This paper explores the implications of government funding for postgraduate research in English universities. Specifically, it focuses upon the funding model introduced recently by the Higher Education Funding Council for England (HEFCE). The suggestion in the paper is that the operation of this model will seriously disadvantage certain parts of the English higher education sector, as well as particular discipline areas and professions. The argument is put that linkage between Research Assessment Exercises on the one hand, and the training of research students on the other hand, is both iniquitous and ultimately disadvantageous to the national research effort. It also runs counter to the responsibilities of HEFCE in supporting existing students in their programmes of study and throws into question the place of the national quality assurance processes that have recently been put in place. England is used here as a case study of what happens when governments begin to manipulate funding streams without considering consequences. Nations that are considering introducing research assessment exercise and/or quality assurance systems at national levels may note these consequences. (Contains 4 tables.)