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You report Graeme Davies (THES, July 28) belatedly telling universities that they should desist from participating in the pre-research assessment exercise transfer deadline because their investment may not pay off; indeed he stated (apparently unapologetically) that last time departments got higher grades but less money, with the implication that it could happen again. If that is all he said, then it was at best partial, at worst very misleading.

The truth is that, because there is no more money (indeed, with a 3 per cent efficiency gain on the BRG for research there is likely to be less) almost all departments are going to get less. But if they do not increase their grade, they will certainly get less. So if they argue that the search for a higher grade needs more staff and research students (which they are encouraged to recruit) then they will enter the transfer market. Almost certainly their income will still fall, but not by as much as it would if they had not entered the transfer market and as a consequence achieved the desired higher grade. Whether you draw your inspiration from the technicalities of game theory (the Prisoner's Dilemma) and the laws of thermodynamics or from anecdotal argument by metaphor (the tragedy of the commons) you come to the same conclusion - with no more money to share out, and everybody competing for as much of it as possible in order to balance their books, the "unit of resource for research" is bound to decline. A very few departments (those large departments going from a grade 3 to a grade 5 in a discipline with all other departments losing a grade?!) may increase their income; the vast majority will not - and the biggest losers will be the already excellent (the current grade 5 departments, which have nowhere to go but down, financially).

Graeme Davies is caught in a cleft stick, of course; his system would work fine if there was new money available to reward the improvers. But there isn't, so all they can hope to do is not fall back too far. We have a system which rewards success by taking money away - and rewards failure (including stability) by taking even more away.

Brian Fender's first task at ÖйúAƬ Funding Council for England must surely be to design a new formula for allocating the R component of the BRG which does not penalise success, recognising the unfortunate truth that whatever government we have for the rest of the century the likelihood of more money for university research is remote. It is no use telling people not to play the current system - they have no alternative.

Ron Johnston Vice chancellor University of Essex