Consultation on the Higher Education Research Capital and Research Postgraduate Grants

5. We are committed to consulting widely on our proposals and welcome comments from our stakeholders and anyone with an interest in the issues raised in this document. We particularly encourage responses from individual universities. Responses should be made using the online consultation form by the deadline of noon on 13 January 2026. You should state clearly whether your response represents the views of a specific organisation or whether you are writing in an individual capacity.
6. Responses to this consultation will help shape any changes to be adopted. All responses will be taken into consideration. However, we anticipate giving greater weight to the strength of the arguments presented than to the number of times a point is made. We will engage with universities and other interested parties during the period of consultation.

7. We will fully assess the impact which changes under consideration might have on the sector population and the potential they offer to contribute to the achievement of our public sector equality duty. This will include an Equality Impact Assessment. Decisions on which options to pursue will be informed by this assessment.
8. In responses on the detailed changes proposed, we would welcome views on the likely impacts – positive and negative – these may have on SFC and the universities meeting their public sector equality duty to: eliminate unlawful discrimination, harassment and victimisation; advance equality of opportunity between different groups; and foster good relations between different groups.
9. Any overarching comments related to the aims of the public sector duty in the context of this review can be made in the ‘further comments’ section at the end of the survey.

10. Since 2010 DSIT have made funds available to SFC for Higher Education Research Capital (HERC) to invest in the physical infrastructure for research. Funding is dependent upon SFC providing match funding.

HERC contributes to the long-term sustainability of institutions’ research through capital investment in the physical infrastructure for research. It is focused on maintaining excellent departments with critical mass to compete globally and the expertise to work closely with business, charities and public services.

 

HERC funding totalling £38 million (£19 million from DSIT and £19 million from SFC) was allocated in FY 2025-26. DSIT confirm level of funding on an annual basis.

 

DSIT funding is currently allocated to institutions based on five-year average Research Council income, with awards being made above £100,000 only, and this is matched by SFC funding. Institutions who receive HERC report annually to SFC on spend. SFC do not mandate how institutions allocate funding internally.

Scope

11. The purpose and focus of HERC funding are agreed in a Memorandum of Understanding between DSIT and SFC and are therefore out of scope for this review. These are:

• to support capital investment in the physical infrastructure for research
• funding to be focused on departments with the critical mass to compete globally and the expertise to work closely with business, charities and public services

12. The review considered the allocation method and reporting requirements for HERC. Proposals for change are set out below.

Broadening research income used in allocation

13. Currently the average of five years of research income from Research Councils, as reported in the HESA Financial Return, is used to allocate HERC funding proportionately. Research Council income is used as a proxy for critical mass and as an indicator of excellent research, as it is competitively awarded.
14. Given the required focus of HERC funding on departments with the expertise to work closely with business, charities and public services, we propose that the research income used to inform the allocation is broadened to include a five-year average of research income from charity (competitively awarded), industry, commerce, and public corporations, as reported in HESA Financial Return
15. Broadening the range of research income used would reward and incentivise institutions to engage these sectors and ultimately lead to research with real world impact. We recognise that these figures are only a proxy for activity and that not all activities in this space will be income-generating.
16. There are a number of options available in how to balance research income from different sources in the allocation model. A potential approach is to allocate a set proportion of available funds by reference to each income stream.

Q1: Do you agree that broadening the research income figures used to inform the allocation of HERC would better reflect its focus on departments with the expertise to work closely with business, charities and public services? Please also comment on the appropriate balance between research income from Research Councils and from business, charities and public services.

Allocation

17. DSIT funding is currently allocated by SFC to institutions based on Research Council income, averaged over five years, with awards made above £100,000 only. This is matched by SFC funding. Originally the £100,000 minimum was intended to ensure that funding was focused on excellent departments with significant Research Council income, which acted as a proxy for critical mass.
18. The working group considered that individual departments could have critical mass without the institution overall having significant research council income. Moreover, it was noted that all institutions in Scotland have excellent research defined as 4* (“World Leading”) in the Research Excellence Framework 2021. A smaller minimum allocation might allow recognition of these areas of activity.
19. However, we also recognise that there is a lower point at which an allocation becomes disproportionately burdensome to administer, spend and report on, limiting the impact that can be achieved with it. Current reporting requirements are set out in para 26, with proposed changes in the subsequent paragraphs. These may inform your thinking on this issue.
20. We propose to reduce the minimum allocation and are seeking views from institutions on what would be the minimum level of allocation that they believe could deliver impact without being overly burdensome, and their reasons behind this.

Q2: What is the minimum allocation that is of value for an institution, considering the allocation, monitoring and reporting requirements? Please provide the rationale for your response.

Implementation of changes

21. It is SFC’s intention that the proposed changes will be implemented from FY 2026-27.
22. Available HERC funding is determined by DSIT on an annual basis and therefore year-to-year volatility is always possible. Institutions may therefore not necessarily view HERC as a long-term stable source of funding. We recognise however that, within a shorter-term horizon, institutions may anticipate a certain broad level of funding to continue.
23. If adopted, the proposed changes could potentially lead to some volatility in HERC allocations as we move to the new model. In the current financial climate, SFC would not wish to negatively impact institutions beyond what is sustainable and manageable.
24. Views are sought on: the tolerance within the sector for volatility in HERC allocations at an institutional level as a result of proposed changes to allocation model; and on potential ways SFC could mitigate against changes which may be destabilising. Potential approaches might be to delay implementation of changes to FY 2027-28 to allow longer planning time, to introduce changes in a phased approach or to limit percentage change in the first year following implementation.
25. Responses should be based on the assumption, for the purpose of this question, that the total available HERC funding will not change significantly.

Q3: In your view, what level of volatility in HERC allocations is manageable, bearing in mind that SFC may not be in a position to limit this where it arises from volatility in level of available funding?

Q4: If proposed changes were to result in volatility beyond that which is deemed manageable, how might SFC mitigate against these changes? Please provide the rationale for your response.

Reporting

26. Institutions report annually on the use of funding to SFC, and SFC in turn reports to DSIT. Institutions are required to complete and return a template setting out how HERC has been spent, and the total in-year project costs. SFC send a consolidated report to DSIT.
27. While this reporting offers assurance that funding has been spent in line with the grant purpose, it does not provide evidence on the impact of funding.
28. We propose a new requirement for additional reporting on HERC associated with the SFC Research Assurance and Accountability (RAA) process. This would take the form of a periodic request for case studies demonstrating the impact of HERC.
29. The RAA is the key element for monitoring the research excellence expectations within the SFC Outcomes Framework. In addition to providing information on allocation and governance, uses and value of Research Excellence Grant (REG), alignment with UK Concordats and RPG outcomes, institutions are asked to submit case studies on impact of REG and RPG. Guidance and further information is available here.
30. Case studies contribute to our evidence base on the importance of core funding (REG & RPG) to support research in Scotland. We draw on these to demonstrate the value and impact of research in Scotland. Similar case studies for HERC would allow us to demonstrate the impact of capital funding over time and would enable SFC and DSIT to better make the case for continued HERC funding in future years.
31. As impacts from capital infrastructure funding take time to emerge, case studies might look back over a number of years. We do not propose this would be an annual ask and propose that the number of case studies required is scaled to the level of funding.

Q5: Views are sought on the proposed requirement for case studies as part of the RAA process and whether this will provide sufficient evidence on the impact of HERC. We would welcome suggestions for alternative reporting formats 

32. SFC’s Research Postgraduate Grant (RPG) provides block grant funding to universities based on postgraduate research student (PGR) numbers and allows universities to invest in creating an environment in which postgraduate research students can thrive.
33. In AY 2025-26, SFC will provide £39.1M to Scottish higher education institutions through RPG, with each institution that supports postgraduate research students receiving a minimum of £81,000.
34. RPG allocations are made proportionate to a university’s share of the sector total of eligible full-time equivalent postgraduate researchers, using a two-year average. The RPG formula incorporates subject weightings, to reflect the higher cost of undertaking research in certain subjects.
35. Institutions use RPG funding flexibly towards postgraduate researcher training and support that best fits the needs of their institution and their postgraduate researchers. Through the information collected through Research Assurance and Accountability returns and through discussions with the sector, we are aware that universities use this funding in a wide variety of ways.
36. The Research Postgraduate Grant (RPG) principles and purpose were reviewed alongside the Research Excellence Grant in 2021. This review also considered the balance of funding between the SFC’s core research grants – REG and RPG. A decision was taken at the time not to review the RPG allocation method, to avoid undue volatility in universities’ core research funding grants.
37. As a result of the 2021 review, and following consultation with expert working groups and the sector, the following principles for RPG were endorsed by SFC’s Research & Knowledge Exchange Committee:

The Research Postgraduate Grant supports institutions to:

 

Invest in a collaborative environment for research training and development that values positive culture, inclusivity and exposure to high-quality research as central to the postgraduate research experience; and

 

Secure a pipeline of skilled postgraduate researchers and support their career development in a way that meets the needs of academia, industry and society.

RPG review scope

38. The current review considers the allocation method for RPG. Other aspects of the RPG such as its principles and purpose are outside the scope of the review, having been reviewed in 2021.

Rationale for consultation

39. As part of our regular cycle of work, we are undertaking a review to consider whether the RPG allocation method continues to be fit for purpose. We have worked with an expert short-life working group to help design the questions for this consultation and are including specific questions within this consultation on areas where the working group has identified the potential for a robust argument to be made for changes to the RPG.
40. However, considering the current financially constrained environment and the desire to reduce financial uncertainty for institutions, SFC is proposing to only make changes to the current RPG allocation method where there is a clear rationale for change and where there is evidence of obvious demand for this change from the majority of Scottish HE institutions.

RPG allocation method – minimum funding level

41. Scottish HE institutions which support postgraduate research students receive a minimum amount of RPG funding per year, in recognition that there are some basic costs associated with supporting PGRs that do not reduce below a certain amount, even for smaller PGR cohorts. The minimum level of funding has increased gradually over time, in line with increases to the RPG formula. In AY 2025/26, the minimum level of funding has been set at £81,000.
42. Once RPG allocation calculations have been run, if an institution falls below the minimum funding level for that academic year, the minimum level of funding is allocated to the institution and the RPG calculations recalculated for all other institutions using the remainder of the RPG grant.
43. Minimum funding (sometimes referred to as “Fixed Element Funding”) has been applied only to a small number of institutions over the past few years, all of which are small, specialist institutions. The impact of removing this funding would have a minimal impact on funding levels for those institutions not receiving the minimum amount, but a potentially large impact on funding levels for those who do.
44. We want to explore whether institutions feel that the current minimum level of RPG funding per institution is set at an appropriate level, and on what basis the minimum level of funding should be set in the future. For instance, should the minimum level of funding be set at a level that would allow an institution to employ a postgraduate research administrator or equivalent role?

Q6: In your view, should any changes be made to the current minimum level of RPG funding per institution (£81,000 in AY 25/26)? If so, what level should this be set at? Please provide the rationale for your response.

RPG allocation method – potential introduction of a quality element

45. One potential change that could be made to the RPG is to introduce a quality element. For instance, Research England’s similar Quality Related (QR) Research Degree Programme (RDP) Supervision Fund currently includes a quality element based on Research Excellence Framework scores.
46. As the RPG has a broader purpose than the QR RDP Supervision Fund, a more appropriate quality element to introduce for the RPG may be doctoral completions data.
47. We suggest Scenario A as a potential model for introducing a small quality element for RPG based on completions data:

Scenario A

In this scenario, 10% of the RPG grant (the “quality element”) is based on the proportion of an institution’s research-based doctorate completions, compared to the Scottish total. These figures are averaged across two years, consistent with the non-quality related element of the grant. International student doctoral completions are excluded.

The remaining 90% of RPG (the non-quality element) is allocated according to the current RPG formula.

Both elements are added together to provide an institution’s total RPG funding. Minimum funding is applied to any institutions falling below a set level.

48. Note that sometimes a student will complete their studies, including writing up, in one reporting year, but their award is not confirmed in time to be included in their institution’s Student Return for that year. In such cases the award will be reported in the Student Return for a later reporting year.

Q7: In principle, should a quality element be added to the RPG allocation method?

Q8: In your view, what would be the advantages and disadvantages of implementing Scenario A as set out in paragraph 47? What caveats should be taken into account?

Q9: If relevant, please suggest a preferred alternative method for introducing a quality element to the RPG, providing the rationale for your view. 

Implementation of changes

49. It is SFC’s intention that, if practical, any changes to the RPG resulting from this consultation be implemented from AY 2026-27.
50. If adopted, changes to the RPG allocation method are likely to impact individual institutions’ allocations. In the current financial climate, SFC would not wish to negatively impact institutions beyond what is sustainable and manageable.
51. Views are sought on the tolerance within the sector for volatility in RPG allocations on an institutional level and on potential ways SFC could mitigate against changes which may be destabilising if this review results in changes to the RPG allocation method being implemented. Potential approaches might be to delay implementation of changes to allow greater planning time, introduce changes in a phased approach or limit percentage change in any year.

Q10: In your view what level of volatility in RPG allocations is manageable, bearing in mind that SFC may not be in a position to limit this where it arises from volatility in level of available funding?

Q11: If changes were to result in volatility beyond that which is deemed manageable how might SFC mitigate against these changes?

RPG allocation method – other

52. We welcome suggestions for any other potential changes to the current RPG allocation method not already covered in this consultation.

Q12: Views are sought on other potential changes to the RPG allocation method not already covered in this consultation. Please provide the rationale for any proposed changes.

53. As we consider potential changes to HERC and RPG, we are aware of the need to consider the combined impact on individual institutions of any potential changes in these two funding streams as well as the wider funding landscape in Scotland and the UK.

Q13: Views are sought on contextual factors that SFC should take into consideration when considering any potential changes to the HERC and RPG allocation methods.

54. We welcome any other comments you wish to make on issues raised by this consultation.

Q14: Please use this space to record any further comments you would like to make in relation to this consultation.

55. We may publish a summary of the consultation responses and, in some cases, the responses themselves. Published responses may be attributed to an organisation where this information has been provided but will not contain personal data. If we publish a response submitted by someone in an individual capacity, we will ensure it is anonymised. When providing your response, you will be asked to confirm whether you agree to your response being included in any potential publication. For further information on how SFC uses personal information please see our privacy notice.
56. Respondents should be aware that we are subject to the provisions of the Freedom of Information (Scotland) Act 2002 and would, therefore, have to consider any request under the Act for information relating to responses made to this consultation exercise. You should mark clearly any parts of your response that you wish us to treat as confidential, subject to the Freedom of Information (Scotland) Act.