Research subsidies: universities’ (other) dirty secret


As I look back this week at the inaugural (and thoroughly enjoyable) Wonkfest, one of the most insightful comments that stuck with me came from Observer leader writer and sector critic, Sonia Sodha. A fascinating debate on regulation (yes really) inevitably drifted into a discussion of universities’ public reputations. Sodha suggested that the sector should reflect on the things it might take for granted, but which may be less palatable to the outside world.

The latest offering from HEPI on the sector’s substantial cross-subsidy from teaching to research is perhaps the classic example. It is simply accepted in most universities that teaching is a surplus-generating activity, and research a loss-making activity. Annual Transparent Approach to Costing (TRAC) reports from HEFCE have confirmed this fact for years. And yet, the question of cross-subsidy is very rarely mentioned in my experience of the fees and funding debate.

Very few people in the sector seem keen to draw attention to it. It’s our dirty little secret, the inconvenient truth that we’d rather hope no-one outside picks up on.

An inconvenient truth

So Kudos to Vicky Olive and HEPI for taking a closer look at this important issue. The numbers are startling. 13% of all UK university research spending was funded by teaching income in 2014-15, primarily from overseas student fees. A quarter of research activity is unfunded. Universities make a surplus of 28% on non-publicly funded teaching income (i.e. overseas student fees), which primarily goes towards funding research.

Granted, TRAC is controversial and unpopular. I have always been suspicious that national TRAC data conveniently shows that domestic student fees cover teaching costs almost exactly. Imagine the political furore if it didn’t! The national data also masks huge variances between institutions and subjects, particularly those which receive additional top-up funding from the state.

But whatever the ins and outs, TRAC proves a well-regarded truism of higher education, that teaching subsidises research. But what does this mean for policy making? This is where I fear that HEPI’s report might miss the point slightly. The take-home message on the run-up to the budget is that research is underfunded, and would not need cross-subsidy if it were funded properly. The implicit argument here is that additional funding for research would also free-up further resources for teaching.

A global issue

This seems unlikely. Yes, UK research is underfunded compared to international comparators; government-financed R&D spend was less than 0.5% of GDP in 2013 compared to over 0.75% in the US and 0.8% in Germany. Yet, as academic and author Christopher Newfield has demonstrated, cross-subsidy is to be found no matter the amount of government funding made available. Newfield argues that the cross-subsidy phenomena in the US – which is even more dramatic than in the UK – is one of the major reasons for spiralling student tuition costs. HEPI’s report highlights a similar problem in Australia, whose system even distributes a portion of research funding to universities according to student numbers.

The problem is that research is a buyer’s market. Funders – primarily the research councils, charities, and businesses – are faced with universities absolutely desperate to obtain grant contracts at almost any cost. Research is currently the main vehicle by which universities and individual academics enhance their reputation and prestige. Contracts can be offered at much less than the actual costs, and greater academic time is inevitably devoted to ensuring positive research outcomes than positive outcomes in teaching. Research contracts come and go, and can be won and lost. Students, on the other hand, bring their income with them only once, and until recently more kept coming.

HEPI’s report does acknowledge that greater accountability for teaching is coming, both directly from TEF and indirectly from students in a competitive recruitment market. The report implies that this could rebalance the cross-subsidies to research, but the continued ‘prestige power’ of research in academia is a good reason to be sceptical.

Importantly, the report does also highlight that there is no conclusive evidence available that good research inexorably leads to good teaching, a conclusion also reached by the country’s foremost pedagogical guru, Graham Gibbs. The sector needs to get its defence in good order here or abandon this often tired and empirically-unsound claim.

So simply blaming cross-subsidy on the miserly Treasury will no longer cut it, especially given the additional £4.7 billion made available for science and research only last year. The real lesson from cross-subsidy – and this may seem naïve – is the need for real prestige and credit in teaching, accompanied by effective incentives to ensure that student fees are actually spent on student learning and services.

Research subsidies may not remain the sector’s dirty little secret for much longer; it’s time to do some laundry before they’re hung out for all to see.

2 thoughts on “Research subsidies: universities’ (other) dirty secret”

  1. “TRAC proves a well-regarded truism of higher education, that teaching subsidises research” No, sorry, not as simple as that. TRAC is fundamentally flawed, in that it normalises staff returns to a standard working week of (if only!) 37.5 hours, say. If we work 50 hours, then the amount of time we’re spending on teaching (and indeed on research) is 33% higher. We as staff are certainly doing all that we need to do to justify the funding we receive, but this then begs the question of who is funding the invisible 12.5 hours that TRAC hides? Given the data, it can only be staff themselves, if we are indeed only paid to work 37.5 hours …

  2. Kevin Maynard says:

    David Morris makes the contention that research is subsidised by teaching based on the outputs of TRAC. I would like to support Simon Thompson’s counterargument that this reasoning is fundamentally flawed. TRAC supposedly gathers the data on time spent doing certain types of activities. As Simon Thompson points out, TRAC has no credibility as a true measure of workloads. All academics are working well over the 37.5 hour week rendering any data gathered through TRAC meaningless. Arguments based this data hence are unfortunately thus rendered equally meaningless.

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