Severe financial consequences for universities if #AugarReview recommendations are implemented

The Committee’s report considers the current system of research funding for universities in England, its relationship with student funding, and its challenges, including: the effect on research of possible changes to tuition fees resulting from the recommendations relating to higher education in the Augar Review; as well as issues that might arise when the United Kingdom leaves the European Union.

The Committee heard evidence from witnesses including the Vice-Chancellors of Oxford University and University College London, and questioned Dr Philip Augar on the recommendations of his review.

The Augar Review did not take a holistic approach to the funding of universities and made no attempt to assess the potential impact of its recommended changes on the funding of research in universities. The result is a distorted assessment of the sector’s financial health as a whole, the House of Lords Science and Technology Committee warn its report.

The Augar Review recommended reducing the tuition fee cap in England to £7,500 but unless this loss is fully compensated by increasing the teaching grant to individual institutions, it will result in significant financial consequences for universities. Any loss in funding would require universities to divert other income streams to support teaching, reducing the resources available to support research. The panel made no attempt to assess the potential impact of its recommended reductions in student fees on the funding of research.

The inquiry also found that Quality-Related (QR) funding, a significant element of the funding provided to universities to support research, has fallen 12.8% in real terms since 2010, adding increased pressure to the ability of universities to conduct high-quality scientific research.

If the Government is to follow any of the recommendations of the Augar Review relating to tuition fees, it must implement them as a full financial package, including increasing the teaching grant to cover the loss of tuition fees, to ensure that universities are no worse off than they are now.

The Government should also address the deficit in QR funding, and should commit to increasing QR funding at least in line with the rate of inflation.

Lord Patel, Chair of the Committee, said:

“The Augar Review has completely missed the mark by not considering research funding in its review. By ignoring research and cross-subsidies, it has made recommendations which, if implemented, could prove harmful to the already challenging ecosystem of university funding.

“We heard evidence that a university’s core operational activities of teaching and research are both loss-making activities already and any shortfall in funding would become unmanageable. The immediate casualties will likely be widening-participation programmes, student experience, infrastructure maintenance and repair, and the hands-on elements of courses.

“Without adequate research funding, the consequences for the UK will be devastating and the UK risks falling behind other countries. The Government intends to spend 2.4% GDP on research and development by 2027, but we conclude that it will be extremely difficult to meet this target unless funding for research in universities is secured and the UK can attract researchers from overseas.”

A Government spokesperson said:

“As part of our ongoing review of Post-18 Education and Funding we will be responding to Philip Augar’s recommendations in due course.

“We have committed an additional £7 billion for Research and Development by 2022, the largest increase since records began.”

“The UK will be leaving the EU on the 31 October – whatever the circumstances. We are stepping up all preparations, including ensuring our world class universities have the necessary support to continue with important research and teaching.

“The independent panel set up to provide input to the review, chaired by Philip Augar, has published its report and we will consider the panel’s recommendations carefully.

“Since 2012, the total income for universities in England has increased by around £6 billion, driven by rising student numbers and the amount of funding they receive. Since 2016, government has committed an additional £7 billion for Research and Development by 2022, through the National Productivity Investment Fund – the largest increase since records began.

“Resource per student is around an historic high – the IFS estimate that the 2012 reforms increased real funding per student by almost 25%. Government, via the OfS, provided over £1.4bn of funding in teaching grants to eligible higher education providers in 2019/20.

“We want a friendly and constructive relationship, as constitutional equals, and as friends and partners in facing the challenges that lie ahead. This is critical to achieving the ambitions of our modern Industrial Strategy, including delivering 2.4% spend of GDP on R&D by 2027. We recognise the important contribution of universities to research, innovation and working with business.”

The Committee also address further issues facing science research funding in universities including:

• Brexit – Retaining the mobility of researchers after Brexit is vital to ensuring the UK can continue to attract the best researchers and meet its research and development goals. The Government must ensure post-Brexit immigration laws do not hinder the ability of UK universities to recruit and retain the scientific staff they require, including technicians earning below the recommended salary threshold.
• Loss of EU funding – The Government should ensure that once the UK has left the EU the level of funding the UK currently receives from the EU for research is matched in full. As the UK is a net beneficiary of EU research funding this amount will be greater than the amount the UK currently contributes to the EU research pot.