Each international student pays £8,000 towards gaps in UK R&D spending

New research from the Higher Education Policy Institute (HEPI) has found that international students each contribute £8,000 towards the growing UK Research and Development spending gap.

The findings prompted HEPI to call on Chancellor Philip Hammond to invest a further £1 billion in the coming budget.

According to the report, research remains underfunded in the UK despite more than a decade of enhanced ‘full economic cost’ funding and students are picking up the bill.

The report highlights a clear discrepancy between UK government spending on R&D and UK university research rankings. The proportion GDP investment is 1.7 per cent and has been consistently below the Organisation for Economic Co-operation and Development average; yet the UK remains a top global performer when it comes to R&D.

This underfunding has been traditionally picked up by non-publicly-funded teaching surpluses (mostly from international students), with the research indicating a £8,000 bill per non-EU student.

Nick Hillman, Director of HEPI, comments ‘Universities are enormous institutions. Some turnover £1 billion a year. So cross-subsidies are inevitable, even desirable. In particular, there is a cross-subsidy from international students to research, amounting to £8,000 per student. This helps explain why the UK is, on some measures, the top-performing research nation in the world. Anyone who wants to end cross-subsidies must say how they would fund universities’ various roles properly.”

Vicky Olive, the author of the report and an Economics postgraduate student at the University of Oxford, said:

“The Government has frozen fees for home students, students are demanding to know more about where their money goes and international student numbers are perpetually under threat.

“There is nothing morally wrong with cross-subsidising research from teaching, particularly if students see the benefits in their lectures and seminars. But it is right to investigate the scale of the subsidies and where they go, so that we can debate whether they are defensible, sustainable and

“The cross-subsidies from teaching to research are a float keeping UK universities world-class, but they are under threat like never before.”

The report indicates that the £3.3 billion research funding deficit which urgently needs addressing cannot be efficiently satisfied by international student subsidies alone.

To overcome this funding gap, the paper makes three policy recommendations:

1) An increase of £1 billion in research spending in this year’s Budget
2) Setting aside some of the extra public support for university / charity collaborations
3) New roadmap for meeting the Government’s commitments on R&D spending

Nick Hillman, Director of HEPI, continues:

‘Our conclusion is that the Chancellor needs to find another £1 billion for research in this year’s Budget, with some set aside for the work universities do with charities. But even this level of additional funding would mean stagnation relative to other countries. So we also need a strategy for increasing research spending to OECD levels over the next few years and German levels thereafter – as promised in the 2017 Conservative manifesto.’

The full report is available here.

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