Total research income to English higher education institutions (HEIs) from grants and contracts fell by 1.8 per cent (£90 million) in real terms to £4.8 billion in 2015-16 compared with the previous year. However, this decrease is attributable to the reduction in Research and Development Expenditure Credits (RDEC) from HM Revenue and Customs.
RDEC offers tax incentives to large companies to encourage greater investment in research and development. It generated £436 million of income for HEIs in 2014-15, but only £82 million in 2015-16 as universities and charities became ineligible for RDEC from 1 August 2015.
Excluding RDEC, the real-terms annual increase in research income was 5.9 per cent or £264 million in 2015-16, although changes in the financial reporting standards for 2015-16 onwards mean that time series comparisons should be undertaken with caution.
Research Councils continue to be the single largest source of research income. This increased by 6.9 per cent (£102 million) in 2015-16.
The largest proportional increase in research funding in 2015-16 was from UK charities. Grants and contract income from this source increased by 11 per cent (£96 million) compared with the previous year. Funding from EU sources increased by 0.9 per cent (£6 million) in 2015-16 to £702 million, which was 15 per cent of all research income.