Support for Universities and Business Innovation: Unravelling the Detail

Support for Universities and Business Innovation: Unravelling the Detail

FS blog websiteBy Fariba Soetan, Policy Lead for Research & Innovation, NCUB

Once again, universities featured heavily in headlines over the past weekend in a series of welcome funding announcements.

Prime Minister Boris Johnson has made clear we are now at the stage that we need to ‘kickstart’ the economy. And while we await the details of what this means in practice, several parts of this policy have already come into view- a university bailout package to address the particular needs of research-intensive universities and a further allocation of funding to innovative businesses through a Government-backed Sustainable Innovation Fund.

What support is being offered to Universities?

The latest two support packages announced by the Department for Business, Energy and the Industrial Strategy (BEIS) on Saturday reflect that university research plays a key role in the UK’s roadmap to economic recovery. The sector has been loudly campaigning for recognition that universities are facing a swift decline in their income as a result of a drop in student enrolments from international students and this is a welcome sign that the Government is listening.

The detail

This is not a straightforward announcement and the devil is very much in the detail. The latest support packages will give greater job protection to thousands of researchers, scientists and technicians working at UK universities during coronavirus and include a mixture of grants and loans (75:25 in favour of loans) available until April 2021 at very low interest rates, over a period of up to ten years.

The first package includes £180 million of new money to enable grant extensions to UKRI and Academy-funded research. Grant allocations to universities will be calculated based on the value of the UKRI grants they hold whose funding finishes between 1 April 2020 and 31 March 2021. The grants will be administered by UKRI and “universities will be required to demonstrate that funds are being spent on research and on retaining research talent” with a high priority on STEM research. The idea behind these funds is to allow for grant outcomes to be delivered that may otherwise be lost due to Covid-19 and lockdown. In practice, this will mean support for research salaries, lab costs, equipment and fieldwork.

The second package gives OfS-registered Universities already in receipt of UKRI funding the ability to reprioritise £80 million of existing grant funding. This is meant to offset the likely loss of international student income that, in part, supports industrial and charitable research. In return for support, Government will be asking for universities to demonstrate how funds are being utilised to sustain high-quality research “with a particular emphasis on STEM research and areas of research typically funded by charities and businesses”. Detailed explanations on the BEIS website explain that “universities will be expected to show they are taking their own steps to make efficiencies, in line with the rest of the economy, to protect their research bases. Precise metrics and outputs/outcomes will be developed as we develop the details of the policy over the next few weeks.”

Experts are already predicting a decline in international students, with the British Council suggesting there may be at least 14k fewer international students from East Asia alone. The real impact of Covid-19 on international student numbers will depend on a variety of factors, such as the extent of restrictions on global mobility, the impact on the student experience and whether there’s a second wave of infection. However it is clear that a substantial decrease in international student income will make a lot of research unviable- both in specific activities and in general capacity terms. This funding will cover up to 80 per cent of the value of missing international fee income.

The new measures announced on Saturday follow a previous package of Government aid in May that brought forward £2.6 billion of tuition fee payments in the 2020-21 academic year to provide stability and help cashflow and £100 million in Quality-related (QR) research funding to underpin the research base. While these measures were welcome, they were limited in their support. They didn’t include any new money and assumed domestic student numbers would stay the same.

What other support is available?

Universities have access to a number of support schemes, including access to some of the government’s Covid-19 schemes for businesses such as the Coronavirus Job Retention Scheme (CJRS) and in some cases the COVID-19 Corporate Financing Facility (CCFF) and Coronavirus Large Business Interruption Loan Scheme (CLBILS).

The Government has made concurrent announcements to support business and innovation. This past weekend BEIS unveiled a new £200m Sustainable Innovation Fund for businesses and start-ups across all parts of the UK who need urgent financial support to keep their cutting-edge projects and ideas alive.

This initiative sits alongside the £500m Future fund scheme which provides government loans to UK-based innovative companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors. All of these measures build on the government’s existing support for innovative, high-growth firms.

Taken together, the Government is demonstrating a commitment to shoring up the research and innovation ecosystem. The Government’s commitment pre-Covid to move towards 2.4% R&I investment is as alive as ever.

What does all of this amount to?

The series of funding announcements by the Government this week for both universities and businesses is good news for research and innovation. It sends an important set of signals from the Government that it values and wants to protect the research base across the UK.

But the devil will be in the detail as to how universities will be able to draw down this support. In a dynamic and uncertain environment, it is not unsurprising that the conditions put on accessing the funding need to reflect the inherent complexities and interdependencies at play.

Not all research takes place in research-active universities and so it may be too early to say whether the totality of these funding pots is enough for our research and innovation ecosystem not only to survive but to continue to be classed as a world leading.

Looking ahead…

This week, it is expected that the Prime Minister will deliver a major speech on the next phase of the UK economic recovery: rebuilding the economy and navigating out of the pandemic. As being trailed in newspapers over the weekend, part of this, we hope, will be further details on how the Government intends to allocate the £22bn in science and research funding promised in Rishi Sunak’s March budget.

One thing is clear, while we wait for the Budget to come in to land, part of this policy effort has already come into view: the horizon for research and innovation is looking positive and despite the complexity of the announcement and funding it should be taken as positive signals from BEIS and Government more generally.

 

Date published: 29 June 2020

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