What lies ahead for higher education funding?

Vice-chancellors have high hopes of David Eastwood, the new boss of the Higher Education Funding Council. Lucy Hodges asks him whether he will stand up for universities against the Government - and what will happen if the cap is lifted on the £3,000 top-up fee

When David Eastwood was 28 and applying for his first academic job at Pembroke College Oxford, he was involved in a terrible motorbike accident. He broke both legs, an ankle, an arm and his pelvis. The doctors thought that he would never walk again. It was an extraordinarily painful and harrowing experience but the new boss of the Higher Education Funding Council for England (Hefce) survived.

More than that, he learnt to walk again - and he prospered, winning the job at Pembroke and going on to be a senior tutor there and then professor of history at Swansea. His rise has been meteoric. At 47, having been vice-chancellor of the University of East Anglia and the head of a research council, he is the youngest ever Hefce boss, in charge of doling out £6bn of public money to the universities. The qualities of steel and determination that served him so well in his twenties will be much needed as he negotiates his way around the minefield of higher education today.

His half-completed biography of Robert Peel will no doubt lie unfinished for ever. Eastwood is engaged in a tougher and more enthralling task - steering the UK's higher education system through the choppy waters of the new top-up fee regime into a brave new world where the market is king but paradoxically where government is increasingly intervening.

For the past four years, the funding council was run by Sir Howard Newby, a charismatic sociologist who became closely allied with New Labour. Newby worked with the then education secretary Charles Clarke on the higher education White Paper, writing various drafts himself. He advised Tony Blair and was a passionate proponent of widening participation and of the role played by the new universities (the former polytechnics) in the economy and society. The rationale was that this was good for the funding council and for higher education. But the universities didn't like it, resenting his closeness to politicians and feeling that their interests were better served by keeping more of a distance.

"Howard Newby became part of the Department for Education and Skills," says one observer. "That meant that Hefce ceased to be a buffer between the Government and the university world."

So, there is great hope that Eastwood will be able to reposition Hefce as a buffer. "I would like him to be a defender of the political independence of the higher education system," says Professor Alasdair Smith, vice-chancellor of Sussex. "Obviously we all have to recognise that government ministers take great interest in matters of detail and will have strong views to express, but we want Hefce to engage in a robust and sophisticated discussion with them."

Whether Eastwood will be able to carve out a role for the funding council that is much more than distributing money and doing Whitehall's bidding is debatable. Universities are having to deal with more interfering ministers at the DfES as well as at the Treasury. Earlier this year Gordon Brown staged a putsch of the Research Assessment Exercise by announcing a new methodology to decide how to award £1.45bn of research money to the universities.

In the past the money was allocated by an clunky system of peer review. Henceforth (once the 2008 RAE is out of the way) it will by doled out, certainly for the sciences, by a metrics-based formula whereby the grants are an algorithm of, say, each university's total research income. The funding council was not consulted about this, finding out 48 hours before the formal announcement.

In his first major interview, Eastwood treads carefully around these hot topics. Although clearly aware of universities' concerns, he doesn't answer a direct question about the extent to which Hefce should be a buffer or agency of government. "You can end up with a wearisome metaphorical debate about what is Hefce; is it a buffer or is it something else?" he says. "Part of my answer to that is Hefce is a key ingredient in what has been a very successfully structured higher education system, the second most effective higher education system in the world (the first being America).

"Working with a high-performing higher education sector and working with a government which has been strongly committed to strengthening higher education, Hefce has played a pivotal role. And that pivot between government in the centre and a strong body that is able to work with the sector to chart a sensible future has made the sector very successful."

The new Hefce boss is good at answering sharp questions in the most anodyne, long-winded way possible, so that you have almost forgotten the question you asked by the time he has completed his essay-length answer, with all its qualifying clauses.

Asked if he is going to stand up for higher education as the vice-chancellors want, he says he believes that a strong funding council and a strong sector are symbiotic. He points to decisions taken by Hefce in the past two-and-a-half months since he arrived as evidence of his macho credentials, specifically the £75m over three years to prop up ailing university science departments.

"What we have tried to do with our teaching funding is to give the sector a degree of stability as we move into the new fee regime," he says. "We have tried to meet the Government's priority that the fee income would be additional at institutional level but have also given ourselves the ability to make strategic interventions where appropriate. We have identified a number of key areas - vulnerable subjects, widening participation and employer engagement."

On the thorny subject of the Treasury's wading in with its jackboots to take control of the RAE, Eastwood again dances around the subject, saying that Hefce had always intended to review the system of research assessment and funding in advance of the 2008 RAE. There was a consensus that this RAE would be the last in the current format, he declares. "To that extent what happened earlier this year was consonant with that."

But he makes it clear that he believes metrics is the right way to go, claiming that there is now agreement that the system after 2008 should be metric-based. "For sciences we believe that the metrics either exist or can be developed, so that with experts' involvement the metrics will be a sufficient," he says. " There is quite a wide consensus that with science engineering and technology it will work. There is also agreement that in the humanities and non-quantitative social sciences there will need to be some greater peer involvement but this could be done with a smaller number of panels and with a less intensive process."

The funding council's new boss is much happier gazing deeply into the future about what could happen after 2009 if the cap is lifted on the £3,000 top-up fee than dwelling on past grief. Most informed commentators now believe that the cap will be raised because agreement has broken out between the two major political parties on the issue.

Eastwood accepts that lifting the cap will mean that some institutions become better off than those that won't be able to charge high fees. But he is convinced that there will still be a lot of public funding around. Hefce would act as a regulator and protector of the public interest. The funding council is already talking to the Treasury about scenarios for such a future.

"If the cap were to be removed or raised significantly there needs to be a debate about what is the public interest in that essentially deregulated higher education market," he says. "Hefce or a successor body would be responsible for securing the public interest. The debate about what would happen to public funding would be interesting. There will be a public interest in securing access to higher education and in sustaining strategic subjects. There will almost certainly be a public interest in sustaining certain institutions because of their pivotal role in their city or sub-region and also I think we can be reasonably confident that research will remain substantially publicly funded for the foreseeable future."

Eastwood doesn't like to talk about institutions "going under" because he thinks it is misleading. If you look at the last 15 years, universities have been amazingly flexible and resilient, he says. "It is in everybody's interests is that we don't arrive at a point where valuable institutions are thrown into crisis and there isn't the long-term public return on that investment that we would hope for. You may see some realignment, you may see some institutions changing the focus of their mission, but that seems wholly appropriate."

In case you haven't got the message, Eastwood is clever, calm and considered, the quintessential safe pair of hands. "He is utterly steely, has strong views and knows what he wants to do," says one observer. "His appointment is a masterstroke by Hefce," according to Bahram Bekhradnia, director of the Higher Education Policy Institute.

But that doesn't mean he is a dreary nerd. He is clever with people and supremely diplomatic. "He's a lovely bloke," says Professor Steve Smith, vice-chancellor of Exeter.

In the final analysis, he will be remembered for his actions rather than his words. "We don't care about his relationship with the DfES," says Michael Driscoll, vice-chancellor of Middlesex. "We will judge him by outcomes."

The CV

Name David Eastwood

Age 47

Job Chief executive of the Higher Education Funding Council

Address Is living out of a suitcase because, while his job is in Bristol, his wife is in Norfolk with his son, who is finishing his A-levels.

Before that Fellow of Pembroke College, Oxford; Professor of history and pro-vice-chancellor, University of Wales, Swansea; chief executive, Arts and Humanities Research Board; vice-chancellor, University of East Anglia.

Likes Wine and Manchester United

Family Married, with three children: Miriam, 22, who works in advertising; Lydia, 20, at Manchester University; and Jonathan, 17, who is at Wymondham College in Norfolk. His wife works for Parent Partnership, which helps families with special-needs children.

What others say Clever, ambitious, diplomatic, determined, utterly steely, knows what he wants to do, "a lovely bloke", with strong views.

Publications Governing Rural England: tradition and transformation in local government 1780-1840; edited The Social and Political Writings of William Cobbett.

Unfinished business Biography of Robert Peel

l.hodges@independent.co.uk