Research councils will cover close to the full cost of research projects from July, the Government has announced, in a surprise move that marks a fundamental shift in the way research by academics is supported.
Lord Sainsbury, Science Minister, and Kim Howells, Minister for Higher Education, wrote to vice-chancellors last week announcing that the research councils would pay 80 per cent of the costs of research - rather than the 60 or 70 per cent previously estimated.
Until now, universities have been unsure of the real costs of research, including research equipment and staff time, and research grants have covered only about half of them.
Ian Haines, chair of the UK Deans of Science Committee, said: "This could be serious extra money coming into departments in a number of cases.
Perhaps some of the closed science departments would have survived with full economic costing."
But with the research councils supporting costs such as salaries and libraries, the Government acknowledged that the purpose of funding from the Higher Education Funding Council for England would change.
Keith O'Nions, director-general of the research councils, said: "It is a profound shift in the way we fund research."
He said that Hefce's research money - known as "QR funding" - should be used by universities to subsidise funding from charities, which usually don't pay any indirect costs, and from Europe, which still meets only 50 per cent of the real costs of research, despite pressure from the UK.
Mike Beveridge, deputy vice- chancellor of Plymouth University, said: "For those of us who watch power politics from the sidelines, the increase to 80 per cent of the full cost for research grants, while welcome, seems like one card in a long game between Hefce and the Office of Science and Technology for control of university research funding."
He explained: "The issue is whether this is a move towards the end of the dual-support system of research funding."
Rob Cuthbert, deputy vice-chancellor of the University of the West of England, said: "We do much better bidding to the research councils than we do waiting for crumbs from the QR table. This move reinforces the areas where we would like to compete."
David Wallace, vice-chancellor of Loughborough University, said that the move raised urgent questions about exactly what Hefce's research funding was intended for. He said: "There is no doubt that Hefce has been thinking quite deeply about its role. It is a minority funder for many institutions now and with top-up fees it will become more so."
But Rama Thirunamachandran, director of research at Hefce, pointed out that Lord Sainsbury and Dr Howells reiterate their commitment to the dual-support system for research in their letter. He said that Hefce's funding was vital to give universities more freedom to carry out the research they wanted to do.
"The key issue is there is now more money for blue-skies research," he said. "If all research is entirely driven by funders' priorities, there is a risk that really innovative ideas will never get researched."
Leader, page 12