RCUK Efficiency Savings: Indexation, Indirect Costs and Equipment

** UPDATE 20/09/2011 ** Added guidance on changes to indirect cost grant submissions and guidance for top slice calculations on existing grants, issued by RCUK.

RCUK has recently reported on changes to grants which will enable it to meet its efficiency targets. The efficiency measures they outline affect indirect costs, inflationary allowances (or “indexation”) and equipment costs across the full RCUK-funded grant portfolio:

Efficiency: Ensuring Excellence with Impact [PDF]

Efficiency: Changes to requests from equipment from 1st May 2011 [PDF]

Efficiency: Changes to Indirect cost grant submissions from 1st July 2011 [PDF]

Efficiency: Guidance for Existing Grants – Top Slice Calculation [PDF]

Although the changes to large equipment purchases will mainly affect applications to the EPSRC, the indexation and indirect cost changes will affect all grants funded by research councils.

The key points are:

  1. Removal of indexation on all grants from 1st April 2011. For existing grants awarded before 1st April, the indexation will be “top-sliced” off the institution’s full portfolio of research council grants from the 1st April. For grants awarded on or after 1st April, new reduced indexation rates will be applied per grant. These new rates will be 0% for 2011 and will be reviewed in subsequent years. In short, indexation will be removed from 1st April for all Research Council grants.
  2. From 1st July 2011 indirect costs will be reduced by a percentage depending on the “efficiency grouping” of your institution. This applies to all grants with payments due after 1st July 2011. The reduction can be anything from 0% to 5%. (The efficiency grouping is worked out by calculating the percentage increase in indirect cost rate between the present year and the previous year.) The mechanism by which RCUK will apply this reduction will be via the institutional “top-slice” mentioned above, which will be invoiced annually to institutions. There was some concern that RCUK were going to ask institutions to calculate this reduction prior to grant submission. However, consultations with research organisations indicated that a less burdensome route would be for RCUK to calculate the indirect cost reduction across an institution’s portfolio of grants and invoice for this annually on 31st March.
  3. From 1st May 2011 the threshold for individual items of minor equipment will be raised from £3K to £10K. These items will be classed as “Other Directly Incurred” and will be funded at the standard 80% research council rate. For items of equipment between £10K and the OJEU threshold value of £121,588 (inc. VAT), extra justification will be needed and only 50% of the cost will be paid with the other 50% being met by the research organisation. For items over the OJEU threshold value, a business case will be required to outline the strategic need for the equipment. If this is accepted, then the RC may fund the full cost of the equipment. In cases where these are rejected, the research could proceed without equipment being funded.

EPSRC has already confirmed that they will use these procedures for equipment funding, and you can read the full details on their website.

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