TRAC was introduced as a result of the Government's Transparency Review in 1999. The first TRAC data showed a significant underfunding on publicly-funded research. It highlighted the problem of the sustainability of research activity and infrastructure in HE with Universities funding the deficit.
In response to the results of the TRAC review, the Government reaffirmed its commitment to support UK's research bases and to help HEIs attain long-term financial sustainability. Over £1 billion annually of additional funding was provided by the Government to this end. And from 2005, the Research Councils started funding research projects at 80% of the TRAC full economic cost which is significantly higher funding for the same work than the previous basis of 'direct costs + 46%'. The research block grant was also increased as part of the reform.
What is full economic cost?
Full economic cost (fEC) was a development of TRAC which allowed the total costs required to run a research project in a sustainable manner be established. Under the old methodology, sponsors fund a varying percentage of the direct and indirect costs of the project where many indirect costs are not considered in the calculation.
Under fEC, institutions are required to identify all direct and indirect costs incurred for each research project. These include costs for all staff working on the project (including PIs, technical and administrative staff), equipment (new items and charge-out rates for existing equipment), consumables, travel, estates costs (University space used during the project), central service department costs, utilities, depreciation, insurance, and net infrastructure adjustment.
What is 'sustainability'?
An institution is being managed on a sustainable basis if, taking one year with another, it is recovering its full economic costs across its activities as a whole, and is investing in its infrastructure (physical, human and intellectual) at a rate adequate to maintain its future productive capacity appropriate to the needs of its strategic plan and students, sponsors and other customers' requirements.