To remain competitive, we must play to our strengths in research

The announcement of how the Higher Education Funding Council for England would distribute funding based on the results of the research assessment exercise was greeted last week with both gloomy and triumphant headlines over the allocation cuts forced on the UK's top universities.

The Russell Group has seen its share of mainstream research funding fall by 4 per cent. Imperial College London - one of the four UK universities among the top ten global institutions in the Times Higher Education- QS World University Rankings - has suffered a decline in research funding of more than 5 per cent.

This is despite the fact that Imperial had the greatest proportion of its staff rated as world leading and internationally excellent, and the greatest volume of academic staff in the units of assessment it submitted.

It cannot have been Hefce's intention to penalise the UK's world-leading and consistently excellent universities at a time of economic crisis, when they are most urgently needed.

Yet by contracting research-assessment rating scales from seven quality measures to just four, and by funding all but one part of the resulting quality profile, this is precisely what it has done.

The standing of the UK's elite universities is something that should begin to concern this country. Innovation in science, technology and medicine is vital to the UK's international competitiveness, and it will be imperative to kick-starting the economy as we emerge from recession. Now is the time to be clear about what the nation wants to be strong in 10 to 15 years from now. It must focus on what it is good at.

Our innovation pipeline is increasingly the preserve of leading universities and not the private sector. Industry simply does not have the capacity to carry out blue-skies research with the potential to become the next big life-enhancing money-spinner. Businesses are looking instead to universities to take on this vital role in the innovation chain while they focus on the costly development process.

Is this a demand that all of the UK's universities can meet to an equal extent? I would argue that the answer to that question is a firm "no".

Pockets of research excellence exist across the sector, certainly. However, centres of concentrated, multidisciplinary, world-leading research excellence are located only in a handful of universities, and these must be nurtured for the nation. Over the past decade, the UK's top ten universities have created spin-off companies at a rate higher than that in the US, when standardised by government research expenditure.

The Government knows that leading universities, and in particular those with a strong science base, will play a vital role in economic recovery, and it is turning to them for help, as highlighted in the Prime Minister's recent Romanes lecture. And in his annual grant letter to Hefce in January, John Denham, the Universities Secretary, stressed the need to maintain a high level of funding for institutions that carry out the largest volumes of world-class research. In particular, he singled out the importance of science, technology, engineering and mathematics.

This makes Hefce's reduction of funding for those institutions that specialise in these disciplines all the more puzzling. Leading universities know that they can contribute greatly to economic competitiveness, but they will struggle to do so if their financial stability is undermined.

It is time to look to the future. We must ensure that any future research assessment system is robust and fit for purpose. One based on citations, as proposed for the research excellence framework, is unlikely to be so for a methodological reason: the level of subject stratification required to make effective comparisons between subdisciplines is very fine. From my own experience, the level of resource and expertise required to do it properly will make it prohibitive for any agency to consider. Citations alone cannot be the means to assess research quality.

Whatever is put in place - and much debate is required before a scheme is set in stone - it must be able to distinguish the very best from the very good and reflect the scale required to do globally competitive interdisciplinary research. Hefce has learnt through the RAE which are the best institutions that have both excellence and size, but it could not deliver the appropriate funding based on its current method.

It has a choice now. The UK is fortunate to be home to a multiplicity of universities, each with diverse strengths and missions. Not all are world leading and research intensive, and not all need to be. But those that are must be recognised and funded appropriately if we are to remain world leading in higher education and globally competitive in scientific research.