Indicative funding allocations 2018/19

Transcription

1 RKEC/18/07 Agenda Item 8 14 March 2018 Indicative funding allocations 2018/19 The paper updates RKEC on SFC s indicative allocations for AY2018/19 for research and innovation funding. In particular, it asks RKEC to note the new Finance Reporting Standards (FRS) 102 which will have an impact on the final allocations for SFC s Research Excellence Grant (REG) and SFC Global Challenges Research Fund (GCRF). Recommendations RKEC is invited to note the SFC indicative allocations (research and innovation) for AY2018/19 and comment as appropriate. RKEC is invited to note the impact of the new Finance Reporting Standards (FRS) 102 on SFC REG and SFC GCRF for final AY2018/19 allocations. Financial implications There are no financial implications associated with the recommendations of this paper.

2 Indicative funding allocations 2018/19 Purpose 1. The paper updates RKEC on SFC s indicative allocations for AY2018/19 for research and innovation funding. In particular, it asks RKEC to note the new Finance Reporting Standards (FRS) 102 which will have an impact on the final allocations for SFC s Research Excellence Grant (REG) and the portion of Global Challenges Research Fund to be distributed by SFC. Background 2. Indicative (AY2018/19) funding allocations were announced on 27 February 2018 (SFC/AN/07/2018) 3. The key points for RKEC to note in this indicative funding announcement for AY are: Core Research grants have been increased by 1.8%. University Innovation Fund has been increased by 10%. Research Excellence Grant 4. SFC has, in its indicative announcement of university funding for , provided an inflationary uplift of 1.8% to the Research Excellence Grant (REG); increasing it by 4.2 million to 236 million (from million). In the indicative announcement figures for REG are based on a 1.8% uplift to the constituent parts of the AY REG budget. Two issues will affect finalisation of the REG allocations financial reporting standards (FRS) 102, and co-investment. Financial Reporting Standards (FRS) The introduction of the new Finance Reporting Standards (FRS) 102 means that from there has been a change in the way institutions may choose to report research income. In a very short form, universities may choose to report some of their research income in the year it is awarded, rather than over the period of the grant or lifetime of a building. This will result in greater year-onyear fluctuations in reported income. To calculate REG allocations for AY , SFC would normally use income data relating to AY to AY to calculate REG(B) and REG(C). Changes to the reporting of income as result of the new option in FRS 102 will therefore impact on institutional REG funding allocations for AY On transition to the new standard (for those that took this route), an adjustment was made to write back existing deferred/amortised grants directly 1

3 to reserves and so this income would not appear in the university income statement. Under the old method there would have been an annual credit to income. For those continuing the accruals method for government grants, there will continue to be an annual credit to the income statement. 7. To ensure that institutions did not miss out on REG funding (because the income effectively by-passed the income statement) institutions were invited to submit relevant income under a special column in their HESA return (Head 6). 8. SFC has already indicated that this income will be included in calculations as we would not want institutions to miss out as a result of the introduction of FRS 102. However, inclusion of this income will result in an even greater fluctuation in allocations in the three years using data from 2015/16, over and above the increased expected annual fluctuations. 9. SFC is, with Universities Scotland, currently consulting with universities on how to handle these fluctuations through the Scottish Universities Funding Directors Group. Co-investment 10. Also introduced in HESA 2015/16 was an additional column in Table 5, Head 5 Co-investment from external sources on funding council-funded projects. Income awarded through initiatives funded jointly by funding councils and other sources, such as the UKRPIF or Catalyst fund, should not attract additional financial support from elements of funding council research funding. Funding councils decide their level of contribution to these initiatives at the time of their establishment, taking sustainability into account. 11. It has become apparent that there have been inconsistencies in how this has been interpreted across the sector and SFC are currently working to provide clarity and ensure this is applied consistently before finalising REG allocations. 12. Any adjustments to REG allocations to reflect the new FRS and co-investment arrangements will be announced in the final funding announcement. Global Challenges Research Fund 13. SFC published indicative levels of (SFC) Global Challenges Research Funding (GCRF) for on 1 February 2018 (Announcement: SFC/AN/02/2018). 14. Allocations are based on universities proportionate share of REG(A) and (B). From 2018, this funding will be dependent on universities submitting satisfactory research strategies setting out their intended use of this funding over the next three years. The indicative allocations of GCRF will be subject to change when REG allocations, specifically REG(B), are finalised (as described 2

4 above). Research Postgraduate Grant 15. SFC has indicated it plans an inflationary uplift of 1.8% to the Research Postgraduate Grant; increasing it by 0.6 million to 35.2 million. Universities Innovation Fund 16. SFC has indicatively announced an uplift to the University Innovation Fund (UIF) by 10%; increasing it by 1.2 million to 13.5 million. This planned increase is a partial restoration of budget to pre-ay levels and recognises SFC s continuing commitment to innovation. DBEIS research capital 17. We understand from BEIS that Scotland s HE Research Capital Allocation will be unchanged from last year at 16.76m and our indicative capital funding announcement to the university sector accommodates the co-funding for this amount. As HERC is distributed by Research Council income share, the FRS102 changes discussed above are also relevant. Risk assessment 18. The risk to the effective delivery of the SFC objectives in Research and Innovation are low. The ability of SFC to indicate an increase in Research and Innovation Grants reduces the risk to the delivery of those objectives. We would highlight that the handling of the FRS102 adjustment needs to be done carefully but the engagement of the Scottish University Finance Directors and Universities Scotland will help ensure a successful outcome of discussions. 19. We remain of the view it is important to continue to make the case to Scottish Government for the use of Barnett Consequentials arising from UK Government allocations of resource to HEFCE/Research England to support Scottish Universities participation in the increasing opportunities presented by the UK Industrial Strategy and associated funding. Not to do so would increase risk of not delivering SFC objectives for research excellence and innovation support. Equality and diversity assessment 20. Equality and diversity issues will be considered by SFC s board as part of its decisions on final allocations for AY2018/19. Recommendations 21. RKEC is invited to: 3

5 RKEC is invited to note the SFC indicative allocations (research and innovation) for AY2018/19 and comment as appropriate. RKEC is invited to note the impact of the new Finance Reporting Standards (FRS) 102 on SFC REG and SFC GCRF for final AY2018/19 allocations and comment as appropriate. Publication 22. This paper will be published on the SFC website. Further information 23. Contact: Hazel McGraw, tel: , 4