The unexpected cost of low inflation: research councils will cut grants

October 15, 2009

Researchers are to be hit in the pocket after the UK research councils announced that they will claw back about £10 million from around 3,000 existing grants.

The awards are being trimmed retrospectively to take account of falling inflation, a move that has angered universities.

Research-intensive institutions will be hit the hardest, and have warned that the cuts will have implications for their budgets.

Wendy Piatt, director-general of the Russell Group of large research- intensive universities, said it was disappointing that the councils "should risk jeopardising the progress of many world-class projects" through the adjustment.

"Universities have planned their research activities on the basis of receiving the full amount, and will have made employment and capital commitments accordingly."

The councils, which spend about £3 billion on research every year, say in a statement that "the reduction will be of the order of 1.2 per cent for 2010-11".

From April 2010 onwards, any existing grant or fellowship announced based on old Treasury figures will be revalued using the new figures, although those where the outstanding payment is £100,000 or less will be spared.

Grants awarded in 2008-09, where the cash limit was calculated using a 2.75 per cent rate, will be recalculated using a 1.5 per cent rate. New grants awarded this year are already indexed at the reduced figure.

Alan Thorpe, chief executive of the Natural Environment Research Council and the new chair of Research Councils UK, said: "The decline in inflation needs to be reflected in the grants we award. All savings made as a result of changing the rate will be reinvested into research and postgraduate training."

In a statement, Universities UK says it is concerned about the implications for financial stability.

It adds that the councils do not appear to have worked with the institutions affected to develop a full understanding of the financial consequences of the decision.

"Indexation is, on the whole, usually below pay awards and other cost pressures within the higher education system. As such, the clawing back of any funding will only hinder institutions' ability to manage portfolios sustainably," it says.

A spokeswoman for RCUK said: "All councils will be advising universities and other research organisations about which grants will be affected over the next few months, but this will take time."

She added that if there was a substantial rise in inflation in the future, the cash-indexation rate could be adjusted upwards, too.

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