Universities may have to turn down research grants from the £12 billion Framework Six programme because they cannot comply with new bidding criteria imposed by the European Commission.
The changes demand that universities submit their full research costs: direct (such as consumables and staff time) and indirect (library use and equipment).
At the annual conference of the Brussels-based UK Research Office last week Jean David Malo, who is drafting financial guidelines for FP6, insisted universities could identify both direct and indirect costs. This would make them ineligible for the funding model used previously. He said that it was irrelevant whether universities could calculate their indirect costs if they could identify where they accrued - so they had to use the full-cost model.
But British university finance officers said they could not identify enough indirect costs to make the full-cost model worth while.
In the previous framework programme universities received the full value of their direct costs and received an extra 20 per cent to cover indirect costs. Under the full-cost model they would receive 50 per cent of both direct and indirect costs, and would have to make up the balance from other sources.
The first round of applications has closed, with universities across Europe putting in collaborative research bids. Oxford University, which was involved in 120 FP6 applications worth about £50 million, was expecting to receive about £7 million a year from the programme.
Pierre Espinasse, Oxford University's deputy director of research services, said: "We've all applied in good faith, but the commission has suddenly reinterpreted things at a very late stage."
The Office for Science and Technology said it was seeking formal clarification from the EC and is consulting on how to ensure universities recover the full economic costs of research, but the systems for doing so will not have to be in place until 2005. Institutions will then use the full-cost model, requiring them to cover the shortfall.
Under the previous framework programme, University College London applied to the commission to use the full-cost model, but was turned down by auditors as unable to identify the indirect costs in sufficient detail.