In this paper the implications of the support of undergraduate medical education and research for the new NHS market are examined. Inaccuracies in current methods of distribution of the Service Increment for Teaching and Research (SIFTR) and Additional Cost of Teaching and Research (ACTR) monies will have adverse effects. Receipt of too much money results in providers' care being unfairly subsidised while receipt of too little results in providers bearing an unfair burden of the cost of teaching and research. Results are reported from a study in the north east of Scotland with regard to the feasibility of obtaining more accurate estimates of the costs to the NHS of supporting teaching and research. The choice is between potentially accurate, but cumbersome and costly, systems of data collection or the continuation of the current, more arbitrary, approach of allocating monies. A combination of the two is recommended.