Cash by results funding on table

A radical new way of funding higher education which would do away with the distinction between part-time and full-time students is being considered by Sir Ron Dearing and the new Government. It could lead to a controversial cash-by-results method of payment.

Sir Ron is meeting David Blunkett, secretary of state for education, this week. His committee of inquiry is expected to recommend a common currency to put an educational and financial value on defined periods of learning.

Existing systems, where students are given "credits" for periods of study, would be forged into a single, national scheme. Students could take credits with them to a new course or institution, or cash them in for a qualification. Credit would become the building block for a new UK-wide qualifications framework.

They could also be used by funding councils to develop a more flexible way of paying for teaching. Cash would follow the number of credits students were aiming to achieve, rather than being based on the number of students attempting whole courses or a set proportion of them.

Bahram Bekhradnia, head of policy for the Higher Education Funding Council for England, said credit-based funding was "entirely feasible" and the council would be "rather keen to use it". But the introduction of such a system should be an academic rather than bureaucratic or political initiative.

Funding could be linked to the number of credits gained by students. The Further Education Funding Council for England already has a so-called output-related element in its funding system. Introducing it into higher education has been considered by HEFCE. But such a move is likely to be resisted on the grounds that it could threaten quality and tempt institutions to stiffen entry requirements.

Quentin Thompson, a Coopers and Lybrand partner acting as a funding advisor to Dearing, described the scheme as "a good idea on the grounds that you would have the funding following the student even more closely than it does now". But the price would be more uncertainty for institutions trying to plan budgets.

Alan Crispin, who has compiled a report on credit systems which will soon be published by the Higher Education Quality Council, warned that national agreements were needed to iron out differences in the way credit is calculated and avoid "credit inflation".

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