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Research councils look set to divert around Pounds 10 million a year from grants for new projects to meet official obligations to increase overhead payments for projects, writes Kam Patel.

The Office of Science and Technology and the Department for Education and Employment are expected to announce in a few weeks that overhead payments are to rise from 40 per cent to 45 per cent of the salaries cost per project.

The rise follows complaints about the workings of the dual support system since research councils started paying overheads in 1992.

A Coopers and Lybrand review last year showed that not all the money transferred to research councils to pay for project costs had been used to do so, but had funded more projects.

Universities pounced on the findings, claiming that institutions had lost out on millions of pounds for equipment and technicians. The rise in overhead payments should come in force next April and apply to all new grants and all outstanding payments on current grants. There will be no backdating.

Total research council spending on grants is about Pounds 500 million a year but well under Pounds 100 million is available for new grants. The rest goes on existing grants that last three to five years. The number of projects funded by research councils could drop by up to 12 per cent.