Whether by spin or pre-election generosity, the Government has cheered researchers with its announcement that research councils will in future pay 80 per cent of the full cost of the research they support. This adds up to more than that provided by the previous overheads system, and is also more than previous announcements had suggested. The size of last year's spending settlement left sufficient leeway to reassure those who feared that reform might lead to less research being carried out.
Paradoxically, the deal is so favourable that it risks making other forms of research funding less attractive at a time when the Government is keen for universities to expand their sources of income. At the moment, the Higher Education Funding Council for England puts about £90 million into supporting research spending by charities. The hope is that under the new system, more money will be available to pay overheads on charity research, but there are no guarantees.
Even worse is the position of universities competing for European Commission research funds. Success in Europe already costs institutions money because of the low level of overhead costs that European grants bring in. The next Framework Programme, starting in 2006, may be twice the size of its predecessor and the UK cannot afford to be left out. Part of the programme is the planned European Research Council, which is intended to fund basic research. It could be a fruitful source of revenue for top UK universities.
And although the new funding regime is accompanied by hundreds of millions of pounds in incentives, there could be unpleasant surprises in store.
Trac, the system for working out how much research costs universities, has not been fully implemented. It may yet reveal that research is more expensive than anyone had thought. If it does, the flow of cash may be interrupted.
In the longer term, perhaps by 2012, the Government's plan is for research councils to fund the full economic cost of the research they commission.
This could mean the end of the dual-support system that has been a constant of postwar higher education. That in turn would remove one reason for universities to stay in the state system. If they can cut loose, and charge students whatever the market will bear while receiving the full cost of their research from the Government, the case for full independence becomes stronger than ever.