Our UK Research and Innovation (UKRI) Strategy 2026 to 2031 commits us to improving the long-term financial sustainability and resilience of the UK research and innovation (R&I) system. We are the largest funder of discovery and curiosity-driven research in the UK and are committed to supporting and sustaining R&I investment. We will strengthen the foundations of the R&I system by enhancing its resilience and sustainability such that it reinforces and supports UK research and development capability, critical infrastructure and talent.
A sustainable research system is one that meets today’s R&I needs without reducing its ability to meet them in the future. A resilient system also maintains the capability and flexibility needed to withstand shocks, achieve long-term goals and capture new opportunities.
Our Research financial sustainability programme has exposed a range of issues and pressures affecting the sustainability of UKRI-funded research and the longer-term resilience of the R&I system.
In 2023, we published a Research financial sustainability: issues paper which highlighted some of the issues facing research financial sustainability based on some of our data analysis.
This was followed up in 2025 with Research financial sustainability: insights paper 2025 which summarised insights from our data analysis and sector engagement around the costs of undertaking research and training postgraduate research students.
We have also published data visualisations (Sankey diagrams) using Transparent Approach to Costing (TRAC) data to show the funding flows in the university sector to accompany and inform our data analysis and sector engagement. Our latest data pack is Research financial sustainability TRAC data 2023 to 2024.
We are taking action to support more sustainable funding practices and behaviour and use our policy levers to lead to a more resilient R&I system. However, fostering a sustainable and resilient system requires a collective effort from all stakeholders within the R&I sector, not just UKRI.
This paper summarises the steps we have taken to improve cost recovery, encourage more sustainable funding practices and set clearer expectations in the sector around our funding policy. This is part of our ongoing commitment to improve the financial sustainability and long-term resilience of the R&I system.
Interventions to improve research financial sustainability and R&I system resilience
Under-costing of research project grant applications
We know that judgements around appropriate costings and incentives that lead to under-costing practices within universities can result in the amount requested on a grant application being less than the actual full economic costing (fEC) of delivering the project.
For example, if certain elements of delivering a project are viewed as ‘expensive’ the amount requested may be adjusted down. This is due to a perception this makes the application look more competitive at review.
There may also be perceived incentives to make adjustments to aspects of the proposal. For example, by reducing the amount of staff time allocated, rather than the project scope, to fit a project application within the budgetary limit of a funding opportunity. This may lead to under-costing resulting in the amount requested on an application being less than the actual fEC of delivering the project.
UKRI interventions
In July 2026, we published a statement highlighting our position on research grant costing practices.
Through our continued engagement and discussions with the sector, we are encouraging universities to develop and share good practice within and between each other around financially sustainable costing behaviours, for example by:
- highlighting that better join-up between the teams who lead on project bids and the teams who lead on annual assurance and accounting helps improve effective management of project budgets
- raising awareness of the dual uses of TRAC data for calculating the fEC for research projects and providing annual assurance reporting, and benchmarking to help strategic choices that support financial sustainability
Institutional matched funding on research project grant applications
We typically provide 80% of costs for a research project, with the host institution covering the remaining 20% from its own resources. Sometimes, the host institution offers to provide additional monetary support or in-kind contributions to support the cost of a project. This is known as ‘institutional matched funding’.
Institutional matched funding may be included for one of two reasons:
- it is requested by the funder as a requirement of the funding scheme
- as a judgement by the applicant to make the project proposal look more competitive
However, the inclusion of institutional matched funding lowers the cost recovery on research because it reduces the proportion of fEC being covered by UKRI.
UKRI intervention
In 2025, we updated our funding policy guidance to clarify that there is no default expectation of institutional matched funding on UKRI funding calls. For more information, see our news story UKRI updates funding policies to improve research sustainability.
Changes to costs during a project’s lifetime
There can be unplanned changes to the delivery of a project post-award. The costs of these changes are borne by the host institution.
For example, costs to cover reasonable adjustments incurred after a grant has started were covered by the research organisation using their ‘own funding’ sources. This placed additional financial pressure on the research organisation’s ability to complete the project as described.
UKRI interventions
In April 2026 we updated the UKRI terms and conditions for research grants regarding reasonable adjustment costs and no-cost extensions.
UKRI can reimburse costs incurred but not fundable within the existing grant limit when:
- new staff are recruited after the grant starts
- a team member’s circumstances change and additional support becomes necessary
These costs must be:
- necessary for the researcher to perform grant-funded work
- directly attributable to the project
- not fundable within the existing grant limit
This enables teams to meet disability-related support needs without limiting project ambition or impact.
No-cost extensions totalling more than six months over the lifetime of the grant will only be permitted for people-related reasons. This policy change was made to support better forecasting and monitoring, reduce administrative burden and maintain necessary flexibility around personal circumstances.
Equipment costs and capital equipment thresholds
It can be difficult to work out the exact fEC of project resources where they are shared between projects or between research and other activities, for example, teaching. An example of this is where equipment, overheads and administration and support costs are shared between projects, the actual fEC may not match the estimated cost for a specific project.
UKRI interventions
In April 2025, we updated our funding policies to:
- fund all equipment purchases at 80% fEC, improving cost transparency across research projects (with exceptions)
- increase the threshold for capital equipment from £10,000 to £25,000, reflecting the evolving costs of research and reducing administrative burdens on smaller purchases
Inflationary pressures
Inflation may increase some research-specific costs, for example, energy and chemicals, during the lifetime of the project.
We have an indexation policy to help address the effects of inflation. As indexation rates are set in advance, it can be difficult for universities and funders to predict how costs (such as staff costs) might change during the lifetime of a research project.
Inflationary effects between funding application and project start date can also result in the amount requested at the time of application being lower than the final fEC of the research activities.
UKRI intervention
We review our indexation rate on an annual basis. We have increased the indexation rate to 2.48% in light of the rise in inflation (tripling from 0.81%). This rate has been held, reflecting that inflation remains higher than it was pre-COVID.
Doctoral training costs
Universities support the development of the next generation of researchers through doctoral training and supervision. Doctoral training can be supported by a range of funders across the R&I system, including through UKRI-funded studentships.
We know that universities make significant investments using their own resources and funding to provide a high-quality doctoral training environment and student experience. This includes wellbeing, equality, diversity and inclusion, and skills provision. This is driven in part by the UKRI statement of expectations for doctoral training.
UKRI interventions
We have increased the minimum stipend for UKRI PhD students (8% in 2025 to 2026, 4.6% in 2026 to 2027) and have committed to improving the value of the UKRI fee level over the current Spending Review.
We are looking at how much it costs to train a doctoral student on a UKRI-funded project or programme. This includes commissioning a study to understand the influence of the UKRI fee level on the HE sector.
UKRI doctoral training terms and conditions have also been updated to provide research organisations with greater flexibility to support their UKRI-funded students by:
- allowing students to take up to 28 weeks medical leave
- making it easier for students who take medical or additional leave to get an extension to their studentship
- removing barriers that might prevent disabled students from getting support
- ensuring that students are treated in a way that is transparent and fair
Managing funding opportunity demand
Research organisations have highlighted that UKRI’s demand management practices have created additional work relating to internal institutional demand management processes for prioritising resource allocation.
UKRI interventions
We will be more explicit and proactive in managing demand using the full range of measures in our demand management framework. This includes publishing upfront in funding opportunities how they will be managed in terms of demand.
While we ask research organisations to submit within their application caps, and understand that there is a degree of work associated with this, it offsets the workload to the community in other ways:
- being clear on demand management requirements in funding opportunities helps research organisations to manage internal stakeholders and processes
- demand management reduces the number of applicants that have to write full applications and responses to reviewers and increases the success rate for submitted applications
In the case of the Future Leaders Fellowship (FLF) scheme, assessment is based upon peer review. Demand management significantly reduces the quantity of written peer review that the community has to provide and the number of panel members required to assess the FLF application. The request for equality, diversity and inclusion data and a supporting statement to be submitted along with FLF applications provides assurance that university gatekeeping processes are fair and transparent
We’re also looking to better understand the contributing factors and incentives to increased application demand, as well as the impact of generative artificial intelligence on composing applications.
Costs of regulatory compliance
Trusted Research and the Foreign Influence Registration Scheme are legal requirements that universities must administer for research projects.
A report by the Innovation and Research Caucus (IRC) highlighted uncertainty within the sector as to whether Trusted Research support is an eligible cost that can be recovered through UKRI grant funding. Some universities have been covering the costs of compliance through their own funds. In some universities, Trusted Research requirements led to staffing re-allocations due to administrative and resource burdens.
UKRI intervention
Funding applications to UKRI can include costs for specific TR&I requirements. As mentioned in the IRC report, “UKRI asks that bids be fully costed and for clear and evidence-based justification of requested resources.”
UKRI is addressing TR&I questions in its funding system , requiring the provision of key TR&I-related information at application stage. This change should help raise awareness in the sector and assist applicants and research support teams at the pre-award stage. It will provide a common approach at application stage across UKRI, in the way recommended towards the end of the IRC report.
Future R&I funding opportunities
The R&I community has indicated that better visibility of what UKRI is doing and what future funding opportunities may be available would benefit forward planning their activities and financial forecasting. Such as when preparing applications to new funding opportunities.
UKRI intervention
In June 2026 we launched a dedicated space on the UKRI website for upcoming funding opportunities not yet on the Funding Finder.
This timeline of R&I opportunities provides a longer-term view of upcoming funding opportunities across UKRI and will be updated quarterly. This will help potential applicants and research organisations to plan ahead with preparing and supporting applications. We are continuing to develop the webpage to improve its utility.
Building a financially sustainable and resilient R&I system for the long-term
As the UK’s largest public funder of R&I, we are working to build a financially sustainable and resilient R&I system for the long-term. We will consider how we can use UKRI’s policy levers to improve overall system resilience and cost recovery on UKRI-funded programmes.
However, a whole-sector response from all parts of the R&I system is needed to foster a world-class, long-term financially sustainable and resilient R&I system in the UK.
We work with research organisations, other funders, sector bodies and government to better understand their contributions and encourage sharing of good funding practice. Through this we will be able to collectively support the development of a financially sustainable and resilient R&I system for the long-term.
Ask a question about our work on research financial sustainability
To find out more about our programme of work on research financial sustainability, email us at irir@ukri.org.