To: Heads of Research England-funded higher education providers
Reference: RE-CL-2025-03
Publication date: 22 July 2025
Enquiries to: annualfunding@re.ukri.org
Dear Vice-Chancellor or Principal
In this letter we set out our budget decisions on Research England’s funding streams for higher education providers (HEPs) for the academic and financial year 2025 to 2026. These funding budgets stem from:
- government department allocations for financial year 2025 to 2026, announced in the Autumn Budget 2024
- subsequent high level UK Research and Innovation (UKRI) budget allocation for financial year 2025 to 2026, published in April 2025
We have been able to maintain budgets in cash terms for most of our funds. However, the Research Capital Investment Fund (RCIF) budget has decreased, reflecting the challenging capital funding landscape across UKRI. We are fully mitigating the impact of reduced funding on the sector with £64 million of additional capital.
Guidance from the Department for Science, Innovation and Technology (DSIT)
Alongside this letter, we publish the specific guidance UKRI has received from DSIT. This sets out the government’s priorities and budget allocations for Research England in the financial year 2025 to 2026.
Our settlement from DSIT maintains the balance of dual support funding at around 64 pence on the pound.
Budget decisions for 2025 to 2026
Following endorsement by the Research England Council, we have set budgets for:
- research and knowledge exchange funding for the 2025 to 2026 academic year (tables 1, 2 and 3)
- capital funding for the 2025 to 2026 financial year (table 4)
Capital funding is allocated by financial year from April to March, and all other formula-based funding is allocated by academic year from August to July.
Decisions on funding are delegated from the Chief Executive Officer of UKRI to me as Executive Chair of Research England. The Executive Chair acts with the endorsement and support of the Research England Council.
Research and knowledge exchange funding for academic year 2025 to 2026
In making budget decisions for the 2025 to 2026 academic year, we have assumed that the funding we receive will continue for financial year 2026 to 2027. This includes our allocations from DSIT, and funding from the Department for Education to support Higher Education Innovation Funding (HEIF).
Any significant future changes to our funding by government could affect the funding we are able to distribute to HEPs in the 2025 to 2026 academic year. This may include revising allocations after they have been announced.
We also reserve the right to make retrospective revisions to allocations for 2024 to 2025 and earlier years if there is specific need. For example, if we find that terms and conditions of grant have not been met or that formula allocations have been informed by incorrect HEP data.
Table 1: academic year budgets for research and knowledge exchange funding
| Research funds | 2024 to 2025 (£ million) | 2025 to 2026 (£ million) |
|---|---|---|
| Quality-related research (QR) funding | 1,987 | 1,987 |
| Policy Support Fund | 29 | 29 |
| Enhancing Research Culture | 30 | 30 |
| Participatory Research | 6 | 6 |
| Specialist Provider Element | 20 | 20 |
| National facilities and initiatives | 86 | 80 |
| School of Advanced Study and Institute of Zoology | 13 | 13 |
| Total academic year research funding | 2,170 | 2,165 |
| Knowledge exchange funds | 2024 to 2025 (£ million) | 2025 to 2026 (£ million) |
|---|---|---|
| Higher Education Innovation Funding (HEIF) | 280 | 280 |
| Research England Development (RED) Fund | 20 | 24 |
| Connecting Capability Fund-RED (CCF-RED) | 28 | 9 |
| Total academic year knowledge exchange funding | 328 | 313 |
| Total academic year funding | 2024 to 2025 (£ million) | 2025 to 2026 (£ million) |
|---|---|---|
| Total research funding | 2,170 | 2,165 |
| Total knowledge exchange funding | 328 | 313 |
| Total academic year funding | 2,498 | 2,478 |
Notes for table 1
Figures may not add up to the total due to rounding differences.
Table 1 excludes £21 million short-term financial-year funding allocated to Research England by DSIT during 2024 to 2025. This was for International Science Partnerships Fund (ISPF) institutional support grant official development assistance (ODA) funding.
Funding for research
Budgets for the separate elements of QR funding are being maintained at their 2024 to 2025 cash levels, as shown in table 2. This recognises Research England’s mission to create and sustain the conditions for a healthy and dynamic research and knowledge exchange system in English HEPs.
Table 2: academic year budgets for individual elements of QR funding
| Elements of QR funding | 2024 to 2025 (£ million) | 2025 to 2026 (£ million) |
|---|---|---|
| Mainstream QR research funds (including London weighting) | 1,303 | 1,303 |
| QR Research Degree Provision (RDP) supervision fund | 344 | 344 |
| QR charity support fund | 219 | 219 |
| QR business research element | 114 | 114 |
| QR funding for national research libraries | 7 | 7 |
| Total QR funding | 1,987 | 1,987 |
Notes for table 2
Figures may not add up to the total due to rounding differences.
We are maintaining budgets for Enhancing Research Culture, Participatory Research, Policy Support Fund and Specialist Provider Element funding in 2025 to 2026. We expect to continue these funds while we evaluate their effectiveness through the strategic institutional research funding review.
The QR RDP supervision fund and Enhancing Research Culture funding will return to their usual distribution methods, after the temporary change that was applied in 2024 to 2025.
Funding for knowledge exchange
We have maintained our main HEIF formula funding at £280 million, as shown in table 1. This includes £48 million contributed by the Department for Education to support student and teaching elements of knowledge exchange through HEIF, which we expect to be confirmed annually.
Table 3: academic year budgets for individual elements of HEIF funding
| Elements of HEIF funding | 2024 to 2025 (£ million) | 2025 to 2026 (£ million) |
|---|---|---|
| Main HEIF | 260 | 260 |
| HEIF business and commercialisation supplement | 20 | 20 |
| Total HEIF funding | 280 | 280 |
In 2025 Research England updated our policy on the eligibility criteria for knowledge exchange funding. We are implementing this new approach in our HEIF (including the HEIF business and commercialisation supplement) grant allocations for 2025 to 2026.
Two funding streams were initiated in 2022 to 2023, in response to government policy guidance to increase funding for activity supporting commercialisation and university-business collaboration:
- HEIF business and commercialisation supplement
- Connecting Capability Fund (CCF-RED) programme
The HEIF business and commercialisation supplement (issued in addition to the main HEIF formula funding) will continue to be allocated on the basis outlined in November 2022.
Funding for CCF-RED, which provides dedicated funding for commercialisation projects, has decreased this year to reflect reduced requirements from current projects as they draw to a close. We are reviewing investments made and identifying priorities, in preparation for future rounds (subject to future funding availability).
Capital funding for financial year 2025 to 2026
The budget for the Research Capital Investment Fund (RCIF) has decreased, however we will fully mitigate this with £59 million of additional capital formula funding. This amount has been made available by adjusting how much of our academic year funding we pay from different financial years. The additional capital formula funding will be allocated in proportion to grant allocations for each of the RCIF elements (HEI Research Capital England and Higher Education Research Capital (HERC) England).
This additional capital formula funding is provided to support the maintenance, upgrade and upkeep of existing capital (buildings and estate) and should not be used for new capital investments.
We provide capital grants on a financial year basis, so for 2025 to 2026 these grants must be spent in full by March 2026.
Capital developments funded under the seventh round of UKRPIF are ongoing, and the profile of funding has been adjusted to reflect their needs.
Capital budgets are shown in table 4.
Table 4: financial year budgets for capital funding
| Research Capital Investment Fund (RCIF) | 2024 to 2025 (£ million) | 2025 to 2026 (£ million) |
|---|---|---|
| HEI Research Capital England | 120 | 92 |
| Higher Education Research Capital (HERC) England | 113 | 83 |
| Total RCIF | 233 | 174 |
| Capital funding | 2024 to 2025 (£ million) | 2025 to 2026 (£ million) |
|---|---|---|
| RCIF | 233 | 174 |
| Additional capital formula funding | n/a | 59 |
| National facilities and initiatives (from additional capital) | 5 | 5 |
| UK Research Investment Partnership Fund (UKRPIF) | 70 | 15 |
| Total financial year capital funding | 308 | 253 |
Notes for table 4
Figures may not add up to the total due to rounding differences.
Further information
Following a period of consultation, an updated set of terms and conditions for 2025 to 2026 will be published on 1 August 2025.
We plan to publish our 2025 to 2026 grant allocations for formula-based funding in July 2025.
An explanation of our allocation methods for formula funding streams can be found in our publication ‘Research England: how we fund higher education providers’.
Any questions about this letter should be addressed to annualfunding@re.ukri.org
Specific questions about research or knowledge exchange funding should be addressed to researchpolicy@re.ukri.org or kepolicy@re.ukri.org respectively.
Yours faithfully
Professor Dame Jessica Corner FMedSci, MAE, FKC, RN
Executive Chair, Research England