The Comprehensive Spending Review may have delivered a better than expected settlement for the national research budget, but Alan Thorpe is still expecting the next four years to be "challenging".

In an interview with Times Higher Education, the chief executive of the Natural Environment Research Council and chair of the executive group at Research Councils UK said he had expected "a lot worse" than the flat-cash, ring-fenced resource budget announced in last October's CSR.

But he described the 50 per cent cash-terms cut in the research capital budget as "a challenge for us all" - not least because the budget is not ring-fenced and is certain for only the first year. "If we are given a change to a budget within a year, it is difficult to be quick in getting money spent or saved because, by its nature, procurement takes time," Professor Thorpe said.

The councils' existing capital commitments will be met, he added, but he expressed concern about the longer term. Nerc cannot rule out dipping into the resource budget to fund capital projects that its advisory bodies consider critical.

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"But we don't like to do that because it means we are doing less science with the resource money," he added.

He said the cuts to the research councils' administrative budgets announced last month - rising to 14 per cent in cash terms by 2014-15 according to indicative figures - would also "pose difficulties" despite being significantly less than the 40 per cent retrenchment previously mooted by David Willetts, the universities and science minister.

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"I can't avoid the fact that there will be fewer people working for Nerc by the end of the spending period," Professor Thorpe acknowledged. "But administration is hugely important in getting money to the researchers and enabling our own institute researchers to work."

Professor Thorpe said that some of the required savings would be delivered by pooling the councils' human resources, computing and grant-application systems in the Shared Services Centre. Although the cost of the centre has risen from initial estimates of ?75 million to ?135 million, it will pay for itself within six years via the significant savings to be made through bulk procurement, he noted.

He denied that greater savings could be made by merging the councils into one. Such a body would still need experts in different subject areas, and in practice would be virtually indistinguishable from the current RCUK setup, he argued.

Further administrative savings are expected to accrue to the councils through tighter demand management. However, Professor Thorpe said, the main aim of this move was to increase success rates for grant applications (the current figure is about one in five) and minimise the amount of time academics waste writing unsuccessful bids.

He said the councils were collectively "taking stock" of the extent to which existing demand-management techniques had been successful, but he thought the varying "cultures and approaches" of different disciplines would preclude a common approach from being agreed.

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The councils were talking to "major universities" to encourage them to do more internal peer review before submitting proposals, he added.

Look out for the targets

The councils also plan to impose efficiency targets on universities as part of the implementation of the Wakeham Review of full economic costing. But Professor Thorpe remained unsure whether this would enable them to come anywhere near to meeting Mr Willetts' hope that the value of their budgets would be preserved in real terms.

The councils' administrative burden will also be eased by the decision, announced in their delivery plans, to award longer but fewer grants.

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However, Professor Thorpe said that the move was driven primarily by the need to fund large multidisciplinary groups to address the UK's strategic challenges, such as food security.

He sought to downplay the amount of money that would be redirected into such strategic programmes, pointing out that Nerc had largely maintained its commitment to responsive-mode funding. Moreover, he said, the delivery plans' emphasis on the impact agenda was not as big an issue as its opponents tried to make it.

He denied that the introduction of a "pathways to impact" element to grant applications had been done at the Treasury's behest and said that critics were mistaken in seeing it in narrow economic terms. By focusing on impact earlier, researchers could speed its delivery and possibly leverage extra funding from potential beneficiaries, he added.

Professor Thorpe also denied that the naysayers were in the majority. "It doesn't feel like that when we talk to the breadth of academics in our communities - and I have never found them backward in coming forward," he said.

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paul.jump@tsleducation.com.