Industry fails to stump up

December 2, 2005

Government hopes that industry will step up its funding of university research are not being realised, according to a statistical analysis of higher education funding.

The Research Yearbook on universities, produced by higher education consultants Evidence, shows that industrial research spending at universities fell from £236 million to £2 million between 2002-03 and 2003-04. By contrast, funding from research councils, charities and the European Union all rose.

The figures show that industrial income in medicine, biology, the physical sciences and the social sciences all fell, meaning universities earned Pounds 12 million less than they did in 2002-03. But spending in engineering departments was up by £3 million.

Figures for individual universities show that the top ten bring in 48 per cent of the total industrial income earned by the 136 institutions that Evidence tracks.

The top earner, Imperial College London, took in £21.8 million in 2003-04, 9.6 per cent of the total but £1.3 million down on 2002-03.

Cambridge University, in second place, made £18.9 million, up £2.8 million on the previous year, while Nottingham University, in third place with £11.3 million, was £1.1 million down.

Ian Leslie, pro vice-chancellor for research at Cambridge, said that part of the increase was most likely to be due to the impact of the Cambridge-MIT Institute.

But he added: "While comprising about 10 per cent of research income, industry-funded research is the area that seems to be increasing fastest."

Richard Masterman, director of Research Innovation Services at Nottingham University, said full economic costing, whereby universities will be expected to charge funders to cover the infrastructure costs of research, could be deterring industry.

He said: "Full economic costing may be having the unintended consequence of encouraging large companies to review their research and development expenditure and place more outside the UK, to ensure that they get value for money.

According to the yearbook figures, York University suffered the steepest fall in industry income. Between 1999-2000 and 2003-04, its industrial income has shrunk each year, from a starting point of £3.3 million to £1.6 million last year.

Simon Newton, director of the Enterprise and Innovation Office at York, said that there was a huge push for universities and the Government to open up strategic opportunities and that there was great potential for growth.

The strongest growth was shown by Greenwich University. Its industrial income of £468,000 in 2002-03 had more than doubled to £1.3 million a year later.

Richard Lambert's review of business-university collaboration, carried out for the Treasury, pointed out that industrial spending on research had fallen from 1.5 per cent of UK gross domestic product in 1987 to less than 1.3 per cent in 2001.

Mr Lambert said that it was essential to "boost the demand for research from business".

Last week the Office for National Statistics said that the figure had fallen to 1.1 per cent of GDP in 2004. This puts the UK near the bottom of the developed nations for industrial research.

* New formula based grants promoting academic-business links could thwart efforts to instil such activities at the centre of academic life in the UK, a report warns this week.

The Higher Education Funding Council for England and the Office of Science and Technology this week unveiled the new approach to the allocation grants for "third stream activities" through the Higher Education Innovation Fund.

Most HEIF 3 allocations, totalling £238 million for universities from 2006-07 to 2007-08, will be based on formula funding for the first time. Grants will be calculated by measuring numbers of staff at universities, general external funding, and numbers of dedicated third-stream staff in place.

But a report by the Higher Education Policy Institute argues against the "simplistic use of such performance metrics". It says: "The approach would not be likely to help inculcate the culture change that needs to pervade the institution."

The report argues that the overarching aim of the HEIF scheme "should be to instil economic and social impact as 'values' within universities, rather than more crudely just to promote a specific set of third-stream activities."

Hefce has asked institutions to submit strategic plans in order to release their HEIF grants by March 15, 2006.
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