There is a scam lying at the heart of academe. It implicates many of those involved in university life and threatens to subvert our ideas about the nature of scholarly activity. Almost nobody talks about it, because complicity in the scam is an essential lubricant of the way universities are funded.

I am talking about arts research by staff in higher education and, more specifically, the consequences of inserting creative practice - in drama, for example, or painting, or sculpture - into the world of academic enquiry. This insertion threatens to instrumentalise art; to subordinate it to extraneous and utilitarian purposes. Worse, it is silently promoting a culture which, while appropriate (say) to astrophysics, is only partially relevant to the work of many artists who earn their living as teachers of art and design.

The higher education funding councils define research as "original investigation undertaken in order to gain knowledge and understanding." The HEFCE art and design panel adds that the significance of a piece of research "can expect to be characterised by I the level of innovation; aesthetic, intellectual, technical or functional I (and) the degree of contribution to new knowledge."

If art is knowledge in any of the dictionary senses, this is to allow a slippery elision between imaginative insights and manipulable information. Once we know a fact, we are in a position to relate it to others and in so doing discover further facts. We can make generalisations that function as a guide to action in, or enhance an intellectual grasp of, the material world. Is this really how creative practice works? Is the "knowledge" contained in a painting by John Hoyland or a play by David Hare, applicable in some predictable way to anything outside itself?

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I always thought that art was a way of telling the truth without having to use facts, and the analogy explicit in the HEFCE documents between scholarly research and artistic creation will not make much sense to people who make, listen to or look at works of art. It does not square with experience. A composer's latest symphony or a choreographer's ballet will be new, but may well not be innovatory if we mean by that the application of some new aesthetic theory, technical innovation or method of performance. It could be a masterpiece, but it will not qualify as research. To put it bluntly, HEFCE favours one kind of creative practice and discriminates against others.

There is a lot of money at stake. According to HEFCE figures, the total budget for quality-related research funding in 1996/97 for art and design was nearly Pounds 8.5 million, with Pounds 1.5 million for communication and media studies and Pounds 1.8 million for drama, dance and the performing arts. Although these are small fractions of the overall research allocation of Pounds 600 million, they are still substantial sums. They compare favourably with the resources made available by the national arts councils and regional arts boards to individual practitioners.

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No wonder, then, that what is an aesthetic scandal has also become something of a financial scam. The recent research assessment exercise was essentially a competitive mechanism for allocating scarce resources. Conversations with two art and design panel chairmen revealed cynicism.

So what can be done to improve the situation? First, it should be readily acknowledged that a good deal of "research" in art and design faculties is, in fact, research. There is work going on in aesthetics and the history of art (for example, the live art archive at Nottingham Trent). In such cases, the HEFCE criteria are perfectly adequate. Problems only arise in creative practice itself and it is here that action is needed.

Some corrective measures can be envisaged. The Arts Council of England, in a submission to the Dearing review, has proposed the creation of an art and design research council. There is much to be said for this, for it would create a forum where the issues could be examined calmly. Such a council could review the various kinds of arts research. Regarding straightforward artistic production, it should admit immediate defeat, rebut the false analogies between it and academic study and recommend a new category in which creative practice is taken for what it is and rewarded appropriately. We need artists of distinction working in arts education, not for their contribution to "new knowledge", but for the essential help they give students.

There are some dangers in this approach. Art and design departments could find themselves demoted in status. Because artistic practice would no longer be assessable alongside other academic disciplines, they might find it harder than before to find a place at the financial trough.

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However, where there is a political will, there is an administrative way. The history of the music conservatoires shows that it is perfectly possible for an arts educational institution to be well-funded, accorded high status and otherwise left to its own aesthetic devices. A Dearing-blessed res-earch council would go a long way to provide the relevant assurances.

This article is a version of Anthony Everitt's recentinaugural lecture as professorof visual and performing arts at Nottingham Trent University.