Universities that do research as well as teach, like Surrey, are funded from many different sources, and their finances are complex. But roughly two-thirds of the money the Department has to pay my salary comes from student fees and government funding for teaching, leaving one-third of my salary to be paid for from research income. The distribution of my time between teaching and research is maybe half-and-half*. Teaching is subsidising research, in the sense that student fees are paying my salary for some time when I am doing research.
I think pretty much everyone in UK higher education knows that teaching subsidises research, it is no secret. But a student at Oxford, Vicky Olive, working for the Higher Education Policy Institute, has done some simple number crunching on this, and written it up as a report. In particular she looked at overseas (outside the EU) students, as they pay higher fees. UK and EU students applying for 2018 entry will pay £9,250 for all our degrees, but for physics, for example, the overseas tuition fee is £20,500 — more than twice as much. All students, whether they are from Salisbury or Shanghai, get the same education.
These large fees mean that overseas students are subsidising other university activities, and this is well known. But Vicky Olive has made some estimates, and come up with a figure of a £4,000 per overseas student per year, for the subsidy each overseas student provides to UK higher education. As the activity that does not pay its way is research, this subsidy goes there. For example, as Olive points out, in 2004, the UK government came up with an elaborate way of calculating exactly the total cost of doing research, and then decided to give universities only 80% of it, forcing them to get the remaining 20% from other sources, such as overseas student fees.
Charities also fund research in UK universities, and they are even worse than the government. Charities like Cancer Research UK fund important research in UK universities but they only pay part of the cost. The next time you see a charity claiming that it was your donations that funded a breakthrough in medical research, you may want to bear in mind that it would be more accurate to say it was funded partly by your donations, and partly by rich Chinese parents paying for their children to receive a British education.
* There are some ambiguities here, for example, if I am supervising a research project of an undergraduate, does that time count as teaching or research?
Chance & Necessity 