Report highlights the costs of knowledge exchange for Scotland’s universities
The first pillar of Scotland’s Future Framework project – a joint undertaking between the Scottish government and the nation’s higher education representative body Universities Scotland – has been released.
The analysis published today focuses on the funding gap faced by Scotland’s universities, diagnosing an overall disparity between cost and income of around £200m a year. The analysis is based on TRAC data from 2023–24 and other sources of official data – last week’s 2024–25 release came too late to be included – with project chair Anton Muscatelli saying that the findings are likely to be a “conservative estimate.”
In particular, the report highlights the “uncosted” activities which universities engage in – that is, those which cannot be consistently accounted for in official datasets – including knowledge exchange activity, where evidence from a survey conducted for the Future Framework suggests that funding is “often insufficient to meet the full costs of delivery.”
Despite “clear expectations” from the Scottish government regarding universities' role in innovation, entrepreneurship, productivity, regional economic development, and civic impact, the report warns that knowledge exchange activities accrue significant costs.
It also emphasises the “fragmented” income streams available for knowledge exchange:
- core grants including the Scottish Funding Council’s Knowledge Exchange and Innovation Fund and Research Excellence Grant
- government funding (from both Scottish and UK government programmes)
- UKRI research councils and Innovate UK, including knowledge transfer partnerships
- industry funding and co-funding
- local authorities and regional partners
- philanthropic and third sector funding
- universities’ own institutional funds.
The variety of sources is a “strength in one sense,” the report suggests, as it means that universities can conduct activity in response to local, regional and national priorities.
However, this also creates “fragility”, with institutions reporting significant variation in their funding mixes and generally being unable to provide a clear percentage breakdown (within the survey timeframe). The time-limited nature of external funding also creates challenges:
“In many cases, universities use their own resources to underpin activity, absorb risk, maintain capacity between projects, and leverage external funding.”
A survey for the report, which received responses from 12 of 19 Universities Scotland member institutions, saw nine universities say that the costs of delivering knowledge exchange activities had seen more than inflationary increases over the last decade. The chart below shows the factors which institutions cited as driving cost increases:
While smaller institutions said that they were spending between £100,000 and £250,000 on knowledge exchange-related staff costs, for large universities this rose to over £5m per year:
“Delivering KE&I and place-based activity requires sustained investment, including crucially the professional services staff who deliver programmes and manage partnerships. Costs also include academic staff time, specialist facilities, company start-up seed funding, legal and commercial expertise, and programme and event delivery costs.”
Knowledge exchange relies on “experienced staff, long-term partner management, contracting capability, and responsiveness to funder, government, business, and community expectations,” the report observes.
All responding universities indicated their intent to grow knowledge exchange in the coming years. Yet as the report concludes, there is “evidence of a growing mismatch between policy ambition, partner demand, and the resources available.”
The next pillar of the Future Framework will assess what Scotland will need from its universities over the next two decades in teaching, research, skills, innovation and civic contribution. Subsequently, the review will turn to options for reform, including university transformation as well as policy and funding change.