Information about the economic situation in the Research Council

Published 28.6.22

KPMG confirms forecasts and points to reasons for the economic situation in the Research Council

A review conducted by KPMG of the Research Council's economic forecasts as of March 2022 shows that no significant errors have been found in the basis that influence or change the understanding of the economic situation in the Research Council. One of the main conclusions of the review is that there has been a lack of agreed economic management objectives that are adapted to the Research Council's activities.

On 16 May, the Research Council was commissioned by the Ministry of Education and Research to obtain external assistance to carry out a review of the economic situation in the Research Council and to explain the main reasons why the economic situation in the Research Council has arisen. The recent review by KPMG shows that no significant errors have been found in the basis that affect or change the understanding of the economic situation in the Research Council. The review confirms that the Research Council has good financial management and that the figures for the forecasts do not contain significant errors and deficiencies.

"This review is important because it confirms that the Research Council has good financial management and that the forecasts the Research Council is working on give a correct picture of the situation. This is an important clarification, and now the board and the administration can continue their work to present good proposals for solutions that the government can consider," says Deputy Chairman of the Board Robert Rastad.

Main reasons why the economic situation has arisen

KPMG considers that one of the main reasons why the economic situation has arisen that there has been a lack of agreed financial management objectives that are adapted to the Research Council's activities.

KPMG points out that the economic situation in the Research Council is complex and that several factors have contributed to the situation having arisen. Fundamentally, the Research Council's grant management is complex. In addition, the Portfolio of the Research Council in recent years, and especially in the period 2020 to 2022, has been affected by changes beyond the ordinary mechanisms.

"KPMG points out that there may appear to have been misunderstandings and unclear terminology related to key mechanisms in the Research Council's grant management, and the report points in particular to the understanding of transfers within the Research Council's activities," says Rastad.

Overview of measures to reduce transfers

Measures (in MNOK)	2017	2018	2019	2020	2021	2022	Total
One-time cut	337	105	5	495	714		1657
Migration Reuse				149		438	586
Over-allocation				1348	150	300	1798
Total effect of measures	337	105	5	1992	864	738	4041

The table summarizes when the measures were implemented and the measures were particularly high in the period 2020 to 2022, where the measures have a total effect of NOK 3.6 billion. (See Table 8, page 16 of the report.)

KPMG points out that the Research Council's portfolio in recent years, and especially in the period 2020 to 2022, has been affected by changes beyond the ordinary mechanisms. At the same time as the Research Council was given extra funding during the corona pandemic, there was a clearly expressed desire from the ministries to reduce transfers. Measures were therefore implemented to reduce transfers by allocated more funding for the research projects than was allocated from the ministries. In the same period, the Research Council has made forecasts that have consistently warned of negative transfers of varying sizes in the period 2022 to 2024. In other words, the economic situation in the Research Council has been notified for several years at the same time as measures have been implemented that further exacerbated the situation," writes KPMG.

KPMG also considers that the DFØ and the Auditor General's conclusions mean that the Research Council must have a "tighter" policy at chapter/post level. It is likely that "tighter" chapter/post management will lead to less efficient use of resources and increased transfers.

Recommendations from KPMG

KPMG's assessment is that the main economic objective of the Research Council should be aimed at measuring annual allocations to research and innovation in relation to the annual payments from the ministries and that the objective is aimed at ensuring a stable relationship between these over time. KPMG writes that fundamentally, the Research Council's grant management complex with one-year funding of multi-year projects and the financial management objectives must reflect this complexity. The main recommendation from KPMG is:

"Our recommendation is that the Research Council, in cooperation with the Ministry of Education and Research, establish agreed economic management objectives that are adapted to the Research Council's activities and the ministries' needs, and that these are used as a basis for management and follow-up of the Research Council."

Read the review from KPMG: "Review of the Research Council of Norway"(pdf) (In Norwegian only)

Research Council board warns against further measures

Published 23.6.22

The resolutions adopted by the Board so far to reduce the deficit in the Research Council will over time result in savings totaling NOK 2 billion. The board warns against further action.

"The measures that the Board has already adopted will have major consequences for Norwegian research," says Kristin Halvorsen, Chairman of the Board of the Research Council of Norway.  If further measures are to be taken, the situation will be very serious.

Read the full news (in Norwegian only)

Voluntary displacement of projects funded by the Research Council

Published 15.6.22

The Research Council is now asking for voluntary displacement of projects that are underway. It is up to the institutions themselves to decide which projects this may be relevant for. The same total payout will be extended over a longer period, up to three years. The management of the institutions shall coordinate the feedback to the Research Council.

In connection with the Research Council being in a demanding financial situation, the Research Council's Board has adopted various measures to remedy the situation in the short and long term. Among other things, the board has asked the administration to engage in dialogue with the research communities about the possibility of contracting displacements in the existing project portfolio.

"We are now asking the institutions to consider which projects can be shifted up to three years. We emphasize that this is completely voluntary. The purpose of this is to improve the liquidity situation, so that we can maintain the pace of allocation of funds for projects in the future. The projects that are being skewed will receive the same total amount paid out, but the payments will be stretched for a longer period of time," says Mari Sundli Tveit, CEO of the Research Council of Norway.

It will be entirely voluntary for project owners to shift progress in Research Council-funded projects, and the proposal will be implemented in consultation with the Norwegian Association of Higher Education Institutions (UHR) and the Joint Arena of the Research Institutes (FFA). It is up to the institutions themselves to decide which projects will extend the project period and the project period can be extended up to three years.

The management of the institutions shall coordinate the feedback to the Research Council. It is important that project owners coordinate with the management of their institution.

Read the letter we have sent to research organisations and research actors in the public sector: "Request to shift progress in research council-funded projects" (pdf) (in Norwegian only)

The Research Council implements the awards in June and August/September as planned

Published 09.06.22

The Research Council implements the allocations in June and August/September as planned, but the level of allocations is somewhat adjusted compared to what was originally announced. This was adopted at the Research Council of Norway's board meeting on Wednesday 8 June.

The economic situation in the Research Council comes as a result of one-off cuts from 2017 to 2021, reallocations of provisions in 2020 and 2022 and previously approved over-allocations.

The Board of Directors assumes the Government's initiative of 3 June 2022, which provides an opportunity to continue previous practice of active liquidity management until 2024, and that temporary halt in allocations from items with negative provisions ceases.

The Board of Directors adopted:

• Reduce the allocation limits for allocations in June 2022 by up to 20% where co-financing is from items that have or may receive negative provisions through 2023.
• Reduce allocation limits in August/September 2022 by 20% for Fripro and all other budget purposes with full funding from items that have or may receive negative provisions through 2023.
• Reduce the allocation limits for other allocations in August/September 2022 by up to 20% where there is co-financing from items that have or may receive negative provisions through 2023

This does not imply lower allocations for research purposes over time, but lower allocations this year due to previous years' over allocations.

"Against the background of the financial situation, the board must already take some steps at this year's awards to bring the provisions towards balance. At the same time, I am pleased that we can now carry out awards both in June and in the autumn. This means that the applicants who have spent time writing applications will receive answers in the usual way," says Kristin Halvorsen, Chairman of the Board of the Research Council of Norway.

Voluntary displacement of ongoing projects

One important step to balance will be voluntary displacement of ongoing projects. The Research Council has already held meetings with UHR and FFA on this, and a letter will now be sent out immediately to the institutions asking for the project period to be extended where possible.

"We will immediately enter into dialogue with the institutions to establish displacements in the existing project portfolio with funding from items that have negative provisions in the current or coming year," says Mari Sundli Tveit, Ceo of the Research Council of Norway.
The Research Council proposes that the first payment to projects awarded in 2022 will be 1 July 2023.

FRIPRO (Ground-breaking research) and RES-EU (Funding for increased participation in EU projects)

It is now also clear that there will be an award at FRIPRO in September. Here, too, the level of allocations will be somewhat adjusted compared to what was originally announced. This is a necessary step to bring the deposits towards balance.

The Board also decided that the RES-EU scheme's payments will be continued in 2022 at the same level as for projects established in 2021. One change from previous practice is that payments will now take place at three equal rates, at the beginning of each of the years 2023, 2024 and 2025.

Read the full decision from the board meeting here

Waiting for an application result in June? Read more about the allocations

The Government is taking initiative to solve the challenges

Published 03.06.22 (English version published 07.06.22)

The Government has today taken an initiative with the Storting that will have a major impact on the Research Council's planned allocations in June and September. The Ministry of Education and Research writes on its website: "The Government is taking the initiative before the Storting to give the Research Council a temporary opportunity to move money across items in its budgets until 2024. This will allow for the implementation of the grants that the Research Council will make in the coming months, including basic, outstanding research (Fripro) in the autumn. "This may be an important measure to solve the short-term challenges, but not enough to solve the serious economic problems alone," says Minister of Research and Higher Education Ola Borten Moe."

The Government's initiative to the Storting is in line with the recommendations made by the new Board of directors of the Research Council to the Ministry of Education and Research.

The Research Council is now planning based on the signals in the Government's initiative with regard to all the calls for proposals awarded in June and September.

"I am very pleased with the initiative from the government, which will allow us to implement allocations in June and September as planned. We are now working, together with the Board and the Ministry of Education and Research, to ensure continued predictability and long-term research funding," says Mari Sundli Tveit, Ceo of the Research Council of Norway.

Board meeting 27 May

Published 30.05.2022

On Friday 27 May, a board meeting was held at the Research Council of Norway. At the meeting, the Board discussed previous one-off cuts, redistributions and over-allocations that affect the liquidity situation and the consequences for the long-term budget. At the meeting, the board discussed various scenarios for voluntary displacement of projects and possible solutions in the short and long term, and asked the administration to continue working on alternative models for how the situation can be resolved.

The Research Council implements most of the allocations in June as planned, but with somewhat adjusted allocation level

Published 23.05.22

In close dialogue with the Ministry of Education and Research, the Research Council's board and administration have made new clarifications about planned awards in June. Allocations from entries that do not have negative provisions will be completed. This means that allotments will be made in June for most calls for proposals, but with lower amounts than planned. We will return with the allocation level for the assignments in June as soon as possible.

Also in September, allocations will be made on the items that do not have negative provisions. We get a lot of questions related to FRIPRO and SFF, which have scheduled award meetings in September. These are items that have negative provisions and we are working on possible solutions to these calls and will return with information as soon as possible.

The Research Council's board and administration are now in dialogue with the boards of the Joint Arena of the Research Institutes (FFA) and the Norwegian Association of Higher Education Institutions (UHR) to jointly find good proposals for solutions. A joint meeting was held with the boards on Monday 23 May.

"I am pleased that we have already clarified that we can carry out most of the awards in June, even though the amount is lower than planned," says Kristin Halvorsen, Chairman of the Board of the Research Council of Norway. "It is now important that we continue to allocate funds so that Norwegian research environments are delayed to the least extent possible," says Halvorsen.

"At the same time, we know that there are now a large number of researchers who have applied for FRIPRO and are waiting for an answer in September. We are now working on possible solutions to this call, and will return with information as soon as possible," says Mari Sundli Tveit, CEO of the Research Council of Norway.

External mapping of the economic situation will be implemented as soon as possible

Published 20.05.2022

In the proposed revised national budget, which was presented on 12 May, the Ministry of Education and Research asks the Research Council's board and administration to look at how the economic challenges should be solved in order to limit negative effects. It has now been clarified that KPMG will review the figures, and this work has been initiated.

"It is important for the new board to work out good proposals for solutions that the Government can consider. I am therefore pleased that we are now able to initiate this review of the figures quickly," says Chair of the Board Kristin Halvorsen.

Temporary halt on new allocations from the Research Council of Norway

Published 18.05.2022

In the proposed revised national budget, which was presented on 12 May, the Research Council has been instructed to stop allocations to new projects until further notice in the areas where there are negative provisions.

The Research Council's administration is now reviewing, together with the new executive board, all the consequences for planned allocations. We will inform you of this as soon as possible.