Source · Select Committees · Public Accounts Committee
Recommendation 30
30
Acknowledged
Universities face significant financial challenges threatening R&D due to declining international student fees.
Conclusion
We asked whether our witnesses had concerns that some universities are running into funding difficulties, which could seriously impair research and innovation. Professor Boyle told us that there is an extremely difficult financial environment at present in the university sector due to a decline in income from international student fees, resulting in risks to R&D spending. He mentioned that a recent Universities UK survey found approximately 80% of respondents are considering cutting back on R&D spending within the next three or four years, while 20% have already started cutting back on early career research investment.82 DSIT told us that, together with the Department for Education, it is monitoring the situation very closely and keeping an open mind about options to ensure the financial sustainability of universities.83 80 Q 84 81 Q 84 82 Q 11 83 Q 87 18
Government Response Summary
The government acknowledged the concerns about university funding difficulties, stating DSIT will consider the impact on financial sustainability when deciding UKRI allocations and uses analyses to understand the challenges universities face.
Government Response
Acknowledged
HM Government
Acknowledged
6.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2026 6.2 DSIT will publish allocations to UKRI in Autumn 2025, and UKRI’s allocations will be published by Spring 2026. 6.3 DSIT and UKRI will draw on a variety of data sources to understand where to have the greatest impact on scaling innovation domestically. This involves not only assessing where there is strength in research, but also where there are existing or nascent industry strengths, absorption capacity and identifiable market failures. 6.4 UKRI has recently launched the first round of the new discipline agnostic Proof-of-Concept funding opportunity. Understanding the full impact will only be possible after the first rounds of projects conclude and are evaluated (evaluation dates not yet confirmed). Early insights will contribute to allocation decisions. 6.5 Scaling innovation is not a linear pipeline from research to scale-up but instead requires an integrated approach across different actors (both private and public) that provides the right policy environment for innovative firms at every stage of their growth journeys. The government’s Industrial Strategy set out how we plan to achieve this. This includes better engagement and alignment between UKRI, the British Business Bank, the National Wealth Fund and other public finance institutions through the new Strategic Public Investment Forum, plus more effective use of public procurement to buy from innovative suppliers, and removing regulatory barriers to scaling. 6.6 In deciding the aforementioned allocations, DSIT will consider the impact on the financial sustainability of university research. DSIT uses analyses of Transparent Approach to Costing data, as well as insights and analyses provided by UKRI, to understand the financial challenges universities face within the R&I system.