UK researchers are afraid to apply for funding from Europe in case they are too successful, the House of Commons science and technology committee has heard.
European Framework funding was viewed as a poisoned chalice, with universities having to find up to 20 per cent of the costs and overheads themselves.
The complex system for applying was also off-putting, the committee was told, particularly for universities that had not previously taken part in Framework programmes.
The new approach of FP6 towards large multinational collaborations would leave successful institutions trying to manage the equivalent of a medium-sized company. The committee is investigating the extent to which the UK is taking advantage of the opportunities for research funding offered by Framework programmes and the effectiveness of existing European Union mechanisms for funding this research.
Gerry Gilmore of the Institute of Astronomy at Cambridge University told the committee he risked losing home funding for astronomy projects if he won European grants.
"The Treasury has said that core programmes cannot be double-funded," he said.
John Turner, director of Surrey University's research and enterprise division UnisDirect, said: "The need to involve small or medium-sized enterprises counts against long-term blue-skies or high-risk research. So this research is mostly funded by UK research councils while applied research looks to Europe."
The Transparency Review and the subsequent government science strategy simplify the need for UK science to be fully costed.
Douglas Robertson, director of business development at Newcastle University, called for a more coherent national policy. He said research councils should be responsible for identifying priority areas for the UK to make the most of Framework programmes.
Michael Trevan, a member of Save British Science's executive committee, said that half the external funding for his former university came from the EU.
"It was a real problem, and FP6 projects will be even more complex and costly to run. It is difficult to work out the true costs but these projects are well below the level where they are self-sustaining."
British researchers are successful at winning funding from the Framework programmes. While the UK contributed about 20 per cent of the funding for FP5, 63 per cent of the successful proposals included British researchers and 26 per cent had a British coordinator.
FP6 offers €17.5 billion (£12 billion) for international consortia to bid for applied research between 2003-05. Enlarging the EU could have detrimental effects in the next Framework programme as more countries compete for funding.