Assuming they need to spend some of that grant in GBP, they'll need to exchange BTC for GBP. It's the GBP hitting the bank that they'll need to explain - if the GBP comes from an exchange, it'll potentially raise a red-flag. I assume a cheque or transfer from a government funding body would go through without a second thought, like any other non-BTC-related deposit.
"The United Kingdoms government is exploring using bitcoin, or some permutation of the blockchain technology that underpins it, to pay out and monitor taxpayer-funded research grants.... A spokesperson said the use of bitcoin to disburse funds was a possibility and that the office isnt ruling out any particular technology. The government is looking into any sort of blockchain technique, bitcoin is one of those. It is open to all ideas,"
This gets twisted into "why isn't BTC skyrocketing" >> "b/coz fkn gubbermint hatin' on our bitcoins!"