Russell Group – Written evidence (STS0012)

About The Russell Group

The Russell Group represents 24 leading UK universities. We believe people and ideas are the key to meeting global challenges. Through world-class research and education, we are helping to create a dynamic economy, stronger communities and a better future for the UK.

Our research-intensive, world-class universities play an important part in the intellectual life of the UK and have huge social, economic and cultural impacts locally, across the UK and around the globe.

Russell Group universities:

• Generate almost £87bn a year for the economy
• Support more than a quarter of a million jobs across the UK
• Produce 68% of the UK's world-leading research (worth £34bn a year)
• Teach a quarter of all undergraduate students, a third of all postgraduate students, more than a third of engineers, four out of five doctors and dentists, 50% of linguists, 58% of physical scientists and 63% of mathematicians

The Russell Group first met in 1994 and was set up as a professional, incorporated organisation in 2007. Its aim is to help ensure that our universities have the optimum conditions in which to flourish and continue to make social, economic and cultural impacts through their world-leading research and teaching. We provide strategy, policy development, intelligence, communications and advocacy for our member institutions.

1.       Executive summary

1.1       The UK is already a world-leading research and innovation nation. The breadth and depth of expertise in the UK’s research-intensive universities means there are few research and innovation challenges they can’t tackle, and their focus on commercialisation and realising economic and social benefit from their research has contributed to a thriving spin-out and start-up sector. The focus should now be to capitalise on these strengths.

1.2       We warmly welcome the Government’s continued commitment to invest 2.4% of UK GDP in R&D by 2027 and its commitment to raise public investment to £22 billion a year by then, despite the challenging fiscal climate. To realise the full potential of the Government’s investment in research, and to cement the UK’s position as a science superpower, the following areas should be prioritised:

• Investment in discovery research, especially via Quality-Related funding, which is vital to safeguard the UK’s future resilience, agility and prosperity. The rapid pace of progress in vaccine development and treatment of Covid-19 was only possible because universities could tap into decades of investment in discovery research.
• Reducing research bureaucracy with BEIS playing a leading role to encourage funders and research organisations to take shared responsibility for this work.
• Improving the share of full economic costs on research projects funded by Government to ensure the delivery of the cutting-edge R&D the country needs, without compromising on excellence, as the volume of our activity increases.
• Scaling innovation clusters across all regions and nations of the UK by: boosting funding streams with a track record of delivering innovation and business investment; creating a deep-tech seed fund to develop high-value disruptive technologies; and reforming tax to support university-business collaboration.
• Associating to Horizon Europe to ensure we can continue to work with the best researchers, innovators and businesses worldwide. If this is not possible, any ‘Plan B’ should be put into place as quickly and seamlessly as possible, with uncapped third-country participation and interim ‘protect and stabilise’ measures.

2.       Questions 1 and 2: What would it mean for the UK to be a “science superpower?” Are the right structures in place in Government to implement a science and technology strategy?

2.1       The UK is already a world-leading research and innovation nation, with many crucial strengths on which the science superpower agenda can build. The UK is:

• Ranked the fourth most innovative nation, behind Switzerland, Sweden and the US[1]
• Producing the highest quality scientific research, consistently ranked 1st by the World Intellectual Property Organization’s Global Innovation Index (GII)[2]
• Home to world-leading research and innovation-intensive universities, 2nd only to the US in the GII[3]
• A hub for international research collaboration: the UK produced 1 million scholarly research outputs in 2016-20, more than half of which (54%) were produced in collaboration with at least one international co-author[4]
• Home to a thriving start-up sector, producing more ‘tech unicorns’ than France, Germany and Singapore combined, and behind only India, China, and the US[5]
• An RDI landscape which invests well in mid-to-late-stage tech start-ups: in 2020, venture capital investment in UK tech companies was more valuable than France and Germany combined[6]
• Hosting high levels of university-business collaborations across a range of disciplines, worth £1.74bn during 2019-20[7]
• Agile and resilient in national crises, with industry, Government and academia coalescing to produce one of the first Covid-19 vaccines globally – used in more than 40 countries and playing a crucial role in protecting public health in the UK, enabling the Government to roll back restrictions and supporting the economic recovery.

Deploying the UK’s strengths to maximum advantage: the role of discovery research

2.2       One of the UK’s most important strengths, which is vital to transformative and radical innovations, is its discovery research. Without our world-leading discovery research, we would not have innovations including graphene, genomics, opto-electronics, cosmology research, and new tests and treatments for everything from bowel disease to diabetes, dementia and cancer.[8]

2.3       The rapid pace of progress in vaccine development and treatment of Covid-19 was only possible because universities could tap into established basic, discovery research and redirect existing resources at pace. For example, researchers at the University of Oxford used cutting-edge vaccine technology developed over a number of years to rapidly create a safe and effective vaccine against Covid-19. Patient long-term investment in R&D, and especially in discovery research, is key to supporting the UK’s resilience and agility, enabling the research base to respond to new threats and challenges and support a prosperous economy and society.

2.4       It is critical there is sustained investment in fundamental, curiosity-driven research, including via quality-related research (QR) funding, to enable these kinds of ground-breaking advances to be made (see question 4 for more details).

Keeping pace with our competitors

2.5       Investment in research, development and innovation is vital for economic prosperity and social benefit. We therefore warmly welcome the Government’s continued commitment to invest 2.4% of UK GDP in R&D by 2027 and its commitment to raise public investment to £22 billion a year by this time, despite the challenging fiscal climate. This will provide much needed certainty to private investors and help signal that the UK is serious about cementing its position as a science superpower.

2.6       At the same time, the UK’s competitors have begun to significantly outpace us. Although the UK’s research base continues to punch well above its weight, the ambition to achieve 2.4% by 2027 may not be enough to compete with the levels of investment being committed by other leading scientific nations. The ambition to achieve 2.4%, chosen as the average amount invested by the OECD, is now below the OECD average which reached 2.5% in 2019. Germany, the USA, South Korea and Israel all now invest at least 3% of GDP in R&D, and the UK may need to re-consider its target in future to cement its place as a scientific superpower and maintain strategic advantage in science and technology. Key to achieving this will be finding ways of leveraging much greater business investment in R&D.

Working together to back and deploy our strengths

2.7       It is vital that different parts of government – from UK Research & Innovation (UKRI), through its constituent Research Councils and Innovate UK, to the Department for Business, Energy and Industrial Strategy (BEIS) and other departments responsible for research spending such as the Department for Health and Social Care, as well as the Office for Science and Technology Strategy and the Science and Technology Council – are effectively co-ordinated. Without effective coordination, including with the devolved governments, there is a risk of growing unnecessary bureaucracy through duplication, reduced visibility of overall R&D spending, and ultimately less effective deployment of our resources.

2.8       Effective coordination between the different parts of the government landscape is, in the Russell Group’s view, more important than repeatedly changing structures. Over the last decade, the Government has made significant investments in setting up new RDI organisations, including Technology Catapults and several research institutes. Legislation has also been passed to create a new Advanced Research and Invention Agency (ARIA). These organisations need time to bed-in and then be evaluated for both effectiveness and value for money before further structural reforms are made to the UK system. We would question the value of further structural reform to the UK’s RDI landscape where existing structures can be deployed with greater speed and efficiency. Indeed, ARIA, first announced in March 2020, is not yet operational – illustrating the time and costs associated with structural change.

2.9       One example of how existing infrastructure could become more efficient would be to better align research and innovation efforts via UKRI. The boundary between an innovative spin-out and the university hosting it can be very fluid indeed: recognising that in all parts of UKRI would work to the advantage of universities, innovation and the economy at large.

3.       Questions 4 and 5: Is the UK realising the potential of its research investment? How should state funding for research and development be allocated between different organisations, who should make that decision and by what criteria?

Improving resilience and agility

3.1       Flexibility, resilience and agility are vital to an internationally leading research ecosystem, as is minimising bureaucratic burden. QR funding is a core means of delivering these aims, as it provides a low-bureaucracy mechanism to get public funds into the hands of researchers on the basis of excellence.[9] Empowering universities to make decisions on how and which projects and people to support ensures funding is used efficiently and effectively, backed up by the established cycle of Research Excellence Framework (REF) assessment exercises as a robust external validation mechanism of the excellence and impact of university research activity. 

3.2       QR funding allows universities to improve the UK’s resilience and agility in responding to pressing threats. During the Covid-19 crisis, universities used QR funding to redeploy researchers to pandemic-related work even before government schemes were put in place. By tapping into existing QR-funded research, vaccines and treatments were developed which saved over a million lives around the world and enabled the Government to roll back restrictions and drive forward the economic recovery.[10] QR funding also complements challenge-based funding, ensuring a pipeline of new ideas to underpin innovation in new challenges is in place, as part of a broad-based research ecosystem.

3.3       Despite its vital role in driving the UK’s research and innovation performance, since 2010 QR funding has declined by 17% in real terms. This has happened while funding for research has increased from £9.7bn in 2007 to £14.9bn in 2021. Indeed, the balance of funding between QR and Research Council funding has fallen from 80p in the pound in 2007, to 64p in the pound in 2021/22.[11]

3.4       As well as underpinning and leveraging other funding, including from industry and charities, QR is used to support a wide range of activities which keep UK universities at the forefront of global science, many of which are not directly supported by other types of funders, including:

• Building interdisciplinary research capacity
• Supporting cutting-edge, curiosity-driven or newly developing research areas
• Attracting and retaining top researchers and supporting staff development
• Developing and improving research infrastructure, facilities and equipment
• Training and developing postgraduates and early career researchers – this is all the more important as it has been estimated we will need 50% more researchers to help meet the Government’s target to boost R&D investment to 2.4% of GDP by 2027.

3.5       Maintaining the balance between QR funding (which can be used to fund long-term or risky research) and challenge-based funding is crucial. Given the increase to R&D funding already announced at the Spending Review, there is now an opportunity to safeguard the UK’s future resilience, agility and prosperity by introducing a significant uplift in QR funding for research.

Reducing bureaucratic burden

3.6       More can be done to reduce the bureaucratic burden in research to the benefit of researchers and the UK’s economy and society. Research bureaucracy has grown due to a lack of shared understanding of its impact, ‘ownership’ of the creation of research bureaucracy and a shared drive to regularly review, sunset and otherwise minimise bureaucracy. The result is a lack of coordination and excess of duplication at sector level.

3.7       BEIS could play a leading role in championing a risk-based, proportionate approach to research bureaucracy, encouraging funders and research organisations to take shared responsibility for reducing unnecessary bureaucracy. The Funders’ Forum, which brings UKRI and other major research funders together with a view to joining up their approaches in a range of areas, could support BEIS in this work. We would also like to see a mapping exercise to help actors understand the impact and cost of research bureaucracy at sector level.

3.8       We would like to see a shift towards viewing universities as partners in research. Working with, and consulting, research organisations before introducing new requirements would help ensure bureaucratic requirements are necessary, streamlined and duplication-free. UKRI and other funders, making full use of the Funders’ Forum, should work with the sector to establish common standards in compliance in order to reduce duplication. More streamlined grants processes and improving digital platforms and due consideration of the merits and implications of longer funding periods would also assist.

Financial sustainability

3.9       Universities make a loss in teaching domestic students[12] as well as on research (where Research Councils only fund 71% of the full economic costs of delivery, contributing to an annual deficit of over £4.6bn in university research).[13] Universities must cover the deficit drawing on other sources of funding like international student fees and business conference hire, which still remain uncertain due to the pandemic. As the shortfall increases with more research being undertaken and more PhD students entering universities, this model risks becoming unsustainable.

3.10   The R&D roadmap committed to working with research funders to “consider opportunities to fund a greater proportion of the full economic cost of research projects in universities” and to ask “whether government should fund at a higher rate, to safeguard the sustainability of the research we fund”. This is vital: increasing the level of full economic costs (FEC) covered on public grants, including from Research Councils, government departments and NIHR, will ensure universities have the capacity to deliver the cutting-edge R&D the country needs without compromising on the excellence of British research as the volume of our activity increases. The ambition should be to deliver at least 80% FEC through grant support for projects and research capital, helping secure our research sovereignty. This scenario would represent excellent value for money for taxpayers as universities would continue to cover 20% of the costs of undertaking research projects themselves, deploying their own resources and leveraging in external investment.

3.11   The decision to freeze tuition fees will inevitably reduce their value over time. In turn, this will add to the financial pressure on universities to adapt while maintaining quality and choice for students. It is important to understand that these financial pressures cannot be separated from other activities carried out by universities including their research.

4.       Question 6: What more should be done to encourage private-sector investment in research and development in the UK?

4.1       Research-intensive universities are at the heart of emerging and developed technology-themed innovation clusters across the UK, with high levels of tech spin-outs, close university-business collaboration and employment in tech. Innovation clusters can attract R&D investment, help deliver on the Government’s levelling-up agenda and build back better across the UK. Russell Group universities play a vital role in developing them in every nation and region, drawing on their research excellence and commercialisation expertise and connecting businesses with public sector partners.

4.2       The Innovation Strategy describes the UK’s ‘research, development, and innovation system as a critical national asset that will more than pay for itself’. In the last year alone, Russell Group universities provided £1.43bn worth of support and services to SMEs, larger firms, and not-for-profits. They have also helped to create jobs and draw investment to the regions, with spin-offs and start-ups originating from Russell Group universities employing over 40,000 people and leveraging £2.9bn in external investment in 2019/20.

4.3       Emerging innovation clusters centred around research-intensive universities across the UK can help revitalise our regional economies with the right support. We recommend the Government seizes this opportunity and pursues a three-point action plan to scale innovation clusters across the UK, leveraging in additional business investment and helping position the UK as a world leader in the global innovation race. By utilising a small percentage of the uplift to R&D funding announced at SR21, the Government could:[14]

• Scale up existing innovation schemes such as the Higher Education Innovation Fund and the UK Research Partnership Investment Fund, with a track-record of proven returns: under our proposals, a net increase of just under £600m over the three years to 2024/25, would deliver a return of £2.7bn to the UK economy and wider society
• Create a deep-tech university seed fund with a one-off investment of £200m, targeted at innovative ideas within the Innovation Strategy’s seven priority technology families: this would develop disruptive technologies, transform regional economies and boost export revenue
• Reform VAT rules and eligibility for R&D-related tax credits to encourage increased collaboration between business and universities that will leverage further private R&D investment to anchor critical research in the UK, reduce red tape, and ensure more SMEs benefit from the expertise of the sector.

5.       Question 7: How well does the UK collaborate on research with international partners and what can it learn from other countries?

5.1       The UK’s success as a knowledge economy hinges on our ability to collaborate with the best minds across the world. The scientific landscape has grown ever more international and many of today’s challenges are global, from tackling climate change to fighting cancer and developing new energy sources. There is growing recognition that these require a critical mass of excellent research: while around 90% of UK research output was domestic in 1981, more than half is now produced in collaboration with international partners.[15]

5.2       On the whole, the research ecosystem is supportive: UKRI works well with international partners and (nationally) with other key funders and the national academies. Bilateral funder collaborations – with the USA’s NSF, the German Research Foundation and others – seem to be effective and avoid ‘double jeopardy’ in evaluation. Greater co-ordination and collaboration between UKRI and NIHR is also to be commended. There is, however, a need to focus on intensifying cooperation and coordination internationally – particularly if the UK does not associate to Horizon Europe, although this should remain our primary goal.

The value of Horizon Europe

5.3       We would emphasise the added value of Horizon Europe to the UK – the world’s largest and most successful programme for multi-country collaborative R&D, which opens the door for high-quality collaboration with the best researchers, innovators and businesses worldwide. Under the previous programme, Horizon 2020, the UK established 31,000 collaborative links with countries around the world. The scale, ambition and associated financial risk assumed by the EU programmes, far exceeds anything that could be achieved on a bilateral basis. More importantly, the funding streams, processes and networks are in place and can be tapped into as soon as association is secured, whereas any alternative plan would take a considerable amount of time to set up.

5.4       Association to Horizon Europe will help facilitate deeper links beyond Europe – it will act as a springboard to partnerships with research networks and businesses in other countries worldwide such as the USA, Canada, Japan and others involved in the programme. It also means the UK can continue to benefit from significant investment through the European Research Council (ERC), which is world-leading in funding only the highest-quality discovery research over the long term at all career stages – and from which the UK does disproportionately well, winning more than 1,800 ERC grants under Horizon 2020.

5.5       We hope the obstacles to finalising the UK’s association to Horizon Europe are removed as soon as possible. However, in the event the UK is unable to associate to Horizon Europe, it is important that any ‘Plan B’ is put into place as quickly and seamlessly as possible. This should involve funding for uncapped third-country participation as well as the use of interim ‘protect and stabilise’ measures, such as boosting Future Leaders Fellowships and other domestic programmes in the short-term.

23 March 2022

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