Forecasts predicting a slowdown in the growth in international student recruitment after an initial bounceback from the pandemic could result in an indirect hit to UK universities¡¯ research funding, it has been suggested.

published by the Office for Students, England¡¯s higher education regulator, earlier this year showed that institutions were expecting such income, largely from non-European Union overseas students, to grow by more than 10 per cent in the coming academic year, after some saw a fall in revenue in 2020-21 as the pandemic hit recruitment.

But forecasts for later academic years suggest that institutions are planning for a tailing-off in this annual income growth to below 10?per cent by 2024-25.

Andrew Connolly, chief financial officer at the University of Exeter, told Times Higher Education that many institutions had ¡°prudently downgraded¡± their projections on international fee income ¨C a major source of overall revenue for institutions ¨C in this way but this in turn could lead to falls in research money.

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This was because overall income forecasts are used to calculate the ¡°margin for sustainability and investment¡± (MSI) used in the sector¡¯s , which assesses how much money universities require to cover the full costs of their activities, including hidden costs such as maintaining research facilities.

A lower MSI would mean researchers costing up grant applications at a lower value or ¡°price¡±, essentially meaning funding from subsequent successful awards will also fall.

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¡°At Exeter, this price fall is 7 per cent ? and this will impact on the funding of our future research awards and therefore future income over the next five years. This will mean our research cost recovery will fall ¨C as a direct result of a mathematical outcome of Trac,¡± Mr Connolly said.

The latest Trac data showed that universities were already only recovering about 70 per cent of the full costs of research in 2019-20, and such an effect could add to other pressures hitting cost recovery, such as growing losses on teaching UK undergraduates.

James Tooze, a policy officer at the Campaign for Science and Engineering, said Trac showed how structural reform on research funding had to accompany the government¡¯s pledge to significantly increase public science investment to ?22 billion by 2024.

He said one way to do this might be to focus more investment on quality-related research funding ? public money that universities receive every year irrespective of how many grants they win.

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Sarah Randall-Paley, director of finance at Lancaster University and chair of the British Universities Finance Directors Group, added that the findings of a 2019 report on financial sustainability in UK higher education, which revealed the extent of cross-subsidies between teaching and research, were ¡°still valid¡±.

This included the finding that ¡°supporting government targets for growing R&D can only be delivered by permitting cross-flows¡± from sources such as international student income ¡°or by increasing funding for research¡±.

simon.baker@timeshighereducation.com