Millions of pounds earmarked for university infrastructure, including the hiring of technicians for research in universities, was spent on employing research assistants and on extra grants, a report revealed this week.

This "misdirection" of research council money through the dual support mechanism could account for up to Pounds 29 million of the Pounds 67.5 million per year transferred to them to cover direct costs previously paid by the funding councils.

The study by accountants Coopers and Lybrand for the Office of Science and Technology says that the volume of research activity has increased since the transfer took place in 1992, although not all of this can be attributed to the move.

Research council spending in institutions rose by 4 per cent in 1992/93 and 1993/94 and was 11 per cent over the minimum to which research councils are committed by Government.

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Coopers and Lybrand found that the dual support transfer system has also helped to increase research volume, because investigators have not been applying for as much extra money as was assumed. This cash went to other areas, particularly to pay for research assistants.

The Committee of Vice Chancellors and Principals says that the report shows that the way the research councils have handled the cash transfer has "undermined" the Government's original intention. "Universities now have a weaker capacity to support research of a wider nature, particularly basic research. If this capacity is not to be further weakened, the balance in funding between councils must be redressed," it says.

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The consultants add that a decision needs to be made on whether steps should be taken to redress the balance in research volume. A reduction would mean fewer research council grants and an increase in infrastructure money for higher education institutions.

The two main options for achieving it are transferring an amount back from the research councils to the funding councils or increasing the level of funding for indirect costs.