Dundee Discussion Papers in Economics 140: Funding research in Scotland's universities: the use and abuse of RAE results

The Scottish Higher Education Funding Council distributes a sum in excess of £130 million to support research in Scotland’s universities. This paper focuses on how much of this fixed pot each of the different subject areas receives on the basis of their respective research quality. The policy importance of this distribution across subject areas is manifest. Subjects which receive a very small share will diminish in activity in Scotland. Some may even disappear altogether. We analyse two different methods of allocation. The first is the method used by SHEFC where the benchmark for comparing research quality is inward looking and involves direct cross subject comparisons and averaging. The second method uses an international benchmark and no cross subject comparisons. We show that the funding implicatio ns of these two benchmarks are very different. We propose the use of the international benchmark together with some input on the national importance of each subject as a better basis for the subject area allocations.