The research assessment exercise could be scrapped because it is failing to provide "bang for bucks". The Department for Trade and Industry, which is looking at the RAE under its plans to introduce a national science and innovation strategy, is questioning whether the RAE is the most efficient way to finance universities to produce the kind of science research that can be developed commercially to benefit the economy.
A senior DTI source said: "There are issues about how the funding of science is organised as against the exploitation of it."
The funding councils for England, Scotland, Wales and Northern Ireland have already announced a fundamental review of the RAE "to consider its continuing fitness" past the 2001 round. Preliminary work by the English funding council has begun, although its terms of reference do not explicitly address the commercial exploitation of research.
The nationwide review is scheduled to begin next year.
Critics have long complained that the RAE is a sterile intellectual exercise that rewards academic publication at the expense of practical exploitation and development. The RAE appears to be at odds with the government's agenda to create a dynamic, innovation-oriented university research culture.
Trade and industry secretary Stephen Byers set his department to work on a research and innovation strategy in March. Since then ministers and officials have been looking at how to encourage cooperation between the universities and industry. Interdepartmental collaboration within government on a science and innovation strategy is also being examined, but it is unclear whether the process will result in a science white paper and subsequent legislation.
The government indicated its commitment to science and innovation in last year's comprehensive spending review with the award of Pounds 1.4 billion over three years. The government has since spent Pounds 25 million on eight centres of enterprise in universities and announced the expansion of the Faraday Partnership scheme, which aims to forge closer links between science and business.
Chancellor Gordon Brown is set to deliver his pre-budget statement on November 9 and a Treasury spokesman said that he would be surprised if there was no mention of increased investment in science, technology and innovation.
On the same day, Ian Gibson, MP for Norwich North, will seek leave to introduce a private bill to set up a national science strategy council. Dr Gibson, former dean of the school of biological sciences at the University of East Anglia and now a member of the science and technology select committee, has suggested that the RAE be abandoned after the 2001 round.
"The RAE was in many ways an excuse for siphoning money into select institutions I It is now time for a bit more redistribution to encourage research in the rest of the sector. We need auditing but not this enormous event every four years," he said.