The Natural Environment Research Council was wrong to cancel an entire grants round so hastily last year, says a critical report released by the Commons science and technology committee.
The council took the unprecedented step of calling off its July 2002 grants round to claw back losses of between £9 million and £14 million. This action saved Nerc £10 million but resulted in about 50 projects and a similar number of fixed-term appointments not being funded.
"The evidence we have seen - some of it in confidence - persuades us that the grants round need not have been cancelled at all," the committee report says.
The report notes that there was no major outcry about this from the science community, but warns that the true consequences of the cancellation are likely to be felt this month with a major surge in grant applications.
The committee chair, Ian Gibson, told The THES : "The cancellation had a big impact on the science base. But the scientists are frightened to stand up and be critical."
In evidence, the council said its debts were caused by the "unexpected, retrospective" application of new accounting procedures, brought in by the Treasury. But this failed to satisfy the committee, which points out in its report that the changes were announced in 1995 and should not have caught the council unawares.
The committee also remains sceptical about why the new system floored Nerc but not the other research councils.
Nerc said yesterday: "We are not surprised that many of their critical remarks are directed at the financial crisis we suffered last year. We acknowledge the difficulties we have had and believe that we shared them openly and honestly at the time and have dealt with them effectively."
As well as accusing Nerc of poor financial management, the report attacks the Office of Science and Technology for failing to grasp the urgency of the situation and failing to offer enough support to its council. It claims that the OST shied away from securing a loan for Nerc for fear that it would be seen as accepting culpability.
The report praises Nerc's science priorities, but it expresses concerns about a possible drop in support for earth sciences.