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Layered governance makes things unnecessarily complicated

In government, there is often a well-intentioned desire to do the right thing. It is taxpayers’ money that is being handled, and it is important to be constantly vigilant about how it is spent. This requires transparency and control of activities to ensure that high ambitions for quality, resource efficiency, effectiveness and legal certainty are put into practice. But can it be too much of good things?

From time to time, attention is also drawn to the effectiveness of supervisory and control systems. The question is whether the resources spent on control are commensurate with what is achieved in terms of improved quality or resource efficiency.

In addition to the activities to be carried out within each authority, the state also wants to achieve general objectives related to things like environmental sustainability, gender equality, permanent archive management, zero tolerance of victimisation or discrimination, GDPR, security protection, etc. These are all legitimate objectives and, for one reason or another, necessary values to uphold.

In recent years, the consequences of this layered governance have been problematized, including in reports by the SUHF. In addition, the relevant minister has expressed ambitions to reduce bureaucratic micromanagement, and the Swedish Agency for Public Management has consequently been tasked with examining the consequences for higher education institutions in particular.

In addition to the control, oversight or audit mechanisms that result from the above, each authority, including universities, needs to ensure that the organisation makes decisions in the right way, deals with different issues in a legally sound way, or ensures that different requirements are dealt with in accordance with the applicable regulations. This gives rise to policies, procedures and other governing documents that either refine externally imposed requirements or add new locally defined requirements.

The SUHF report published earlier this year by Ahlbäck Öberg and Boberg states on the last page that “…university managers should take greater responsibility for pointing out the excessive demands that the current state control entails, and that they should also ensure that their own university is not overburdened with administrative tasks that crowd out core activities.

In other words, it is high time to do two things.

First, the overburdening of universities in the form of burdens, controls and requirements of all kinds needs to be recognised (and reduced). When all is said and done, the result is not a more efficient operation with higher quality, but a heavier bureaucracy that risks reducing the amount of resources that actually go to core activities. This is wrong!

Second, the universities themselves need to look at how governance is organised.

What needs to be governed should be governed in a sensible way. Where things need to be done equally, they should be done equally. But there are also times when the level of detail in governance is too high, and the arrangements that are decided locally become overly complicated and resource-intensive, and tend to contribute to more bureaucracy rather than more quality in the organisation. This is also wrong!

Removing a rule, reducing the level of detail or cutting back on reporting also means that there is confidence that the organization is doing the right thing.

University career systems play an important role in the working environment

One of the biggest challenges for universities in Sweden is the high level of external funding. Today, just over 60 per cent of research funding is won in a competitive bidding process.

Our staff work hard to apply for money, follow up and report on grants to a variety of funders with different requirements for follow-up, different rules for how the money can be used, different rules for covering overheads and requirements for co-financing. We are good at this!

However, a challenging consequence of the funding system is that it is difficult for universities to be really good employers. Although we know with a fair degree of certainty that funding will come to the university through external funders, it is difficult to know in advance exactly what we will be funded for and on what terms.

At the same time, there is a strong expectation that universities will provide secure conditions and predictable career paths for our academic staff. In other words, the combination of a lot of sometimes short-term external funding and the need for long-term favourable conditions for our academic staff is not the easiest to solve.

During the year, KTH has investigated how we should structure our career system and also how different categories of academic employment outside the career system should be described.

The aim is to be able to offer clear conditions for all our academic positions and to take long-term financial responsibility for the positions we offer. Not everyone can have everything, but everyone can know what applies to the category to which they belong.

Universities also offer a large number of fixed-term positions in the form of PhD studentships, post-docs and assistant professorships. It is generally accepted that academic careers are built on such positions, which eventually lead to tenure. However, even with fixed-term contracts, it is important that the terms and conditions are clear.

Universities have a great deal of freedom in shaping the career system, although there are some legal and regulatory constraints. This freedom also brings with it a great deal of responsibility and, as I said, the somewhat challenging question of how to combine a high proportion of external funding with secure and predictable employment conditions. One of KTH’s goals is to create an attractive, inclusive and equal working environment. The career system is an important part of achieving this.

Investing in tech research and innovation can turn the tide for Europe

There have been a number of high-profile reports recently showing that Europe is lagging behind both the United States and Asian countries – perhaps especially China – in terms of competitiveness. This is also reflected in the development of research, where investment in research is particularly strong in China.

But at the same time, there are both possible and necessary actions to reverse the trend, where investment in research, innovation and new technologies can form the basis for a future leading position for Europe.

According to the Draghi report published in September, Europe’s competitiveness situation is precarious.

Increasing the pace of innovation, lowering energy prices and reducing dependency in an unstable environment are key elements of the analysis. It calls for strong investment in innovation and new technologies, as well as a reform of the EU’s Horizon Europe research programme, which runs until 2027.

Among other things, it is proposed that the research programme should focus on fewer areas and prioritise them, better coordinate research and development investments through a common Research and Innovation Union, and improve funding and facilitate start-ups and scale-ups in the European market.

Another proposal mentioned in a report on the EU’s market published this spring is for a fifth freedom, i.e. in addition to the free movement of goods, services, capital and people, the freedom to conduct research, knowledge, innovation and education across borders.

This is also highlighted as an important way to strengthen Europe’s competitiveness in the report of the European Commission’s Expert Group for the Evaluation of EU Research Programme. Sykvia Schwaag Serger, Professor and CEO of IVA, is the lead author.

The report proposes a number of measures, including doubling the budget for future EU research programmes to €220 billion over seven years.

The report’s authors also call for a “coherent chain” that supports research and innovation results at every stage, from early research to market introduction, so that good ideas can be brought to market more quickly. In an opinion piece, they write: “Strengthening the EU Framework Programme is, in our view, the best investment we can make in the future of our continent, for competitiveness, for security and for sustainability”.

At the European level, KTH is part of the CESAER network, which focused on these issues at its recent meeting in Glasgow. The network brings together some 50 technical universities from 26 countries to discuss how our part of society can best contribute. It was clear from these discussions that the picture painted by Draghi and others is shared by many countries and universities. It is crucial that European programmes are based on this kind of analysis and are able to prioritise research and innovation.

But how can KTH contribute specifically and how can Sweden’s space and contribution to a strong Europe be formulated?

First and foremost, some muscle is needed at the national level to be able to coordinate coordinated investments in cutting-edge research and innovation in selected critical technology areas. Hopefully, future legislation and government initiatives will learn from the many recent policy reports.

Larger, coherent and long-term initiatives would be preferable to many small and scattered ones. A concerted use of different instruments is needed, from graduate schools and research infrastructure to venture capital and scale-up opportunities for new technologies.

As one of Europe’s leading higher education institutions, we are not only important for Sweden and Europe to make a change, we are also a necessary part of the conversation about how best to do it.

A market model highly distorted

I have previously written about the unreasonable model we currently have for the provision of our premises, and the fact that grant funds are returned to the state budget via surplus profits and yield requirements at Akademiska Hus.

The immediate and obvious measure would be either to introduce a cost-based rental model and exempt Akademiska Hus from yield requirements, or to return the distributed funds to the higher education sector. However, other measures are also conceivable. When the model was introduced 30 years ago, it was one of many reforms carried out over a few years in the early 1990s with the aim of increasing market governance, commercialisation of public services and deregulation. It was done in a number of areas.

For higher education institutions, we got a strictly market-based model for the provision of premises. This means that commercial property companies own the premises, which are then leased to universities. The market is good, but one concern is that it is only the market at one end of our profit and loss account.

Every business in the city – ICA, Vattenfall, the dry cleaner on the corner, Ericsson, for example – that lives under commercial conditions has to constantly balance its costs and income. If costs spiral out of control, for example due to a sharp increase in premises costs, management must assess whether this can be passed on to customers in the form of higher prices or, alternatively, whether it can be managed to some extent through lower profits or increased internal efficiency.

In the model under which universities operate, costs are spiralling and we are forced to reduce our costs and increase efficiency.
However, we have no influence on the details of the prices we charge our customers. The state, which receives the surplus profits from Akademiska Hus, has full control over the prices we can charge our customers in the form of the per-student price list decided in the budget bill, and these prices do not increase at all in line with costs.

If it is to be a free market, it is conceivable that educational institutions would be given the right to raise prices to compensate for increased costs: it would simply be more expensive for the buyer, in this case the state, to buy education from universities if costs rise sharply.
This is not an unreasonable model if you want a market model for what we do.

The problem now is that there is a market at the end where the costs increase, but government planning at the end where the revenue is generated. And even though it’s the government at both ends, there doesn’t seem to be an understanding that one hand is creating unreasonable consequences that the other hand is not compensating for.

Of course, we would have to maintain the requirements for constant efficiency improvements, but it’s not possible to conjure up the consequences of a nearly 20 percent increase in the cost of premises in two years through efficiency improvements.We just have to raise prices too!

Long-term vision wished for in government research investments

The government presents a research and innovation bill once every government term, and for the current term it will be presented in December 2024. But the ministers responsible have already announced that there will be a total investment of SEK 6.5 billion in annual increases.

That’s a lot of money – in fact, it’s one of the largest investments in recent decades. In 2023, direct government funding will amount to SEK 22.8 billion and total external research funding (government, private, national and international) will amount to SEK 29.3 billion.

Given that research policy did not seem to be a priority in the Tidö cooperation and that there are so many areas that need investment, it is very positive news that so much money is being invested in Swedish research. The government has also shown when and how it intends to distribute the investments. The new funds will be added in stages, with SEK 1.5 billion in 2025 and, as I said, SEK 6.5 billion in 2028.

Of the SEK 6.5 billion, just under SEK 4.9 billion will go to the research councils (VR, Formas, Forte) as well as Vinnova, Rise and the Swedish National Space Board. Just over SEK 1.6 billion will be distributed as increased basic grants to universities and colleges. VR alone will receive a larger increase (just over SEK 2.5 billion) than the higher education sector as a whole. One assumption is that this includes specific funding for large national research infrastructures.

This means that overall external funding for universities will increase. We currently have 62 per cent external funding, and with reasonable success in relation to the additional funding, this percentage will increase in the future.

A high proportion of external funding means a lot of quality-assured allocations, but also considerable transaction costs. There are many judgments to be made and, as always, the question is where the optimal balance lies: When does quality assured funding at project level cost more than the quality gain that this model of funding provides? I think we passed that point a long time ago.

Now that the government has decided to further increase external funding at the expense of basic funding, I would still like to see some innovations in the way research funding organisations work.

Large and long-term funding packages, perhaps focused on broader themes defined by researchers, preferably in collaboration between different higher education institutions; or

strong research career grants that give the most successful researchers more time to freely build successful research environments; or

investment in specific technology areas for the long-term development of innovation capacity, research and scale-up. The key words are long term, long term and long term!