You seem to view the UK coalition government's approach to funding research in universities as a change of direction, even harking back to that of the 1980s (Nature 466, 296; 2010). This is not the case.

The emphasis on economic returns by minister David Willetts is couched in language such as “absorptive capacity”, which was part and parcel of the former Labour government's approach. For example, in addition to the paper by Jonathan Haskel and Gavin Wallis that you mention, Willetts cites one by Rachel Griffith and colleagues at London's Institute of Fiscal Studies, a mainstay of thinking on this for the Treasury under Labour (see http://go.nature.com/orVDfF). The significance of absorptive capacity is that it leads us away from pure excellence, as measured by the citation metrics you describe, and towards a concept of 'good-enough' science, which does just enough to improve a firm's absorptive capacity but not obviously anything more.

I thus believe it is more accurate to see the coalition government's approach as a potentially powerful acceleration of the trends instigated under Labour.