TRAC review 2026 refers to the renewed scrutiny facing the Transparent Approach to Costing (TRAC) — the 25-year-old methodology UK universities use to calculate the full economic cost (FEC) of teaching and research, and the basis for UKRI’s funded-research rates. A November 2025 report from the Policy Institute at King’s College London (KCL) argues TRAC data is inconsistent across institutions, under-used in governance, and too coarse-grained to support the benchmarking the sector now urgently needs.
Transparent Approach to Costing (TRAC) is the UK higher-education sector’s standard costing methodology, developed jointly with funders and regulators to let institutions calculate the full economic cost of their teaching, research and other activities.
- What is TRAC and why is it under review now?
- What did the King’s College London Policy Institute report find?
- Why is TRAC data called inconsistent and under-used?
- What would a modernised costing standard mean for UKRI FEC rates?
- Frequently asked questions about the TRAC review
- Implications for research offices and what happens next
What is TRAC and why is it under review now?
TRAC was introduced across UK higher education roughly 25 years ago to give funders, regulators and institutions a shared basis for costing teaching, research and other activities. UK Research and Innovation (UKRI) uses TRAC-derived data to set the full economic costing (FEC) rates that determine how much of a grant-funded project’s true cost it will pay.
The methodology has been reviewed before. The UK Higher Education Regulators and Funders Group (RFG) — comprising the Office for Students (OfS), UKRI, the Scottish Funding Council, the Higher Education Funding Council for Wales and Northern Ireland’s Department for the Economy — commissioned KPMG to review TRAC, publishing findings in November 2021. That review focused chiefly on reducing the burden of completing TRAC returns; its highest-priority recommendation, streamlining institutional governance sign-off, has since been implemented.
The 2025 KCL Policy Institute report reframes the debate. Rather than asking whether TRAC is too burdensome to complete, it asks whether TRAC data is good enough to use — and concludes that, as currently structured, it largely is not.
What did the King’s College London Policy Institute report find?
The report, Broke and broken? What TRAC data tells us about higher education finances, was published by the Policy Institute at King’s College London on 11 November 2025, authored by research fellow Dr Eliel Cohen with commentary from Richard Salter, KCL’s Director of Analytics.
Its central finding is definitive: TRAC data reveals a £5.4 billion shortfall in research cost recovery, systemic across grant types. UKRI’s funding model is built on covering 80% of the full economic cost of research council-funded projects, but the report shows actual recovery averages only 68%. Recovery for industry-funded and government-department-funded research fares only slightly better, at 75% and 76% respectively, while charity-funded research recovers just 56% of its true cost.
Richard Salter said the TRAC return “has been a relative constant” through a period of major sector change, but warned that treating it “simply as a regulatory burden to be discharged as painlessly as possible” is no longer affordable. Dr Cohen added that the £5 billion research funding “black hole” comes as government policy leans toward universities doing less research rather than resourcing it properly.
Why is TRAC data called inconsistent and under-used?
The KCL report identifies four structural weaknesses that limit TRAC’s usefulness beyond its narrow regulatory function.
- Inconsistent data collection across institutions, which undermines cross-institutional comparability.
- Insufficiently granular breakdowns — TRAC does not routinely split costs by subject, course level or cost type, blocking meaningful benchmarking.
- Missing contextual data, such as regional cost variation, estate size and performance metrics, that would let institutions interpret their own numbers.
- Time lags in publication that reduce TRAC’s value for live financial planning decisions.
These gaps compound a funding concentration problem the report also documents. Quality-related (QR) research funding and the Higher Education Innovation Fund together total almost £2 billion a year, yet 66% of that money goes to just 21 institutions — meaning QR cannot realistically plug research cost-recovery deficits for the rest of the sector.
| Funding source | Recovery rate vs. full economic cost |
|---|---|
| UKRI research councils (target: 80% FEC) | 68% |
| Government departments | 76% |
| Industry | 75% |
| UK charities | 56% |
Charity-funded research is the weakest point on this table, made worse by the fact that UKRI’s dedicated fund supporting universities’ charity-partnered research has seen below-inflation increases for 15 consecutive years, according to the report.
What would a modernised costing standard mean for UKRI FEC rates?
A modernised TRAC would not, by itself, change UKRI’s 80% FEC policy — but it would change the evidence base that policy rests on. Granular, comparable, timely costing data would let UKRI and the sector negotiate FEC rates against a realistic picture of actual cost recovery, rather than the current aggregated 68% average that obscures wide variation by discipline, institution and grant type.
The report’s authors point to the UK government’s post-16 education and skills white paper, which commits to working with the sector on cost-recovery and TRAC data use, as a genuine reform window. They also cite international precedent: sector-wide financial transparency agreements in Ontario, Canada, which have helped build trust between institutions and regulators through shared, comparable costing data — a model the UK’s Regulators and Funders Group could draw on as it takes forward its own TRAC recommendations.
For research administrators, the practical implication is that better TRAC data would strengthen the case for full economic costing in grant negotiation, institutional strategy and governance reporting — shifting TRAC from an annual compliance exercise into an active decision-making tool.
Frequently asked questions about the TRAC review
What is TRAC in higher education?
TRAC (Transparent Approach to Costing) is the methodology UK universities use to calculate the full economic cost of teaching, research and other activities. It underpins the FEC rates UKRI applies when funding grants, and has been in continuous use across the sector for around 25 years.
Why is TRAC being reviewed again now?
A November 2025 King’s College London Policy Institute report found TRAC data too inconsistent and under-used to support good decision-making, arriving as the government’s post-16 education white paper commits to working with the sector on cost-recovery reform, making this a live policy window rather than a routine audit.
What does TRAC data show about UK research funding?
TRAC data shows a £5.4 billion shortfall in research cost recovery. Against UKRI’s 80% full-economic-cost target, research councils actually recover only 68%, while UK charity-funded research recovers just 56% — a systemic gap across nearly every grant type.
Who is responsible for reviewing TRAC?
The Regulators and Funders Group — the Office for Students, UKRI, the Scottish Funding Council, HEFCW and Northern Ireland’s Department for the Economy — commissions TRAC reviews, including KPMG’s 2021 burden-focused review, and holds ongoing responsibility for TRAC guidance updates.
Implications for research offices and what happens next
For research administration offices, the KCL findings are a prompt to treat TRAC returns as strategic intelligence rather than a compliance box to tick. Institutions that build granular, subject- and grant-level cost breakdowns internally — beyond the sector-wide minimum — will be better placed to negotiate with funders and to model financial sustainability scenarios as the government’s international-student levy and tuition-fee changes take effect through 2026-27.
The Regulators and Funders Group has not published a timetable for a further formal TRAC overhaul, and the KCL report is a policy intervention rather than a regulatory mandate. But with the post-16 white paper commitment on the table and sector deficits mounting, pressure for a more comparable, better-used costing standard is unlikely to ease. Research offices, funders and institutional leaders should expect TRAC’s governance and granularity — not just its administrative burden — to dominate the next phase of this debate.