Leading article: Mr Willetts's university challenge

David Willetts's first big speech since taking office as Universities Secretary was, as one might have expected, thought-provoking. Mr Willetts is right to point out that the Government cannot rely on increasing fees alone to provide the necessary finance to ensure a world-class university system in the UK. His proposal for cut-price degrees, whereby students can study more cheaply at an institution near their home for an external degree awarded by a leading university, deserves consideration.

But there are concerns. First, would it not create a two-tier system whereby employers favoured the candidate who had undergone the full university experience at one of the Russell group universities – which represent many of the leading research institutions in the country – over someone who had studied at a, say, more "bog-standard" institution near their home? Second, can Mr Willetts square his desire for better teaching quality in higher education with providing lectures for students at institutions which themselves do not award the degrees? Third, would it not pull the rug from under the feet of a number of the universities which these students would otherwise have attended?

The answer to the first question is: possibly. But then a two-tier system already exists between a first-class honours degree from Oxbridge and one from one of our former polytechnics. Robust monitoring of standards would be necessary to counter fears on the second question (and arguably our colleges already undergo a more robust system of inspection than our universities). The third point is less easy to dismiss if the viability of middle-ranking universities, rather than the weakest, were to end up being threatened.

So these are legitimate questions to ask. But the Universities Secretary also makes a valid point when he argues that simply raising the cap on fees would itself cause serious problems for the Treasury, since the cost to the Government of the additional student loans that would inevitably be taken out would also rise.

Neither cut-price degrees nor raising fees are, in themselves, a panacea for the finances of the university sector. Instead, the key to ensuring that we retain our high world-ranking for provision of higher education places is going to lie in a judicious mix of different solutions. It will take imagination and flexibility to shore up what Mr Willetts describes as our universities' "shaky foundations".