DIUS gears funding for knowledge transfer

December 21, 2007

A welcome redistribution of wealth from rich to poorer universities, or a hindrance to excellence - new funding arrangements for so-called third stream activities have split opinion.

Bill Rammell, the Higher Education Minister, says two thirds of universities will see funding for knowledge-transfer activities rise by 50 per cent after reforms to the Higher Education Innovation Fund.

The fourth round of funding (HEIF4) will rise to £150 million in 2010-11, but a cap will set an annual limit of £1.9 million per university.

For the first time the money will be allocated by formula only - with no competitive bidding - and no institution will receive more than a 150 per cent increase on current funding.

The new system follows the Sainsbury science policy review recommendation that more funding be directed to business-facing institutions.

The new funding cap has not been welcomed by the elite research-led Russell Group universities, most of which stood to exceed the £1.9 million limit.

Wendy Piatt, the group's director-general, said: "All of the English Russell Group universities reached the absolute or relative cap on funding for HEIF due to the intensity of high-quality knowledge transfer activity they have undertaken - a clear indication of the importance of this work in our research-intensive universities, which are, in fact, not just world-class but also business-facing."

While the group welcomed the overall increase in HEIF funding, it "would question the use of an absolute cap on institutions that (were) excelling in this area - at least a cap at a level which almost all our institutions exceed".

"In an area of such key strategic importance to the growth of the UK economy it is essential that excellence is fully rewarded and incentivised," Ms Piatt said.

The arrangements for HEIF4 have been welcomed by some as more equitable.

Oisin MacNamara, director of research at Northumbria University, said the cap would prevent funding being monopolised. "I think this will engineer a certain amount of redistribution of wealth and ensure everyone gets a decent share," he said.

Dr MacNamara also welcomed the overall increase in knowledge-transfer funding.

"Even a small amount of money can go a long way when it's discretionary," he said.

"It gives you that discretion to be autonomous, fleet of foot and to invest in those things that you think are appropriate to take the university forward."

There will be substantial differences in the percentage increase received by institutions.

Whereas large, research-intensive universities may have been getting £1.5 million under HEIF3, rising to £1.9 million under HEIF4, some smaller, business-facing universities that previously received much lower sums will also get up to £1.9 million.

Michele Mooney, director of the Corporate Development Centre at Birmingham City University, gave a cautious welcome to the new system.

"We're on just over £1 million a year at the moment under HEIF3, and under this formula it looks as though we might move up to £1.9 million three years out.

"But that's predicated on us maintaining the things that go into the formula - staff numbers and revenues."

David Eastwood, Higher Education Funding Council for England chief executive, said the £1.9 million cap would drive "appropriate" distribution of funds, and described the funding formula as "a work of algorithmic genius".

Appearing before the Innovation, Universities and Skills Select Committee, he said: "The funding metric uses staff numbers as a measure of capacity, business income as a measure of activity and doubly rewards engagement with small to medium-sized enterprises, which is challenging and (which) we want to incentivise."

john.gill@thes.co.uk.

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