The Government Response to the Consultation on The Sustainability of University Research was announced in July in Hansard - Column WS68.

The Government has set out its overall strategy for the Dual Support system in the Science and Innovation Investment Framework 2004-2014, published as part of Spending Review 2004 on July 12.

The key response to the consultation was that Higher Education Institutions requested a further year for the implementation of the extensions to the TRAC accounting methodology.  The Government accepted this, as announced by Lord Sainsbury and Alan Johnson MP in their letter to Vice-Chancellors of 24 November 2003.

The Government, in the light of responses received and subsequent consultation with stakeholders, has decided as follows:

a. Research Councils will pay a single percentage (as discussed in the Investment Framework) of Full Economic Costs (FEC) for almost all types of grants for research projects and programmes (Councils may announce special arrangements for certain types of grant, for example small travel grants, in due course).  Research Councils will include time spent by permanent academic staff, as calculated using the extended TRAC accounting methodology;

b. Research students will continue to be excluded from the FEC regime for the time being.  This will be revisited when TRAC has been successfully extended to teaching;

c. The additional resources allocated in Spending Reviews for Research Councils to pay a greater proportion of the costs of research (£120 million from Spending Review 2002 and a further £80 million from 2007-08 allocated in SR04) will be allocated between Research Councils from 2006-07 in such a way as to preserve the current balance of research volume.  Detailed modelling is currently underway; an announcement will be made when this has been completed.

The guidance and checklist on the pricing of projects for non-Research Council funders has been slightly revised in the light of comments received.