies Policy Advisory Group,10 that a dual support system, albeit modified, should be retained. The arguments are that Funding Body research money provides institutions with an essential degree of flexibility in managing their research, and provides the departmental structure and ethos which develop and sustain Research Council projects. It allows institutions, as employers of those who carry out research, to cope with the sometimes short term and unpredictable character of Research Council funding, and somewhat eases the national problem of career management of contract research workers. We heard strong arguments that it was not only the right of institutions, but also their duty to manage their research income in the wider interests of research, and this might indeed include revitalising departments that were in decline, or initiating new interdisciplinary initiatives that were possible on their campus. The accusation of lack of transparency was vigorously contested.

11.24 A second, more broadly based, argument was that it is healthy for research in the country as a whole to have multiple streams of funding. Limiting the number of streams could result in short term thinking, with the major provider of funds becoming preoccupied with themes or trends that are of particular interest to the Government of the day. Funding Body research funding provides the only way of funding the unconventional or unfashionable field, or the unknown researcher who does not yet have the reputation to compete successfully for Research Council grants. A number of institutions expressed the concern that, because some Research Councils have their own research institutes, there was a conflict of interest, and these institutes were (or could be, in the future) favoured in the allocation of research funds, to the detriment of research in institutions of higher education.

11.25 More generally, we heard that there was real merit in a national system of research funding that was partly retrospective (ie based on track record as is the Research Assessment Exercise) and partly prospective (ie responsive mode Research Council funding).

11.26 There must be proper infrastructural support for projects funded by the Research Councils. At the same time, we see merit in a diversity of funding sources, and in institutions having a degree of discretion over how their research money is spent. We believe that departments have a legitimate role in the promotion of research; we have seen examples of departments that, under good leadership, have developed fine traditions of research and research student training. We have not seen evidence that a departmental structure inhibits interdisciplinary work.

11.27 The relative vigour and cost-effectiveness of UK research over the last decade appears to have been sustained by the two streams of government funding, and we propose that they should continue, albeit in modified form. We do not believe that the national interest is best served by transferring all research funding from the Funding Bodies to the Research Councils. However, we do think that there is a need to introduce greater clarity into the funding responsibilities of the different organisations.

11.28 Research Council funding for peer reviewed individual projects is vital to support high quality research allocated on a competitive basis throughout the UK. Such work should be adequately funded and supported in a way which is clear and transparent to those inside and outside the Research Councils. Furthermore, research groups that are able to win Research Council grants, but happen to be located in departments or institutions with a poor overall performance in the Research Assessment Exercise must be able to obtain sufficient institutional infrastructure support to perform the work.

11.29 We propose, therefore, that all Research Council grants should cover realistic indirect costs and include the costs of premises, infrastructural services and central computing, but exclude the salary costs of academic staff. The indirect cost element should relate as closely as possible to the true reasonable cost to the institution in carrying out the research. We propose that the present rate met by the Research Councils of 45 per cent on staff costs should be increased to 60 per cent, or such higher rate up to 100 per cent as the institution can justify (which would include a sum to cover capital depreciation of buildings and equipment). This will provide a powerful incentive to institutions to understand their costs properly and will ensure that institutions which are research active can maintain the infrastructure they require over the long term. It would also increase the awareness of the costs of research, which would assist institutions in their negotiations with industry or other funding partners who wished to commission research.

11.30 We estimate that around an additional £110 million per annum is required to meet the full costs of the grants allocated by the Research Councils. If Research Councils are given this additional funding responsibility, they must ensure that the projects they fund are adequately supported, and that the temptation to fund as much research as possible, at the expense of proper investment in the infrastructure, is strenuously avoided.

11.31 There are three possible ways to meet the additional costs of the Research Council grants. Our favoured option would be for an increase in Government funding to the Research Councils. An alternative approach would be to reduce the overall volume of research, but this would not be in the long term interests of the UK given the economic, social and cultural importance of research. A third solution would be to transfer the shortfall (around £110 million) from the Funding Bodies to the Research Councils. It is worth noting that the Research Councils experienced some difficulty in implementing the 1992 funding transfer and any future transfer would have to be carefully monitored. Such a transfer would obviously constrain the research funds directly allocated by the Funding Bodies and would have a differential impact on individual institutions depending on the relative importance of the funding they receive from the Research Councils and the Funding Bodies.

Infrastructure
11.32 An immediate problem which affects the UK’s research capability is the serious state of the infrastructure and equipment needed to do it. Experimental work has to be carried out in modern laboratories that in some cases have been specially built or modified for the purpose. Special needs may arise from the requirements of equipment, from better understanding of laboratory hazards, and more stringent health and safety requirements. In recent years, there has been virtually no direct funding available to institutions to refurbish old building stock or to bring laboratories up to modern standards. We have already discussed the infrastructure funding gap, and in Chapter 3 we described the outcomes of a recent survey that found the state of research equipment in universities to be inadequate.

11.33 Concern about infrastructure is not confined to those in higher education institutions. Multinational companies are dissatisfied with the state of research facilities and equipment in higher education institutions and have told us of their serious concerns. Some are relocating their collaborative projects with universities outside the UK as a direct result of decay in the research infrastructure.11 During our visits to institutions, we came across a number of examples where the poor quality of infrastructure had resulted in major research universities losing international company research contracts to overseas universities.

11.34 Inadequate investment in infrastructure means that potential areas of growth are not being developed adequately. For example, the biomedical field has experienced a change in emphasis from whole-patient or whole-animal research to molecular and cell biology, but very few of the UK medical schools have the plant or equipment to become internationally competitive in this new and extremely fast-moving field. The Forum on Infrastructure of Health and Life Sciences has concluded that the infrastructure problem has now become chronic and requires an urgent solution.12
11.35 When the previous Government made a 30 per cent cut in capital budgets in 1996-97, it suggested that the Private Finance Initiative (PFI) could meet the gap. Whilst it might be realistic for the PFI to support those facilities which are clearly revenue producing, such as residential accommodation and conference facilities, it is unworkable for major research and teaching equipment and laboratory facilities which have little revenue earning capacity, and are rapidly depreciating assets. The Council on Science and Technology sees only limited application of the PFI in this area because of the typically short life of such equipment.13 As a consequence, the capital cut has simply exacerbated the research infrastructure problems.

11.36 The Joint Research Equipment Initiative (JREI), introduced in February 1996, has provided funds for research equipment in areas of research relevant to Technology Foresight priorities, where industry contributes to the cost. In 1996-97, JREI provided £50 million for equipment, including the contribution from industry. Although welcome, this is insufficient and is not directed at all infrastructure needs.

11.37 Without a major injection of funds to improve the infrastructure of the UK’s top quality research departments, we do not believe the future competitiveness of the UK research base can be secured. Although the problem is immediate, a one-off injection of resources would not solve the problem over the long term. Rather, a continuous process needs to be put in place to prevent the deterioration of infrastructure in these departments in the future. We recommend later that a fund be established to provide loans at very low interest rates for research infrastructure (Recommendation 34).

11.38 We are convinced that this is an area where it ought to be possible to seek collaboration between all the major parties, including the Government, the Research Councils, the Funding Bodies, industry, and the research charities, who rely on a well-provided infrastructure to underpin their own investment in research.

11.39 We judge that it would be desirable, with the help of Government commitment, to secure a revolving fund of £400 to £500 million in due course. The fund would support departments or institutions with a track record of conducting top quality research. Repayments of the loan should be made from the enhanced indirect cost rate proposed earlier.

11.40 The establishment of a fund, with contributions from several sources, would require a joint management committee or board to enable the various parties to maintain accountability for their investments. To avoid all of the expenditure being counted against the Public Sector Borrowing Requirement, we understand that it would be important that the power to appoint to the managing body did not rest solely with the Secretary of State and that the Government did not require the board to operate as a Non-Departmental Public Body.

Communications and Information Technology (C&IT)
11.41 An increasingly important element of the infrastructure for research is Communications and Information Technology (C&IT). C&IT has enhanced communication between researchers and provides better access to information such as large information datasets, data-centres and on-line journals. High performance computers are used to model and visualise virtual and remote environments as well as to manipulate information and data. There is less concern about current levels of investment in C&IT compared to other aspects of infrastructure, although continued investment is be needed to keep the UK at the forefront in the use of new technologies for research.

11.42 The Funding Bodies, through the Joint Information Systems Committee (JISC), have supported initiatives to provide services for researchers, such as electronic databases, electronic journals, image databanks and document delivery projects covering a range of disciplines. Funding of such services is significant but finite, and other means of funding them will need to be found if they are to continue. The Funding Bodies should continue to manage and fund these projects, although we suggest that a proportion of the costs should be recouped by charging institutions for services on a volume-of-usage basis, to be recouped, in part, from enhanced Research Council indirect costs. This would result in the provision of demand-driven services which would help to ensure that they are high quality, effective and useful.

Recommendation 27
We recommend that the Funding Bodies, through the Joint Information Systems Committee (JISC), should continue to manage and fund, on a permanent basis, quality and cost-effective Communications and Information Technology (C&IT) services for researchers and should, in due course, introduce charges for services on a volume-of-usage basis.

11.43 The provision of a high quality broadband network is essential for much research 14 with the UK Joint Academic Network (JANET), SuperJANET, and their successors, being important to collaborative research across institutions. The UK higher education sector is privileged in its access to an advanced broadband infrastructure. However, its success and the increasing demands on the system have placed it under considerable strain, particularly in communicating with centres overseas. The National Science Foundation in the USA has developed a mechanism to cope with this problem by introducing a graded system with different classes of access ranging from ‘overnight express’ to ‘third class’, depending on the importance of the communication. It has been suggested that the UK could adopt a similar system.15 Other ways to reduce the pressure on international bandwidth include ‘caching’ (where retrieved data from overseas is stored temporarily locally for use shortly by others) and ‘mirroring’ (where a duplicate or mirror copy of such data is held locally). These processes are already practised to a limited extent, but the growing use of networks by researchers and their likely increased future use for teaching may mean that these techniques alone will be insufficient to provide sufficient bandwidth to meet all needs.

Recommendation 28
We recommend to the Funding Bodies that the Joint Information Systems Committee (JISC) should be invited to report, within a year, on options to provide sufficient protected international bandwidth to support UK research.

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