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March 02, 2011

TRACked and FECked: How audits undermine the arts, humanities and social sciences

The 'Haldane Principle' has been at the heart of the funding of UK higher education since 1918. It endorses the public funding of research but stipulates that government should have no direct influence over the research it funds. The principle is enshrined in the dual funding of research through Research Councils and the quality related (QR) block grant administered by the Higher Education Funding Councils through the Research Assessment Exercise. However, the emphasis now given to the ‘impact’ agenda means that the principle is now becoming seriously attenuated. 

The impact agenda is associated with the rise of the ‘co-production’ of research between universities, government agencies and commercial enterprises, and the increasing interest in knowledge transfer.An initial concern was to identify the ‘private’ beneficiaries of research in order that they should pay rather than be funded by public money. This goes back to the Rothschild and Dainton Reports of the 1970s which argued that applied research should be funded on a ‘customer-contractor’ basis. How to charge the full cost of research was also an issue and the arrangements for full economic costing (FEC) were designed to enable them to be charged to private beneficiary (as well as be recognised in Research Council and other funding arrangements).

It is clear, however, that private beneficiaries prefer their research costs to be subsidised. Indeed, the Wakeham Report on Financial Sustainability and Efficiency in Full Economic Costing of Research in UK Higher Education Institutions, June 2010 noted that one explanation for British industry's failure to fund the research from which it benefits is that FEC places UK universities at a disadvantage in commercial contracts against other university systems where FEC is not charged.

At some point in the last decade, a different emphasis emerged, namely that publicly-funded research should benefit the economy and policy-making in terms of its ‘impact’. This increasingly shapes the Research Council agendas and is accentuated in their delivery plans following the recent research-budget settlements in the Comprehensive Spending Review.

The introduction of the ‘impact agenda’ into Research Council funding priorities, as well as into the new REF, increases the incorporation of Government objectives into research funding in two ways. First, by making them an increasingly important part of Research Council decision-making (‘excellence with impact’) and, second, by ‘nudging’ academic behaviour into the adopting those objectives into their own research proposals. Although it is acknowledged that the social sciences and arts and humanities have wider social and cultural significance and that this should be recognised, it is clear that, for both the Economic & Social Research Council and the Arts & Humanities Research Council, there will be greater emphasis on seeking an ‘economic’ impact from the research that will be funded in the future.

The President of the British Academy has recently suggested that the pragmatic strategy of stressing the impact of research, including that of the arts, humanities and social sciences, has been a ‘success’ in saving the scientific research budget from significant cuts in the recent Comprehensive Spending Review. But 'success' here is relative: overall there has been a cut of 40 per cent on capital projects and close to 10 per cent in real terms on the ‘uncommitted’ budget for the arts, humanities and social sciences, with the latter receiving the heaviest cut.

The threat of the withdrawal of funding is used to assert government influence over the direction of policy, but at the same time the formal structures that notionally enshrine the Haldane principle are declared to be intact. Indeed, RCUK welcomed the ‘restatement of the Haldane Prinicple in its response to the spending announcement on 20th December 2010.

Although it is frequently allowed that criteria can be different across different subject areas, it is clear that the overall shape of the different audit exercises that govern academic activities is determined by the requirements of the largest players, namely the science, technology, engineering and mathematics (STEM) subjects. I don’t wish to downplay the serious differences within the scientific community over ‘impact’. I merely note that it is within the sciences that itsgreatest advocates are to be found, including the downplaying of a long-term perspective on research. Thus, the Royal Academy of Engineering has recently called for, “a higher proportion of our research investment …[to go]… towards high quality research that is likely to lead to near- to mid-term economic benefit”. The President of the Royal Academy of Engineering is Lord Browne of Madingley.

Part of the current crisis facing the non-STEM subjects is the way in which the interests of the STEM subjects are coming into conflict with those of non-STEM subjects. In the process, the standard ‘research-teaching’ contract that sustains the arts, humanities and social sciences is coming under threat.

In part, this derives from a separation of teaching and research activities that is intelligible for STEM subjects. But it is highly problematic for non-STEM subjects. This separation is used to justify a ‘soft cap’ tuition fee of £6,000 that is significantly less than the current income received for teaching in non-STEM subjects. Ironically, the Government suggests that the public funding of a private beneficiary is appropriate where that is a corporate beneficiary, but not where it is a student beneficiary.

One of the ways in which the Browne Review and the Government arrived at the appropriateness of this £6,000 fee is that they believe teaching income is being used to subsidise research. But how do they arrive at this conclusion when, at the same time, vice chancellors, especially those in the Russell Group, argue that teaching is underfunded and the real cost is about £8,000? Enter FEC and the 'Transparent Approach to Costing' (TRAC).

The TRAC mechanism was developed to assign the full economic costs of research, including its indirect costs, such as estates, and previously unfunded staff time by asking staff to assign their time to different activities. It was designed to enable indirect costs to be identified and allocated either to teaching or to research, and to the administration associated with each activity.

Many colleagues in non-STEM subjects found the distinction between teaching and research to be somewhat arbitrary. This was especially true of scholarship that might be the basis of an academic paper submitted to a journal and included in the RAE, and, at the same time, might be drawn upon in research-based teaching. Little attention was paid to these niceties locally, since each institution was under pressure to have its TRAC data accepted, so that it could be used in submissions for Research Council funding under FEC.

However, as Wakeham indicated, the new system did nothing to standardise charges for indirect costs across universities, or find ways of reducing those costs. This has had paradoxical consequences. The lack of a proper test of the TRAC outcomes has increased costs both to Research Councils and those bodies paying FEC, and, at the same time, made it appear that research is underfunded. Potentially, it is ‘underfunded’ to the extent that the indirect costs are ‘overcharged’.

The ‘solution’ in the Wakeham Report is to recommend over the next three years a 5 per cent per annum efficiency saving on indirect costs—this would be moderated according to whether an institution is significantly above or below the median. In addition, it recommends increased concentration of research and selectivity by research councils and funding agencies to maximise efficiencies.

Again, ‘concentration’ and ‘selectivity’, may make sense in terms of the research-infrastructure costs associated with many STEM subjects, though many in those subjects doubt it. But it makes much less sense in non-STEM subjects, where the RAE in 2008 showed that research excellence was distributed widely across the sector—and therefore had an ‘impact’ on research-led teaching. Yet ‘concentration’ and ‘selectivity’ are to be introduced for all subjects, regardless of their subject-specific characteristics. Indeed, it has already been announced that HEFCE will no longer fund 2* research. In so far as there is a career trajectory through 1* or 2* research before achieving outpust of the international significance of 3* and 4*. This decision, together with the emphasis on impact will disadvantage early career researchers and their employment prospects in any institution seeking to maximise REF outcomes. 

TRAC also identifies the indirect costs of teaching. The implication seems to be that a 5 per cent per annum efficiency saving can be made in teaching even though, unlike Wakeham's examination of research funding, there has been no proper examination of the data. This seems to be one reason why Browne recommended a ‘soft cap’ of £6,000—less than the current income per student for non-STEM subjects by about £1,332—because the idea of efficiency savings in relation to indirect costs is carried over from the Wakeham Report.

However, while it is true that there is no 'efficiency driver' for FEC charges on research, it is not true that there is no such ‘driver’ as far as teaching's indirect costs are concerned. Universities may 'overcharge' to claim FEC, but, unlike research ‘inefficiencies’, teaching 'inefficiencies' are not charged out so there is a local incentive to find them.

The problem is compounded by the fact that teaching in non-STEM subjects appears to be subsidising research in other ways. This arises for two reasons. Whereas for many STEM subjects it is difficult for an academic member of staff to conduct research unless it is externally funded, it is possible for individuals in non-STEM subjects to conduct research which is submitted for the RAE/REF but where the only funds associated with the research are QR funds. Indeed, ESRC and the British Academy have been pressed to withdraw their small grant schemes precisely because the Depertment of Business, Innovation and Skils believes that the activities they funded should be funded out of QR (at the same time BIS seeks to restrict the distribution of QR). Academic staff hired following the introduction of student fees were often hired on research/ teaching contracts. But any increase in staffing in a unit of assessment over the number submitted in the RAE attracted no QR income. Therefore those individuals had the research part of their contract supported only by additional teaching income.

However, if such research is also scholarship that supports teaching, then assigning it simply to the research column of the TRAC record understates the real cost of research-led teaching for non-STEM subjects and makes it appear that it is inappropriate to support it whether from HEFCE teaching contribution or from student fees. In STEM subjects, however, the appropriateness of that contribution is implicitly recognised in the continuing HEFCE teaching contribution. At the same time, the research that enters into the teqaching of STEM subjects is more likely to be externally funded. Notably, the one STEM subject that is like the non-STEM subjects—mathematics—is to be protected by being assigned a HEFCE teaching contribution which is now to be restricted to former Band A and B subjects, to which it is now assigned.

Research in non-STEM subjects is currently being undermined by a number of factors. The move away from the Haldane principle has negative consequences for the arts, humanities and social sciences in a way not shared by STEM subjects. Indeed, the latter have frequently argued for the shift away from Haldane in order to secure the public funding of applied science.

The mechanisms that have been designed to make public funding transparent—FEC, TRAC and RAE/REF—do not differentiate sufficiently among different activities and are detrimental to non-STEM subjects. Ironically, it is the non-STEM subjects that have the best case for public funding in the light of the diffuse public benefit that they bring. But, it is the non-STEM subjects from whom such funding is to be withdrawn. 

It is clear that HEFCE is concerned that the legitimacy of TRAC may be called into question. An annexe to the Wakeham Report sets out key messages about TRAC to be used at conferences, meetings and other events. At the same time, little has been said about the withdrawal of public funding from the teaching of non-STEM subjects or about the way in which TRAC is used to suggest that there are teaching efficiencies to be gained. It is precisely this silence that undermines the legitimacy of HEFCE and TRAC alike.

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