Where has UKRI got to on research financial sustainability?

The government’s response to Paul Nurse’s review of the research landscape spoke of the need for a “sector-wide discussion” of financial sustainability challenges, rather than any immediate action on the true cost of end-to-end research activity which Nurse had repeatedly flagged as an urgent concern.

Alongside the government response, which arrived in November 2023, UKRI released an issues paper on research financial sustainability. This observed that the full economic cost of research in universities is “increasing and exceeding the dedicated income for those activities.”

The paper recognised that the incentives which UKRI creates in the research system have an important role in financial sustainability. These incentives include everything from the funder’s portfolio composition to its grant terms and conditions.

Since then, UKRI has been engaged in an incremental programme of interventions to address some of these “perverse” incentives (as the Nurse review response phrased it). These interventions have been helpfully compiled in a new publication, released last week.

The funder’s moves on research financial sustainability have been supported by research conducted by the Innovation and Research Caucus (IRC) – the group’s latest paper dives into the “hidden costs” before and after the application phase, based on interviews with those involved in research support across the sector. UKRI has responded to several of the concerns raised, in areas including regulatory compliance and demand management.

Hidden costs

UKRI’s new publication begins by highlighting its already announced policy changes or other guidance, such as its recent “position statement” on accurate costing or the clarifications around institutional matched funding which it set out in spring 2025.

The hidden costs of demand management – where individual research organisations are given application caps of one form or another – have been garnered increased attention in recent months, not least in ARMA’s recent stakeholder engagement. The new IRC report homes in on this as well:

“Demand management stipulations by UKRI tend to increase costs to universities associated with the selection and submission of funding applications because implementation requires more formalised review panels and internal award vetting processes.”

UKRI’s interventions paper promises to be “more explicit and proactive in managing demand using the full range of measures” in its demand management framework, including publishing upfront in funding opportunities how they will be managed in terms of demand. Although there is institutional work associated with handling demand management, UKRI emphasises that it “offsets the workload to the community in other ways.”

Trusted research-related compliance costs are also flagged by the IRC report as a proliferating hidden cost, with research institutions either investing additional funds or otherwise diverting resources to ensure compliance with relatively new requirements, such as export control licences and the Foreign Influence Registration Scheme.

UKRI has responded directly to this concern, noting that funding applications can include costs for specific trusted research-related requirements. It also points to changes in the design of its funding service, whereby trusted research information is required at application stage in a way that is standardised across UKRI.

Other concerns

The Innovation and Research Caucus report goes beyond considering what UKRI alone can do, seeking to understand the full landscape of hidden costs both pre- and post-award (building on its earlier report which focused on the project costing stage).

The cost of pre- and post-award support – ranging from resources needed to prepare bids, both successful and unsuccessful, to expenses incurred in audit or contracting – is funded in various different ways, the report observes. But these different streams are increasingly not sufficient:

“The scope of what QR and indirect costs are expected to cover continues to increase in scope, from IT and library resources to HR and legal services.”

In more research-intensive institutions (groups A, B and C in the TRAC classification), we see “extensive preparatory work” in project conceptualisation and design, identification of relevant research opportunities, and bid development. This can be accompanied by “significant investment” in online learning resources.

The IRC finds that in less research-intensive organisations (TRAC groups D and E) almost all such research support is being centralised, with little capacity at the departmental level, while in the more research-intensive universities this is not the case – despite some “evidence of consolidation.”

The study also finds a consensus that there is currently insufficient support for application development, with the burden often falling on the researcher.

The previous IRC report on cost recovery highlighted the problem of under-estimating project costs – the newer research points out that doing this accurately, as UKRI is emphasising, requires resource and staff expertise:

“Doing this effectively requires an understanding of assessment processes, particularly insights developed with experience about what assessors expect, prioritise, and criticise in terms of estimated resource allocation, as well as a detailed understanding of what things cost and how to appropriately estimate the cost of activities or equipment slated to be purchased, sometimes years from the award date.”

Post-award, the study diagnoses “considerable variation between institutions about how proactive and comprehensive the post-award support available was.” There is also said to be a growing burden on research finance teams, not least in joint projects:

“There was a sense from the interviewees of a growing expectation from UKRI that the lead institution on larger grants was responsible for ensuring the compliance of partner institutions. In practice, this was tantamount to expecting universities to adopt an almost ‘real-time audit’ in assessing the eligibility of partner spending, which increased both the burden of risk and workload of grant-holding institutions.”

What’s next?

The Innovation and Research Caucus warns that the consequence of not investing in the hidden costs associated with supporting research is “likely to see the capacity to apply for and support research funding applications decline.”

But while there are interventions that can be made by UKRI, there is also a “continued need for universities to improve the efficiency of research support by reducing duplication and streamlining the delivery of support.”

UKRI’s interventions paper says that it will continue to consider how its use of policy levers can improve “overall system resilience and cost recovery on UKRI-funded programmes.” At the same time it continues to stress that a whole-sector response is needed.