Treasury proposals to axe the unpopular research assessment exercise could destabilise the sector, with some universities losing up to 80 per cent of their research income, vice-chancellors have warned.
The future of the 2008 RAE hung in the balance this week after Chancellor Gordon Brown's Budget announcement of a "radical simplification" of the research funding system.
A Treasury report outlining the next steps for science did not rule out dropping the 2008 RAE at this late stage "if an alternative system is agreed and widely supported".
Vice-chancellors from both ends of the research spectrum broke ranks this week to support such a move.
The Government will consult on the plans between May and October, but has stated that its "preferred option" would be a metrics-based scheme that might include measures such as research income and citations.
The proposals sparked panic in many universities. Some fear that institutions with a strong foundation in the arts, humanities and social sciences will suffer because their grants are substantially smaller than in the sciences.
Vice-chancellors who had seen the figures modelling the impact of switching to a metrics system said they were "dreadful". They predicted that up to half of all institutions could lose millions, with one well-respected small London institution pegged to lose 80 per cent of its research funding.
According to the calculations, Goldsmiths, University of London, the London School of Economics and Sussex University are likely to be hardest hit.
The deputy head of one institution said: "It will balance out for big universities such as Oxford and Manchester, which will lose in arts and humanities but gain in science. But those that don't have a broad spread will be in serious trouble."
A vice-chancellor with close links to the Government said: "If we were to go to a solely metrics-based system, there would be a substantial number of losers."
But some universities are eager to embrace the Treasury model. Eric Thomas, vice-chancellor of Bristol University, said: "If in the end the arts and humanities want to run a small RAE themselves that would be fine, but this is the way forward for science."
The vice-chancellors of Warwick and Middlesex universities this week confirmed that they would like the forthcoming RAE to be scrapped.
Michael Sterling, vice-chancellor of Birmingham University, said he and other Russell Group heads wanted to pull science and engineering out of the next exercise. He said: "I would support a switch to metrics for science and engineering in 2008. Why bother doing an RAE when you know what the results will be?"
Michael Driscoll, chair of Campaigning for Mainstream Universities, said:
"We would welcome a wholesale review of RAE 2008 if the outcome is the further distribution of research funding."
But another influential vice-chancellor said: "People want to get the end of the 2008 RAE off the agenda. There's a clear majority of people who want it to go ahead."
A spokesperson for the Treasury said: "Although the RAE has served us well, it is money and labour-intensive, and if you can find a simpler, cheaper way of doing it that has to be attractive."