Students are subsidising university research through their tuition fees, according to a new report.

Research at UK universities is significantly under-funded with latest figures showing a £3.3 billion deficit, it says.

This hole is being plugged by money for teaching, particularly fees from international students, according to the Higher Education Policy Institute (HEPI) study.

It urges Chancellor Philip Hammond to find an extra £1 billion for research in his Budget later this month.

The study says official figures show that in 2014/15, there was a deficit of almost £3.3 billion across UK higher education, which has been “traditionally filled from non-publicly funded teaching surpluses”, money gained from international students, as well as activities such as consultancy work.

On average, over the course of their degree, each non-EU international student contributes more than £8,000 to UK research, it calculates.

HEPI’s report also shows universities’ income for teaching from non-publicly funded fees totalled £4.6 billion in 2014/15 and the costs of teaching were £3.3 billion, leaving an excess of #1.3 billion.

In addition, income for teaching from publicly-funded sources – largely fees paid by home and EU students – totalled £13.3 billion across UK universities, with costs of £13.1 billion.

This leaves a surplus of £200 million, which is understood to come from English and EU students studying at English universities, who pay up to £9,000 in fees and are eligible for government loans.

The study comes amid a growing debate about university funding, tuition fees and whether students are receiving value for money.

HEPI director Nick Hillman told the Press Association: “My concern is that tuition fees are under the spotlight, students want to know where their fees are going, no-one wants to increase fees, are these cross-subsidies sustainable? If they are, there is still a massive shortfall in research funding.”

Philip HammondChancellor Philip Hammond has been urged to find an extra £1 billion for research (Chris J Ratcliffe/PA)

Report author Vicky Olive said: “The cross-subsidies from teaching to research are a float keeping UK universities world-class but they are under threat like never before.

“The Government has frozen fees for home students, students are demanding to know more about where their money goes and international student numbers are perpetually under threat.

“There is nothing morally wrong with cross-subsidising research from teaching, particularly if students see the benefits in their lectures and seminars.

“But it is right to investigate the scale of the subsidies and where they go, so that we can debate whether they are defensible, sustainable and valuable.”

Mr Hillman said: “Our conclusion is that the Chancellor needs to find another £1 billion for research in this year’s Budget, with some set aside for the work universities do with charities. But even this level of additional funding would mean stagnation relative to other countries.

“So, we also need a strategy for increasing research spending to OECD levels over the next few years and German levels thereafter as promised in the 2017 Conservative manifesto.”

A Business Department spokesman said: “Science, research and innovation is at the heart of our industrial strategy and we have announced an additional £4.7 billion for research and development – the biggest single increase by any Government since 1979.

“This funding will be delivered primarily through our research councils, Innovate UK and HEFCE, and will support universities across the UK.”