Research funding for universities has increased by £7bn in the last two decades, according to data released by the National Audit Office.

Between 1995 and 2011, research funding rose from just under £20bn to more than £27bn.

Data also shows that UK higher education institutions have increased their funding of research by 86 per cent, or £3.3bn, in real terms since 1995.

However, UK’s HE institutions’ funding lags behind comparable international competitors who are funding more research at a quicker rate. The report suggests these institutions are devoting more funding in an attempt to combat the global downturn by investing in further education.

Higher education institutions contribute 27 per cent of the total R&D in the country.

The government has also progressively reduced the amount it spends on undertaking R&D itself, instead increasing the funding it gives to UK businesses. Between 1995 and 2011, governmental funding of R&D towards public research institutions (research bodies associated with the government) fell by 19 per cent, while government funding of UK business increased by 19 per cent. 

In 2011 UK businesses spent £284 million towards R&D in HE institutions.

Research and Development (R&D) is historically the most cited metric of innovation in an economy. A recent review commissioned by the Business, Innovation, and Skills department indicated the rate of return for R&D investment as between 20 and 50 per cent.