Government attempts to reform the research assessment exercise "lack ambition" and should do far more to support applied research, employers have warned.
In what could prove a highly influential submission to the consultation exercise on the future of the RAE, the Confederation of British Industry calls for a "guarantee" of equal treatment for applied or "user-focused"
research and curiosity-driven research.
This could see a shift of funds from Russell Group universities to newer universities, who argue that their applied research is damaged by the RAE's focus on curiosity-driven research.
Richard Lambert, the director of the CBI, has strong links with the Treasury and many credit him with pushing the Government towards reform of the RAE.
The CBI submission takes a broad definition of user-focused research, including work funded by government departments and agencies, charities and business.
Tim Bradshaw, head of the Innovation, Science and Technology Group at the CBI, said: "We should take this opportunity to radically reform research funding. The 2008 RAE will inform research funding for the next few years, creating time to tackle this bias."
The CBI proposes that the Higher Education Innovation Fund (Heif), which helps universities better exploit their research, be included in the block grant.
This grant, known as the quality-related, or QR, block grant, would then be split into a curiosity-driven stream and a user-focused stream. "Separate assessments, probably focusing on different indicators with different weightings, would be required," the CBI submission says.
The CBI supports the greater use of metrics in assessing research but does not endorse any of the models set out in the Government's June consultation document.
Michael Driscoll, vice-chancellor of Middlesex University and chair of Campaigning for Mainstream Universities, welcomed the greater stress on applied research, but warned against amalgamating Heif into the block grant.
Malcolm Grant, provost of University College London and chair of the Russell Group, also warned against dissolving Heif. He said it was often difficult to distinguish curiosity-driven and economically important research.
"Often what starts off as basic research ends up as highly beneficial to the economy," he said.