Huw Richards, in the first of a four-part series, evaluates the impact of the Research Assessment Exercise for 1996. The Research Assessment Exercise enters its fourth incarnation next year amid rumours about its longer-term prospects. This is in spite of Brian Fender, the new ÖйúAƬ Funding Council for England chief executive, marking his accession to office by proclaiming belief in both its survival and its efficacy. And with little apparent likelihood that selectivity will be displaced as the guiding principle of research funding policy, it is hard to see what could replace it.

Jeremy Black, professor of history at Durham, recently appointed to the chair in Exeter and far from an uncritical admirer of the process, said: "Not to have the RAE would be to rest entirely on historic funding patterns."

But debate and speculation over its future typifies one of the RAE's most notable effects. Ostensibly a simple system of accounting and accountability for selective research funding, it has become the most consistently fruitful subject of academic gossip in living memory. Hugh Willmott, professor of accounting at Manchester School of Management, said: "It has entered the academic pysche with remarkable rapidity, becoming a central preoccupation and the main subject of conference chitchat. People assess their own performance and sense of identity against these measures."

This impact in terms of image and self-image proliferates across the system. Tudor Jones, head of physics and astronomy at Leicester University, said: "Outside perceptions are important. Schools and potential students ask about ratings and take note of them."

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Unlike those other definers of modern academic life - more students, declining unit of resource and intrusive management - the individual academic has a direct role in the RAE and, in principle at least, the chance to change the standing and financial status of their department.

Even more important than the psychological impact is the material one. There is serious money in the outcomes - Pounds 600 million in the 1995-96 Hefce allocations. And it is not simply a matter of the amount. "Improving your research ratings is the only way, apart from part-time students, of increasing your income," said Ron Johnston, until recently vice chancellor of the University of Essex.

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Academics and their managers are inveterate games-players. "If it wasn't RAE they would be playing some other system," noted one science professor. Caught in some cases on the hop by the first exercise in 1985, university managements learnt that filling the form in and waiting for the money to arrive was not likely to be productive. Nowadays operations are much more sophisticated: "We can stage dummy runs of the exercise and work out where a small investment should bring a good return," said Howard Newby, vice chancellor of Southampton University.

But there are catches to this, as Professor Newby readily admits: "Everyone else is playing the same game and ultimately pursuing the same pool of money. So the price of getting it wrong is a high one." Recent experience as a vice chancellor clearly colours Professor Johnson's statement that: "For most universities losing two or three of their grade 5s could be extremely serious. Clawing back the lost money would be very difficult." The head of one sizeable 4-rated department estimates that a 5 in 1996 could bring in an extra Pounds 0,000 - while losing a point could cost Pounds 150,000 or more.

Alan Jenkins, professor in the education methods unit at Oxford Brookes University, notes that a process intended to diversify the university system has in fact homogenised it: "The new universities have wanted the prestige associated with a research profile, as well as the money. Instead of pushing out all but a small elite of institutions, the game has pulled almost everybody in." His analysis is borne out by the participation of the last ex-polytechnic refusenik from the previous round, the University of Central England, in the 1996 exercise.

Participants have to a great extent to fight according to the rules of the last battle. It could be assumed, as soon as the 1992 exercise was concluded, that there would be another in about four years. Institutions, rather like politicians who start working on the next campaign as soon as the results are clear from the last, have had an eye on 1996 ever since. But its broad outlines did not become clear until June 1994 and the full details will not be finalised until next month, when the subject panels release their assessment criteria.

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All participants point to two certainties. Whatever the individual outcomes, there will be no extra money for research. The consequence of this is summarised by Professor Newby: "There will be a reckoning in 1997-98 when everyone takes stock. And some people are going to end up as losers." The spectre haunting a lot of vice chancellors, managers and academics is a mocking echo of the National Lottery slogan "It could be you".