Universities now have to charge the full economic cost (FEC) of research projects to their private sector clients. By forcing academics to do more rigorous assessments about the real cost of research, universities in theory will be better able to manage their budgets. Like all theories it’s a good idea, but the reality seems less palatable. The major weakness of this concept is that it ignores the flexibility of the international market for research and researchers.
It is very easy for large companies, particularly those in the pharmaceutical sector, to shift their research spending outside the UK (as they have started to do). Similarly, academics accept that working overseas may be necessary to further their career, indeed many see the chance to escape the UK’s education system as a major bonus.

The net result may be that universities are able to balance their budgets, but that these will then be smaller. As research and academics shift, so eventually will students - in the future we may well look back at FEC and the doctrine of short-term economic rationalism as seriously damaging to the long-term prospects of UK education and business. To make matters worse, the new ‘metrics’ for evaluating research funding will be introduced for the 2008 Research Evaluation Exercise. No one knows what the actual metrics will be, except that they will run in parallel to the peer review system they are supposed to replace.

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