Based on the research of Smith Gorard you reported how removing marks had led to a decline in performance for one Year 7 class.
However, what their article in Assessment in Education (March, 2005) makes clear is that the teachers involved did not provide comments which would encourage further learning. Faced with comments such as "try and improve" and "very good" it is not surprising that one pupil said: "Miss, I'd like to know my marks because comments don't tell us much." The problem here is the practice rather than the principle.
There is plenty of evidence of how this approach can improve learning - see Black et al's (2003) Assessment for Learning - Putting it into practice.
Sadly, your claim that there are "government-backed moves to replace pupils' grades with teacher feedback" seems well wide of the mark.
Gordon Stobart Editor Assessment in Education Institute of Education University of London