EveningStar - I can certainly believe that the RAE is sub-optimal as a quality measure. However, a degree performs 2 purposes:
1) The student learns about (or does research into) a subject
2) The student jumps through various hoops requiring a level of knowledge and effort (aka exams / thesis) and gains a badge / piece of paper at the end of it. That badge is a form of signalling to others, be they employers or otherwise, as to one's persona and suitability for a particular task.
If doing a degree purely for fun and to exercise the brain, the badge you get at the end is of no real value, besides being framed and filling a space on the wall at home. If you want to use it in a career, the *perceived* value of the badge matters - and society over the last 10 years has become rather more formal qualification centric. A new student is buying a brand and hoping that brand will have maximum future perceived value.
You can wave that badge at people and tell them how much you learnt, but other people need some quick and easy way of discerning which badges (or courses) are good and which are less good. If you don't know someone who's done the course, you need an objective quality measure with publicly available information produced by others who are at least semi-credible.
I may think the MSc course I did was the best in the world.... but if the commonly perceived value by others is that it's terrible, then that MSc badge is worthless on my CV no matter how much I espouse its virtues. The RAE in the UK has its flaws.... but I'd be keen to hear of any other easy and simple ways to ensure a new course one is about to start will gain siginficant future recognition by others on a CV