Why does research need subsidising if universities compete to do more of it?
A research award arrives as good news. It is announced, celebrated, counted in the annual review and cited in the next recruitment campaign. It also arrives with a bill, because the funder is very often not paying the full cost of the work.
That gap is real money, and it has to come from somewhere. Across the sector it comes substantially from the surplus on international teaching — which means the prestige economy runs on the recruitment economy, a dependency rarely stated in those terms.
So why did universities keep feeding it? Because the returns are real: staff, students, rankings, standing, the ability to be taken seriously. This chapter examines that logic honestly rather than dismissing it, and then shows the point at which a tolerable subsidy became a structural strain.
It is what fuel it uses, who pays for it and how long an institution can go on treating heat as proof of solvency.
Regulated to Fail, Chapter 6
The two deficits, and what covers them
What each activity costs against what it earns. Teaching British students loses money. Research loses more. One column pays for both.
Measure: £ million surplus or deficit; cost recovery as a percentage of full economic cost. Coverage: 128 higher education institutions in England and Northern Ireland. 2023–24.
What this chart does not show (5)
TRAC uses full economic cost, not cash accounting. A TRAC deficit is not the same as a cash loss in the year.
Covers 128 institutions in England and Northern Ireland only. Scotland and Wales are not included.
'Other (non-commercial)' shows a very high recovery rate because it carries little attributed cost; it is not a meaningful trading surplus.
Sector aggregates conceal a wide spread. Individual institutions differ sharply from these figures.
The five activity lines sum to -£2,002m against a published sector total of -£2,003m. The £1m difference is rounding in the source table, not an error here.
How the figures were prepared: Figures reproduced as published. No rebasing or adjustment. Percentages are cost recovery against full economic cost.
View as a table
TRAC 2023–24, 128 institutions in England and Northern Ireland.
Activity
Surplus / (deficit)
Cost recovery
Publicly funded teaching
−£1,693m
89.2%
Research
−£5,367m
66%
Other (income-generating)
−£136m
98.1%
Non-publicly funded teaching
+£3,232m
143.1%
Other (non-commercial)
+£1,962m
906.4%
Sector position
−£2,003m
95.7%
Where this goes next
This is the question the chapter opens with and the mechanism it identifies. What it concludes — and what follows from it — is in the book.