Research Councils UK Review on Full Economic Costing

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1 Research Councils UK Review on Full Economic Costing September 2008 AMRC Response The Association of Medical Research Charities (AMRC) Response to the Research Councils UK Review of Full Economic Costing (fec) The Association of Medical Research Charities (AMRC) welcomes Research Councils UK s (RCUK) timely Review of the implementation of Full Economic Costing (fec). AMRC is a membership organisation of the leading medical and health research charities in the UK. Working with our member charities and partners, we aim to support the sector s effectiveness and advance medical research by developing best practice, providing information and guidance, improving public dialogue about research and science, and influencing government. AMRC survey of its member charities In formulating our response to the Review AMRC conducted a survey of all its current 114 member charities. The survey was sent by to either the Chief Executive, the Research Director or their equivalent in each member charity during August and a copy of our survey is attached as an appendix to this response for the Review Panel s information. Our response has been endorsed by AMRC s Executive Council. 47 members or 40% of our membership responded to the survey. The total expenditure on medical research represented by these respondents which include the four largest funders in the UK the Wellcome Trust, Cancer Research UK, British Heart Foundation and Arthritis Research Campaign - is 780 million or 97% of the total expenditure for our entire membership in of 826 million. As the Review Panel will no doubt be aware, approximately 70% of charity research funds is spent in Higher Education Institutions (HEIs). We therefore believe that our response is highly reflective of the key issues and concerns of the sector arising out of Full Economic Costing (fec). In addition to AMRC s submission, some our member charities will be submitting their own response to the review. Key headlines AMRC has endeavoured to provide a sector response to each of the questions the Review Panel posed to our individual member charities through a combination of quantitative and qualitative evidence, illustrated by direct quotes taken from our members. However, in summary, the key headlines to emerge from the evidence we have gathered are as follows: Our members are flexible partners in their approach to research funding, while maintaining the principle that the indirect costs of research undertaken in universities in the UK are not the responsibility of charitable funders. There is a lack of transparency and very little consistency in the way in which HEIs are defining directly allocated and indirect costs. Costs are rising for charity funders as for others: key drivers include salary costs and the costs of running animal houses. Changes to the current system and level of funding will have knock-on effects for the amount that charities will be able to spend on medical and health research. RCUK fec Review AMRC Response 1

2 We would recommend that the Review commission a study into the likely future demands on the Charity Research Support Fund (CRSF) Universities and their representative associations, in partnership with AMRC, need to do more to raise awareness among researchers and administrators about the Charity Research Support Fund (CRSF) as a potential revenue stream for charity supported research. Many charities have introduced new mechanisms and innovative partnerships to support sustainability in universities. Please note that we have clustered the Review questions where appropriate. All statistics in our response relate to member charities who responded to the survey. 1. Are there circumstances in which you pay an element of fec? 2. Have you widened your definition of allowable costs (e.g. infrastructure, buildings and equipment) since the introduction of fec? AMRC asked its member charities to indicate whether they pay any indirect costs and also whether they pay any directly allocated costs. In terms of indirect costs, 87% of charities who responded to our survey said that they did not pay indirect costs with 10% saying that they did. The following quotes are typical of the responses we received. They indicate a strong view within the sector that medical research charities should not pay the indirect costs of research undertaken in universities in the UK. Cancer Research UK Cancer Research UK (CRUK) believes that research in the university sector must be sustainable and it is important that universities and research funders understand the true cost of undertaking research. In accordance with our grant application guidance we will pay the directly incurred costs of research. CRUK will not pay the indirect costs as we provide our awards on the understanding that the host institution will meet the indirect costs. We also believe that the host institute should meet the directly allocated costs but we may, where deemed appropriate, contribute to these costs. Breast Cancer Campaign Charities provide a significant contribution to research funding in the UK, funding which is derived from donations from the general public. We therefore have a duty to ensure that funds are spent, wherever possible, directly on research to fulfill our charitable aims and to ensure the continuing support from the public. Most of our members have a statement about their policy on indirect costs available to researchers and university administrators and/or refer to AMRC s statement and supporting guidance (the former is included as Appendix 2 to this submission) on their website. As regards directly allocated costs 80% of members who responded to this question in our survey confirmed that they did pay some of these costs (the most cited being academic staff time, technician time, major facilities costs such as animal housing) while 20% said they did not. Charities are quite clearly willing to pay those directly allocated costs which are specifically related to a research project. Stroke Association The Stroke Association will pay Directly Allocated costs relating specifically to the use of equipment necessary to the project for example for the use of centralised scientific facilities such as an electron microscopy suite, MRI or other imaging etc. The Directly Allocated costs of Technical or Clerical staff time necessary to the project are considered on a case by case basis, but reasonable costs are not usually refused. AMRC Submission to RCUK Review on fec 2

3 Arthritis Research Campaign Critical technical infrastructure necessary for the project can be funded i.e. technician time if by funding a percentage this will allow additional staff to be employed by using funds from a series of grants. In reality this is difficult to check. We will also fund charges if without payment of these the grant could not take place i.e. on a marginal cost basis. However grant award committees often may not approve if costs are excessive even if arc staff are happy. British Heart Foundation In addition to the infrastructure awards noted above, an increasing fraction of our standard grant awards contributes to fec. The most obvious example is that almost all universities now present the costs of animals on grant applications in a manner that includes recovery of fec for the maintenance of animal facilities, and we pay these costs. Similarly, the costs associated with clinical procedures (e.g. MR scans) include an element of recovery of fec. Increasingly, we are also asked to pay towards the costs of other support services (e.g for a central microscopy or genomic unit), or maintenance contracts for large items of equipment, and these costs include a proportion of fec. Less commonly, but increasingly, we have paid fractional staff salaries, where it is clear that the personnel will be directly working on the project and their continued tenure is dependent on external salary contributions: examples include research nurses and statisticians. Indeed, it is AMRC s experience that medical research charities are willing to be flexible and have widened their definition of what is allowable on a case by case basis and where it is in the interests of the partnership with the institution concerned. As British Heart Foundation comments: We have always been prepared to pay the full cost of equipment purchase on research grants, and through other specific funding streams have been prepared to contribute to building, refurbishment, large equipment and other infrastructure costs. We are not prepared to pay estate costs. In addition, the Review Panel may find it helpful to know that AMRC carries out a snapshot survey of its members and how much fec they are paying each year on response mode grants. In 2007 this survey of over 220 grants awarded by four of our member charities showed an average of 48% fec being paid on each grant compared to 45% in 2006 (survey of seven charities and 290 grants), this relates to project grants, but the figure would be higher on fellowship awards. The Wellcome Trust have informed us that their figure is nearer 58%. 3. What information or estate costs do you expect HEIs to provide with proposals? The vast majority of our member charities (84% versus 16%), in their response to our survey, do not systematically monitor the proportion of fec that they fund, or ask applicants to complete a monitoring form to provide information although this does not include the four largest charity funders. netheless, 48% of our members, in response to our survey, reported changes in application behaviour since the establishment of fec and, in particular, changes in the categorisation of costs by applicants. At the very least the experience of our members is of a lack of transparency and very little consistency in the way HEIs are defining directly allocated and indirect costs. At the very worst they suggest that some institutions are either deliberately hiding costs that charities should not otherwise be paying. As one member charity told us: AMRC Submission to RCUK Review on fec 3

4 We have noticed that, since the introduction of FEC, many universities have adopted strategies aimed at padding their grant income which we often regard as inappropriate for charity-funded grants. One simple and relatively benign example is the habit of requesting 20% of a technician s salary on a grant to provide routine support and assistance (e.g. preparing media, cleaning glassware, etc). This type of support and assistance was traditionally funded from the university block grant and, in our view, should still be provided from central funds as it is clearly not a directly incurred cost... The matter which is currently causing us most concern is the way universities charge for animal research on grants. We have investigated several cases and it is clear that most universities are charging the full economic cost of this part of the research on charity grants. A limited number of universities have two rates of charging a FEC rate and a charity (presumably directly-incurred cost) rate. However, most charge the FEC rate without making the charity aware of the fact. Moreover, these universities refuse to use any other charging rate and, if we were to only offer to pay for at a directly-incurred cost rate, they would ignore this and still charge the scientists holding the grant at the FEC rate. In effect, we are being denied the option of funding the directly-incurred cost of this part of the research as the only other option available to us would be to refuse to award the grant. The charity Sparks commented to us: Once grants have been awarded we are now more frequently being asked to pay research directly allocated and indirect costs [such as] use of research laboratory space. Unfortunately, we find that these costs are not being directly requested but are hidden in consumables section of the invoices that the charity would normally pay quarterly in arrears of the research work being undertaken. An experience shared by Arthritis Research Campaign: There is an increased number of applicants/universities including overhead costs in grant applications and hoping we miss them categorising them in different ways in particular access charges. Usually we spot them but sometimes they are difficult to categorise. AMRC believes that these findings support the need for greater consistency and transparency in how universities are categorising costs and for charities to be given further support in helping to monitor such costs and spot discrepancies as and when they occur. Separately, AMRC also asked its member charities to tell us whether they had seen the cost of research funded by their organisation rise over the last two years. 51% said costs had risen in the last few years with 23% saying they had risen more than 10% and 10% saying that costs had risen over 30%. 46% of respondents said that it was hard to both quantify any cost rises and, even where possible to do so, it was difficult to attribute these to the implementation of fec per se. The most frequent items to feature in member responses to this question were noticeable rises in salary costs and animal house charges. Multiple Sclerosis Society We have received several requests from current grant holders for us to review the total costs of grants to consider increases in salaries in the majority of cases we have declined. Sparks We frequently receive requests to fund increases in salary costs due to internal pay rises/government [policy], which unfortunately, as a charity, we cannot support once grants have been awarded. AMRC Submission to RCUK Review on fec 4

5 4. Are there mechanisms you ve introduced to support sustainability for example fostering more innovative partnerships; and can you provide examples and quantitative information on the above? To assist us in answering this question we asked member charities whether they were facilitating or developing strategic relationships between funders and research organisations. 44% of those members who responded to this question were able to provide evidence of ways in which they were supporting such partnership. These range from Cancer Research UK s current funding of 19 Experimental Cancer Centres (jointly funded with the devolved departments of health) and its plans to fund up to 20 CRUK Cancer Centres involving universities and NHS Trusts across the UK to joint-funding initiatives: Kidney Research UK Kidney Research UK works in partnership with other funding bodies to co-fund grants, and to date these include the following: MRC, Diabetes UK, British Renal Society, Royal College Surgeons. The Charity also works closely with other key stakeholders on strategic research developments, namely to date: BHF, Dept of Health, Cancer Research UK, Stroke Association, Renal Association in addition the organisations mentioned above. Research into Ageing We are developing relationships between funders other charities and also with research councils (specifically BBSRC regarding a joint highlight). We also chair the UK age research forum bring together all the major players in age related research. RiA does not have a relationship with any research organisation other than with the University of Edinburgh where we are funding a 13 year programme of work. Meningitis Research Foundation We are working on a Knowledge Transfer Partnership with one university in the field of after-effects of meningitis and the supportive care available. Wellcome Trust As part of our approach to full economic costing, the Trust is committed to supporting sustainability in universities, by investing in infrastructure, buildings and equipment, and strengthening research resources, in a way that best meets the Trust s charitable mission. Such investments are ideally made through partnerships with the Government, universities and other funders. Given the time available to us to respond to the Review we have been unable to explore these partnerships in more detail. However, we would be very willing to work with the Review Secretariat to investigate them further ahead of any work we have already planned for next year to map current collaborations and partnerships involving our members. 5. What is your experience of the operation of the Charity Research Support Fund (and its equivalent in Scotland, Wales and rthern Ireland)? The Charity Research Support Fund (CRSF) is a vital element of the dual support system by which research, including health and medical research, is funded within Higher Education Institutions (HEIs). AMRC welcomed the Government s announcement to establish CRSF in We have worked closely with the funding councils and universities since then on its implementation. The aim has been to ensure that the purpose of the fund and the position of charities is well understood, to analyse our members individual and overall contributions to universities (as shown above), and to help determine the future growth and operation of CRSF. AMRC Submission to RCUK Review on fec 5

6 Against this background, and in addition to the responses made to previous questions, we would make a number of observations. Strategic importance: Over 70% of the member charities who responded to our survey said that CRSF was important to their research funding strategy. Many members predicted that without the CRSF in place charities would likely be asked to pay a higher proportion of indirect costs with a subsequent reduction in the amount of quality research they were able to support. Further still, others suggested that they would likely attract more expensive and/or lower quality applications. Alzheimer s Society The CRSF is the reason we give, not to support any costs not directly associated with the research. We fully believe that charitable donations should be used as effectively as possible to further the research strategy of the charity providing the longer term health outcomes that the target population wants. It would be very difficult for our type of charity to fundraise to maintain general university infrastructure. Wellbeing of Women Should the research that we fund not be supported by the CRSF to the extent it is currently, it seems very likely that the applications that we would attract would become more expensive, or possibly of lower quality. It would also be very hard to justify to donors the additional payment of indirect costs. Parkinson s Disease Society The CRSF allows us to maximise the benefit of the research project that we fund. Value: While we accept that the Review Panel has not invited comment on future funding levels for the CRSF we believe it is important to note the sector s continuing concern that the current value of the Fund falls well below what is necessary to support charity research now and in the future. We believe that the Review panel should recommend a detailed analysis of the demands of CRSF in order to inform the next Spending Review. In our submission to the Comprehensive Spending Review (CSR) in 2007 AMRC set out its own forecast of how funding for CRSF needed to increase: Using 2004/05 figures on charity funding in English universities [AMRC] believes that the Government should be aiming, at the very minimum, to increase the Fund to 360 million by 2009/10, an increase of 90 million from the estimate outlined in the Science & Innovation Investment Framework in This would allow for increases in funding and enable charities, in partnership with the Government, to cover 80% of the fec of grants made to English universities. [AMRC submission to Comprehensive Spending Review, December 2007] AMRC remains concerned that unless this is appropriately addressed in the forthcoming Spending Review it will have a detrimental impact on charity supported research in universities: Alzheimer s Society [We] can see a day when the best institutions would be against receiving the grants we offer. This means that there would be no incentive to carry out the research we think is important. Medical Research Scotland one would apply for funding because of the perceived loss of value looked at in terms of finance. AMRC Submission to RCUK Review on fec 6

7 Muscular Dystrophy Campaign We would not be able to award the number of projects we currently support. BUPA Foundation The Board would undoubtedly be able to fund fewer projects. As we fund solely clinical work that has the potential to change patient care in the short to medium term, this would ultimately impact on patient care. In light of this we would recommend and welcome any move by the RCUK Review Panel to commission a study of the anticipated demands on CRSF and enabled a forecast of the size of the Fund needed to meet this in the future. Awareness: Our general impression is that awareness of CRSF is often low among key research and administration staff within institutions and that this has hampered effective implementation overall. There appears to have been no concerted drive by HEFCE, individual universities or their representative associations to ensure that these staff understand the potential value of CRSF to researchers and, ultimately, to their institutions and a lack of transparency about how host institutions are using CRSF monies. One behavioural consequence of this that we have picked up anecdotally through our survey is that researchers are being actively discouraged from applying for charity support: Stroke Association We are aware of the CRSF. However, very few of our researchers are. We often receive complaints that Research Institutions make accessing CRSF funds difficult. Yorkshire Cancer Research Researchers are wholly unaware of CRSF in our experience. A total failure to communicate the existence of CRSF has occurred and this must be addressed as soon as possible. To prevent researchers discounting charity funding, or being discouraged from applying by University departments the CRSF must be more widely advertised and promoted with researchers. Alcohol Education Research Council Universities have told researchers that our level of funding (about 50,000) is no longer worth the effort. We think that this is because they would have to find the indirect costs. Devolved administrations: AMRC s view is that many of these issues are not unique to England with particular concerns voiced by our charities who fund in Scotland and Wales: For background, just over 40 of our member charities fund work in Scotland and we estimate that, in any given year, approximately 13 to 15% of all medical research charity money is spent in institutions in Scotland. In Wales our most recent figures (2005-6) show 25 member charities contributing just over 8 million to health research with 98% being used to support research in universities. Breast Cancer Campaign The lack of long-term assurances on the support fund within the devolved administrations is concerning, and only adds to uncertainty surrounding support for charity funded research. Also, whilst the fund has risen in line with the CRSF in Scotland and rthern Ireland it remains unchanged in Wales at 3 million per year. It is important to ensure at the very least that the devolved nations match the HEFCE funding for CRSF. Medical Research Scotland The Scottish Funding Council does not provide money from its CRSF pot that equates with fec as calculated by the HEI Accountants. Furthermore, the SFC provides funding in an unclear way. The funding provided by the SFC depends on the RAE status of the Institution or Department and takes into account research council funding achieved in addition to other AMRC Submission to RCUK Review on fec 7

8 unspecified features of the Department or Institution. Thus HEI Accountants wish to steer clear of funding bodies like the Scottish Charities who do not provide at least 80% of the fec of research. 6. How would you summarise the impact of the introduction of fec pricing? Perhaps one small indicator of the importance of fec pricing and CRSF to AMRC s members is the fact that, when asked, 47% of charities said that there had been a discussion within their Scientific Advisory Board or Board of Trustees on the issue. It suggests that fec is impacting on both an operational and strategic level for medical research charities. Like our membership, we support the need for clear accounting within universities that enables the full costs of research to be estimated accurately and budgeted for. But this system must be seen to be transparent and perceived to be fair to those it impacts upon. We do not feel that, thus far, that this sense of openness and fairness has been achieved for all partners of universities including charities. Together with our members we remain committed to monitoring the current system as it evolves, understanding better the pressure points for charities and universities and guiding our members appropriately to be flexible partners in covering appropriate costs as put forward by institutions. However, that has to be supported by equivalent efforts by the university sector to ensure that its senior staff are aware of the importance of charitable funding and of CRSF. At the same time AMRC and its members are unshakeable in their view that charitable funds and should not be used to pay for the indirect costs of research. It is critical that we get fec and its administration right. But is also important that funders and researchers are united in emphasising the important of a strong CRSF Fund to support charity research appropriately in the future. AMRC Submission to RCUK Review on fec 8

9 Appendix 1 AMRC Questionnaire on fec and CRSF 1. Position on full Economic Costs (fecs) In order to gain an overview of where members stand on the issue of fec, it would be helpful to know how your charity approaches this issue. 1a) Below please could you summarise what your charities position is, and provide a web link or document if you have one? 1b) In the past AMRC charities have agreed NOT to pay indirect costs, however with the advent of fec some funders are allowing elements of indirect costs to be included in their grant applications. Does your charity pay any of these costs? Directly Allocated Costs (e.g. academic staff time, technician time, major facilities including animal housing) Indirect Costs Please specify what these additional costs cover and give your reasons for agreeing to fund 1c) Has there been a discussion with your Scientific Advisory Board or Board of Trustees about this issue? If there has, please give details of the issues raised in this discussion 2. Monitoring the impact of full Economic Costs 2a) Has your organisation experienced any changes in application behaviour since the inception of fec (e.g. a change in the number or type of applications, changing categorisation of costs etc)? If you answered yes, please give examples 2b) To what extent has the cost of research funded by your organisation risen over the last two years? (NB: this may not be a direct result of the introduction of fecs, but it would be useful to monitor rising costs) Rise 1-10% 11-20% 21-30% Over 30% Hard to quantify Please give details AMRC Submission to RCUK Review on fec 9

10 2c) Is there a particular area where costs have risen over the last few years? Please describe and give examples 2d) Do you monitor the proportion of fecs that you fund, or ask applicants to complete a monitoring form to provide information about the full costs of grants? 3. Charity Research Support Fund (CRSF) or equivalent in devolved nations 3a) How aware are you of the CRSF (or equivalent) and how it operates? Do you think your researchers have sufficient information about the system? 3b) How important is the Charity Support Research Fund (or equivalent) to your research funding strategy? Very Important Important Fairly Important t Important Please give your reasons why 3c) What would be the impact on your organisation if CRSF remained at its current rate and charity research funding continued to go up/increased? 3d) Are there any specific issues arising in Scotland, Wales or rthern Ireland relating to charity research funding support which you would like us to highlight in our response? 4. Other Mechanisms of Support As part of the Science & Innovation Framework, which heralded the setting up of CRSF, the UK Government asked charities to continue to sustain infrastructure in the UK science base. This included developing other mechanisms of support, either by developing better relationships, or providing other types of infrastructure support. In some cases, AMRC charities will be providing this support, but their funds will not be eligible for CRSF, and so their contribution will not be visible. We would like to collect information and examples of these mechanisms, in order to demonstrate the full spectrum of charity support for UK Medical Research. 4a) Are you experiencing / developing strategic relationships between funders and research organisations? If you answered yes, please give details AMRC Submission to RCUK Review on fec 10

11 4b) Please describe below any infrastructure or other support you give to: Core Funding of Institution (e.g. given by Single Institute Charities, centre funding, core funding etc) Equipment (e.g. direct costs, maintenance, running costs, support staff) Endowed Chairs Other 5. Strategy / Further Work 5a) In the run up to the next Comprehensive Spending Review (expected 2010), what do you believe are the three key messages that AMRC should be relaying to the government? 5b) We would welcome any further comments / suggestions you may wish to add. In addition, it would be helpful to get input from your respective research departments on what their experiences of CRSF and FEC are. 5c) As part of this exercise, AMRC would like to convene a small forum to discuss these issues in more detail. Please indicate if you would be interested in helping AMRC respond to this consultation, and our contribution to the wider debate about sustainable funding for UK medical research. 5d) Would you like AMRC to provide further information about fec / CRSF? AMRC Submission to RCUK Review on fec 11

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