I chanced upon this interesting letter from Michael Singer, Emeritus Professor of Mathematics at Edinburgh, in which he takes Science Minister David Willetts to task for the state of the EPSRC - the funding council for the physical sciences.
His specific gripe is that the direction of funding is decided by the bureaucrats without reference to scientists
EPSRC has declared that it is now in the business of ‘sponsoring’ rather than ‘funding’ research. This means that EPSRC will try to pick winners on its own, without adequate advice from the community. This process has already begun. Applicants for programme grants (which are a favoured mechanism for o ffering relatively large chunks of funding for a substantial project over a period of up to 6 years) have first to submit an outline proposal to EPSRC. The outline is assessed and, if satisfactory, EPSRC will invite the applicant to develop a full proposal. In my experience, at the outline stage, EPSRC seeks no external opinion about the quality of the science. The discussion with EPSRC is entirely about such things as management, risks, and leadership.
I wonder if something like this goes on at NERC - the body that funds environmental science. The problem with state funded science is that you tend to have to hand control of a great deal of money to somebody. Do we want money directed by politicians (who will spend to maximise their chances of reelection) or by bureaucrats (who will spend it as wastefully as possible in order to encourage more funding to come their way) or by scientists (who will try to shut out dissenting views).
Perhaps Koutsoyiannis's idea of allocation by lot is not so daft after all.