Prior to 1986, the year of the first Research Assessment Exercise (RAE), funding for research in British universities was built into funds per student on the assumption that all academics were engaged in research and scholarship as part of their role as academics. Additional funds for specific projects were available upon successful application from the Research Councils according to the principle of dual funding. However, beginning in the 1970s, the University Grants Committee (UGC) found that the government grant for the funding of teaching and research in British universities was declining in real terms. Moreover, in the early 1980s the universities fell victim to heavy cuts in public expenditure and it became apparent to many administrators in the field that excellence in research could not be maintained without applying some principle of selectivity in funding. Somewhat reluctantly, therefore, the UGC agreed to a research selectivity exercise whereby research funds were distributed to different departments according to the UGC's assessment of its degree of excellence.
The first exercise was an ad hoc affair with the UGC hurriedly appointing its assessors and only a small proportion of research monies dependent on their ratings.l The second exercise was carried out by the UGC in 1989 with a larger proportion of research funding dependent on the ratings of duly constituted subject panels to whom departments were to submit much refined applications; and in 1992, its successor, the Universities Funding Council (UFC), carried out a third exercise. In 1992, over 90 per cent of the UFC's research funds was distributed by its successors, the Higher Education Funding Councils (HEFCs) for England, Wales, Scotland, and Northern Ireland, according to the ratings of its subject panels and the pre-1992 universities had to compete for that money with the ex-polytechnics or the new universities. As for the 1996 RAE, British universities prepared their submissions in an even tighter financial climate brought about by an average of 5 per cent reduction in real terms across the sector for 1996/97 (Universities Funding Council, 1989; Phillimore, 1989; and Higher Education Funding Council for England, 1993).
The first exercise seemed to have little impact on economists and their research. However, by the time of the 1989 RAE, the socalled `Diamond List' of core mainstream economic journals had been drawn up and there was a strong belief amongst economists that this list was used by the assessors to inform their judgement of the quality of research in economics departments in British universities. Certainly attempts were made to extend this list for use in the 1992 RAE, though this modified list remained, like its predecessor, `unofficial,' (see Table 5, page 48). The existence of these lists, whether official or not, has produced considerable discontent amongst British economists, for reasons not at all unrelated to the research rating received by their departments. (Diamond, 1989; Minutes of Conference of Heads of University Departments of Economics, 4/11/89, 215/93, and 21/5/94; and Harley and Lee, 1997)
At the 1994 Royal Economic Society Annual Conference a special session was held at which the chairman of the economics panel for the 1992 RAE, Professor Anthony Atkinson, gave his view of what the panel did and also received questions from the floor. One question asked was how did the panel regard economic research which fell outside the domain of mainstream economics. The answer was, in part, that the assessors did not discriminate against non-mainstream research and that the research assessment exercise should not be used by economic departments to discriminate against non-mainstream research. Professor Atkinson went on to add that he did not believe British economists would actively discriminate against non-mainstream economists and their research. However, at the same conference a flyer appeared which announced that The University of Manchester was in the market for nine economists who would raise the School of Economic Studies research profile in mainstream economics (see The Guardian 29/3/94). …