The dual-support system has been running in its current form for more than ten years. The original idea was that a research proposal was judged purely on scientific merit, away from the politics of running a university.
Money from research councils was to fund the direct costs of research (research assistants, technicians, equipment, consumables), with the funding council grants supporting the indirect costs (heating, lighting and the cost of accommodation).
These streams were meant to meet the full costs of the research with a bit left over to generate new research and cover infrastructure.
Currently, the research council grant also includes a contribution to indirect costs calculated as 46 per cent of the cost of staff employed on the research grant.
This amount is not expected to cover academic salaries or building infrastructure. These costs were to be met by the funding councils' side of the dual-support system, allocated by research assessment exercise rating as quality-related (QR) funding.
But other research funders have used the 46 per cent as an indicator of how much they should contribute to indirect costs irrespective of whether there is QR funding to match.
Based on a 1997 study, the government now estimates a gap of £170 million between dual-support funding and the actual cost of research. Other studies put this as high as £440 million.
The 2002 spending review allocated an extra £120 million to the research councils to come online in April 2005 to increase their contributions to indirect costs.
The Office of Science and Technology proposal suggests that universities should be responsible for recovering full costs of their research. The research councils would pay 60 to 70 per cent of the full costs of a research project to enable universities to put their research on a sustainable footing.
The transparent approach to costing (Trac) is a new system for identifying the full costs of research. Universities will be asked to recover their full research costs.
Trac builds on the transparency review, a Treasury initiative to demonstrate the full costs of institutions' activities that identified a £2 billion funding gap between research income and expenditure.
At present, research is subsidised by charging overseas students more than it costs to teach them and by academics working up to 70 hours a week.
A pilot group of ten universities started work last spring to reliably and robustly estimate the full costs of individual research projects. The group includes Russell Group and modern universities, and English, Welsh and Scottish institutions.
Universities must have Trac in place from next summer.
HOW TRAC WORKS
* Generates research proposal
* Indicates resources required, including an estimate of staff time
* Adds costing information on direct overheads, the principal investigator's costs, departmental overheads, central overheads, infrastructure costs and the costs of the capital employed
* Checks the validity and accuracy of the submission
* Confirms that the university has the balance of funding available
Research council: review process
* Assesses research quality
* Confirms resourcing level
* Considers value for money
Research council: administration
* Checks costing based on resourcing level
* Checks validity
* Issues grant offer