Research England proposes first major overhaul of university innovation funding formula since 2008

Research England has opened a consultation on proposed changes to the formula used to distribute the Higher Education Innovation Fund (HEIF) to universities in England. The proposals would mark the first significant redesign of the formula since it was introduced in 2008.

The fund supports universities in building partnerships with businesses and other organisations, commercialising research and sharing academic expertise beyond higher education. In the 2026–27 academic year, HEIF is supporting 114 institutions, with allocations ranging from £258,000 to £6.78 million.

Research England said the proposed changes are intended to make the funding model simpler and more responsive to the government's economic growth priorities. The role of HEIF would remain unchanged, with universities continuing to receive a flexible allocation and deciding how to use it for their knowledge-exchange activities.

Four priorities proposed for funding allocations

Under the proposed formula, funding would be organised around four areas: partnerships, commercialisation, skills and entrepreneurship, and local growth.

The partnerships component would recognise universities' work with businesses and other external organisations. Commercialisation would focus on turning research and knowledge into products, services and technologies, while the skills and entrepreneurship category would cover activities that develop workforce capabilities and entrepreneurial skills.

The local growth component would recognise universities' contribution to regional economies and local innovation networks.

Research England has also proposed bringing the existing separate funding supplements into a single formula. It said this would make the system easier to manage and allow funding priorities to be adjusted without introducing additional supplements whenever government priorities change.

The consultation also includes technical changes to the formula's operation, including a proposal to replace one of the existing measures used to assess skills and entrepreneurship activity with a more clearly defined knowledge-exchange metric.

HEIF generates £14.80 for every pound invested

Research England said HEIF generates £14.80 in economic returns for every £1 invested. The fund is allocated annually through a performance-based formula that takes account of universities' knowledge-exchange activities.

The current model includes a main allocation, a top-up for high-performing institutions and a separate supplement for business and commercialisation activity. The proposed changes would bring these separate elements together under one allocation framework.

Professor Dame Jessica Corner, executive chair of Research England, said the consultation was an opportunity for universities and others involved in knowledge exchange to help shape the future funding model.

Research England is inviting responses from higher education providers, sector organisations and individuals with experience of knowledge-exchange funding. The consultation closes on January 15, 2027.

The funding body expects to publish its decisions in spring 2027. If approved, the revised formula is proposed to take effect from the 2027–28 allocation year.