A considerable sum of money is allocated to UK universities on the basis of Research Assessment Exercise performance. In this paper we analyse the impact of the two main funding models on the intra-territorial and intra-regional allocation of funds. We also examine the effect of the present system of territorial safety nets and discuss the impact of their removal. The major conclusion is that the safety net implicit in the current funding arrangements delivers well for Wales but poorly for Scotland and is broadly neutral for England and Northern Ireland. However, this broad neutrality for England masks quite considerable variation across the nine regions of England. (Contains 6 tables and 10 notes.)