That's not quite how it works and in my opinion not the main problem. Take for example DARPA grants, they are controlled by outside people and I don't think it works. You essentially have a "case worker" often with little understanding of the field pushing in some direction. Moreover the amount of admin around these grants is staggering.
The root cause of the situation is that there is not enough money in the system and compared to previously more money is distributed by competitive grant processes. This results in a couple of things.
1. The cutoff (reviewer mark) where grants get funded or not is completely arbitrary, because it is in the flat part of a arctan or logit type curve, so small differences or luck can me you are able to do your research.
2. Competition therefore is fierce.
3. To balance the odds you have to write a lot of applications (academics now spend most of their time either writing grants or administering their grants, not doing research.)
4. It encourages incremental research, because non-incremental research implies high risk, but no one can afford the risk to fail, because having a significant reduction of publications reduces you chances of getting grants in the future (see 1.). Once you get some gap in your funding its almost impossible to get back.
5. This disadvantages women who want to have children.
Yeah more university/grant administration of the current sort is not the right way to go. They have too much power already.
Established elder scientists with little bias and little incentive to corrupt the country education/science system should be in charge, not administrative pencil pushers. Maybe hire some outsiders and set up some kind of independent commission of renowned scientists and budget planning/audit people to maintain oversight of the supported science groups.
But lack of money isn't really part of the problem, there is lot of money there and it often goes to waste. Putting in more isn't the solution - it would just amplify the current situation.
The fact there is competition for money isn't a bad thing. In theory it keeps people engaged and working efficiently. The problem with the current competition is that people are judged by their willingness to play ball, by flawed citation metrics, publicity, imaginary department points and relationships. Not by their originality and weight of their scientific contribution.
The root cause of the situation is that there is not enough money in the system and compared to previously more money is distributed by competitive grant processes. This results in a couple of things.
1. The cutoff (reviewer mark) where grants get funded or not is completely arbitrary, because it is in the flat part of a arctan or logit type curve, so small differences or luck can me you are able to do your research.
2. Competition therefore is fierce.
3. To balance the odds you have to write a lot of applications (academics now spend most of their time either writing grants or administering their grants, not doing research.)
4. It encourages incremental research, because non-incremental research implies high risk, but no one can afford the risk to fail, because having a significant reduction of publications reduces you chances of getting grants in the future (see 1.). Once you get some gap in your funding its almost impossible to get back.
5. This disadvantages women who want to have children.