Science Research Funding in Universities (Science and Technology Committee Report)

In 2018-19, universities reported a £4.5 billion shortfall between income and costs of research. Universities predict a reduction in the number of international students; if that happens, it will further add to financial pressures. Also predicted is a possible shortfall of approximately £790 million from other streams of income. The effect of temporary removal of controls on student numbers this year may further add to costs. Other effects of Covid-19 on UK research have included restrictions on research activities, closure of labs, et cetera, as a result of lockdown, and also reduced numbers of postgraduate students coming from overseas.

Medical charities with a shortfall in their income have cut or cancelled 18% of their research funding, amounting to hundreds of millions of pounds. The biggest threat to universities from the reduction in funding is a reduction in research talent. Early-career researchers are particularly likely to be affected. Research students’ funding is funded only to 45% of costs, resulting in a £1.5 billion deficit. Cuts to charity research funding are likely to disadvantage early-career researchers such as PhD students, postdocs and research fellows. Covid-19 clearly is going to have a significant effect, and no one knows for how long.

I turn to the government response, which in some terms is positive and is much appreciated, as far as it goes. The Government have provided short-term funding of £100 million in QR-related funding that is brought forward. A research sustainability task force engaging with the university sector to discuss science research and issues is most welcome. The £280 million sustaining university excellence fund—the so-called SURE fund—is another initiative. That is all good, but how do you plug billions of pounds-worth of shortfall? Some questions remain about the long-term level of support.

In December 2019, the Government announced their ambition to make the UK a science superpower. The recent research and development road map reaffirmed the pledge to increase R&D spending to £22 billion by 2024-25. By the way, our report identified a key issue of the large number of scientists who will be needed with this scale of increase in R&D. Estimates suggest that an increase of as much as 50% in the numbers of research scientists and technicians will be needed; in the short term, this could be met only by international mobility. The government R&D road map sets out the framework, but now it needs the Government to engage with the university sector to get the details right.

I said that I would not disappoint the Minister by not mentioning Brexit. Agreeing a sensible deal and associating UK with the Horizon Europe programme is important. It will enable the UK, a leading science research country in Europe, to continue and enhance the strong links with academia and the private sector, not only with other European counties but more globally. If the UK fails to secure association with Horizon Europe, it will be necessary to have schemes focused on international partnerships, with bottom-up, excellence-based frontier research put in place, with funding and the ability to tap into Horizon Europe on a third-country basis. Is the Minister able to comment?

Putting this all together, I have the following questions for the Minister. What steps will the Government take to improve the financial resilience of university-based research and innovation? Will this include addressing the shortfall in funder contribution to full costs and short-term and long-term adjustment to QR funding? When do the Government intend to publish the terms and conditions of the SURE fund? What involvement will the university sector have in developing the R&D road map? What involvement will the universities have in the Government’s place-based strategy for research? I look forward to the Minister’s response and very keenly look forward to listening to the speeches of other noble Lords. I beg to move.

I hope upon hope that there is one silver lining in Covid—that it has killed Augar. I mean the report, not the man; at least, I think I mean the report not the man but, when he gave evidence to the Committee, I felt decidedly homicidal towards him. Funding further education properly is important for our economic future; the last thing that hard-hit universities need right now is for the funding of further education to face a reduction in student fees. Can the Minister assure us that this frankly bonkers idea is now officially dead?

I turn to the dual funding system, which must be preserved, with a reversal of the quality-related funding stagnation of the last 10 years that the noble Lord, Lord Patel, talked about. This is particularly important, not only because of the funding levels but because dual funding gives universities important flexibility in creating research collaborations and developing research infrastructure. That ability should not be eroded.

Lastly, we must find ways of ensuring that the fruits of UK university and other research benefit the UK. All too often, as was shown by a previous report from the Science and Technology Committee, innovations researched and developed in the UK are snapped up and grown up by US investors and leave these shores. This is one of the things that we ought to learn about from the US. Can we not import that, rather than chlorine-washed chicken?

I remind the Government that prior to the pandemic we were already struggling to maintain our international competitiveness and our reputation as an open and welcoming country, which has taken a huge knock as a result of the rhetoric surrounding the Brexit debate. As an aside, the A-level results fiasco has been an additional cost for universities, particularly those already struggling to balance their books.

On other sources of funding, charities have funded 15% of research over past years but they have been badly hit by the virus. Demand for their services have gone up but donations have gone down. Many charities have seen a big drop in donations. Four per cent of university research income comes from business, mainly big business—companies such as Rolls-Royce and Airbus. We all know what has happened to them during the pandemic. At a time when they are making thousands of workers redundant, they are unlikely to take up the slack left by our departure from the EU. So we rely on government as a source of funding, and that government funding has stagnated in recent years. The Government now have to take up that challenge, increase funding in real terms and fill the gaps left by the other traditional sources of funding. We cannot take our position at the head of world research for granted.

Thirdly and finally, where do we go on our ODA spending? There is a lively debate about this but, even without any change to the 0.7% target, if GDP falls that 0.7% will be a percentage of a smaller sum. There must inevitably be a debate on priorities. One of my frustrations in my time was that the DfID culture was very much to focus on the poorest people in the poorest countries. That is admirable, but it cannot be the full story of ODA expenditure. I was very aware of the resentment among low to middle-income countries, such as South Africa and India, which no longer passed the DfID test as being the poorest countries and therefore faced the loss of any ODA funding. Along with the then Foreign Secretary, I was able to go to those countries and say, “You may no longer be getting DfID money, but we are now offering you a partnership in research and development”. I hope that offer will be retained and very much hope that the Minister will be able to acknowledge these points in his wind-up.

Since then, as has been said, the tectonic plates have been shifting. Covid-19 has had a profound effect, but it has also generated a showcasing of the quality of British science, whether in research towards a vaccine or in providing critical recommendations for quarantining and lockdown. So I hope that it has reinforced the public and media appetite for promoting research and innovation.

A key theme of my early work was trying to make sure that the London teaching hospitals were closely related to the medical schools and their local universities. Each time the noble Lord, Lord Oxburgh, who was then rector of Imperial, made another step forward in his research or innovation programme, he would write and say that closing hospitals is never popular for a Minister, but that if I had not done it they would not have been able to make the progress that they had made. I took great comfort in this, and also at that time worked most happily with the chair of the committee, the noble Lord, Lord Patel.

As a social scientist, let me continue to reinforce the importance of social science. The University of Hull is not one of the great, elite global universities but is always hugely committed to and serious about specific areas of research. It is world leading in applied health research, incorporating wider areas such as education, criminology and environmental sciences. Its insights are extraordinarily important in the development of policy formation. Hull, like so many others, has had an excellent track record in EU research. With others, I ask the Minister to update us on the Government’s ongoing discussions with the EU concerning Horizon 2020. It really has been the generator of a vast amount of research, innovation and collaboration.

Collaboration is the hallmark of the best research. Professor Dame Nancy Rothwell, one of our most outstanding vice-chancellors, speaks in this month’s FST magazine about the importance of national and international collaboration, and I pay tribute to my noble friend Lord Willetts for his work as chairman.

Finally, I will say that, along with the responses we await on many subjects, the noble Baroness had unkind things to say about Dr Augar. More important perhaps is Dame Shirley Pearce’s independent review of the Teaching Excellence and Student Outcomes Framework. She and her team were commissioned by the former Secretary of State. There has been no response whatever for more than a year. It was a tremendous report, with an ONS survey and expert committees. It has been a gross discourtesy not to respond for more than a year. As we make our plans to go forward, there are many encouraging signs and there is more to do. We need a coherent road map if we are indeed to become the scientific superpower that the Government claim is our aim.

The key to the Dearing report was essentially that those who benefit from higher education should contribute. Students benefit and they make a contribution. It is important that they make a similar contribution and that we do not penalise the more expensive subjects such as science, medicine and others. We do not want to disincentivise anybody. The public benefit. We have doctors, nurses and medical specialists—any number of people whom Mariana Mazzucato, in her excellent research work at University College, London, has described as the “significant public investment” in the sorts of specialties that we need.

Business also benefits. I argued with the then Sir Ron Dearing that a hypothecated bond might be a way of looking at another stream of funding for higher education. I understand that the Treasury does not like hypothecated bonds, and Sir Ron made the point that, if it was to be done, we should try to make sure that it was not the Government who did it but the private financial institutions. Be that as it may, the purpose was to create an entirely different stream that had to be applied to higher education.

I conclude by saying that we cannot leave this, I am sad to say, to the vice-chancellors. Their discussions have been very narrow and they have been focused on the competitive interests of their own universities, and that trumps everything else. There has also been a lack of imagination. But we are now in a position where we can look at alternatives, and indeed we must do so.

The Economic Affairs Committee, of which I am a member, had a jolly good stab at unravelling the intricacies of student loan financing in its 2018 report, Treating Students Fairly: The Economics of Post-School Education. Giving students value for money and not treating tuition fees as cash cows was a primary concern. A squeeze on university finances would push that in the wrong direction and away from the more expensive STEM subjects that the economy requires.

The committee also proposed removing the various fictions and anxieties surrounding student loans—my paraphrase—by lowering interest rates and removing the deferred recognition of loan losses used in the national accounts, which differs from international corporate norms—a correction which has now been made. So, if a headline student debt cut is needed, go for the interest rate: it causes alarm and is unfair, yet significantly adds to the amount that is not eventually repaid, serving little purpose now other than appearing as a loan loss in the national accounts.

There is an especially compelling case for prioritising energy R&D. Without innovation, we will not meet our 2050 net-zero target, but that in itself cuts global emissions by less than 2%. It is more important that these innovations could have a benign multiplier effect and perhaps accelerate the developing world’s efforts to leapfrog to clean energy. Then—I suspect the noble Lord, Lord Willetts, would approve of this—we would reduce global emissions by far more than 2% and help the developing world.

Likewise, our leadership in plant science could facilitate the switch to the sustainably intensive agriculture that is needed to feed the world’s 9 billion people by 2050. It is hard to envisage a more inspiring challenge for young scientists than providing food and energy for the developing world. We need to ensure that these scientists are educated, motivated and supported. Our schools, universities, and high-tech businesses—supplemented by national laboratories—must all match the international best if we are to prosper.