The recurrent research budget remains at ?1.58 billion, but the relative quality weighting of 3* and 4* research has been tweaked to account for the increase in the volume of research achieving the top score.

A letter sent to all institutions and published on the Higher Education Funding Council for England¡¯s website today also says that adjustments made after the 2008 research assessment exercise to protect funding for research in science, technology, engineering and mathematics will be dropped.

The Department for Business, Innovation and Skills told Hefce in its grant letter in January to continue to selectively fund world-leading (4*) and internationally excellent (3*) research wherever it is found. The Hefce board met on 2 February to decide how funding for 2015-16 will be distributed.

The letter from the board says that the allocation of funding will follow the percentage weightings of the individual components of the overall quality profile, with outputs accounting for 65 per cent, impact for 20 per cent and environment for 15 per cent.

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This effectively adds a cap on the amount of funding distributed on the basis of impact, for example, where scores were particularly high.

The weighting given to 4* research in the funding formula is to be increased. The relative quality weighting between 3* and 4* work will change from 3:1 to 4:1.

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David Sweeney, director for research, education and knowledge exchange at Hefce, said the amount of 4* activity increased by 70 per cent in the exercise and that the board thought more money should be allocated to 4* research to recognise this.

¡°However, if we had allocated significantly more to 4* it would not have left very much to 3* so we took a middle ground,¡± he told Times Higher Education.

This involves topping up the amount for 4* but still leaving ¡°a pretty decent amount¡± for 3* research, he added.

He added that the move will ¡°clearly benefit¡± institutions that had a high amount of 4* activity.

Adjustments put in place to protect STEM research after the RAE, which saw research volume in these areas drop, will not be continued.

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After the RAE, Hefce diverted some money away from the arts, humanities and social sciences to boost funding for STEM subjects.

As STEM activity in the REF has now increased to levels seen prior to the RAE, this is no longer required, Hefce believes. Subsequently arts, humanities and social science subjects could see a boost in funding from the REF compared with the RAE.

But the letter says that removing the protection from STEM subjects will affect institutions differently. ¡°To mitigate the institutional impact of this change, for 2015-16 only we will provide a transitional allocation of ?28 million (not included in the recurrent research total of ?1,558?million) to ensure no institution experiences a reduction in funding directly because of this change,¡± the letter adds.

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The mechanism to determine the slice of the overall QR pie that each discipline receives will remain unchanged from the RAE. Money will be distributed between the four main panels on the basis of cost-weighted volume associated with 3* and 4* research.

This will then be distributed between the units of assessment within each main panel based on quality-weighted and cost-weighted volume.

The method used to allocate mainstream QR and research degree programme supervision allocations also remains unchanged.

But Hefce is lifting a cap on the rate of grant introduced in 2012-13. It will issue a one-off transitional payment of ?24 million, which is not included in the overall recurrent research funding total, to mitigate declines in the rate of funding for research student supervision in recent years.

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Recurrent funding for research remains at the 2014-15 level of ?1.58 billion. The recurrent teaching grant, however, has dropped from ?1.58 billion in 2014-15 to ?1.42 billion in 2015-16.

holly.else@tesglobal.com