Leader: Modest gains but a chillier wind is blowing

This week's funding allocations for universities and colleges in England are the first concrete manifestation of the new regime at the English funding council. It is a reasonably good settlement. The unit of resource for teaching is marginally up, which makes a change from the year-after-year misery of "efficiency gains". Extra places have been fully funded, bringing substantial gains to a number of institutions, and the premium for widening participation has been doubled to 10 per cent. Universities that increased their 5* ratings for research have not been capped and will reap the full benefit of their standing. The worst cuts resulting from the research-cash shortfall have been cushioned for this year, and only three institutions - Luton, Lincoln and South Bank - face reductions so serious that they are required to submit revised action plans. Of these, Luton and Lincoln are already engaged in agreed restructuring.

But for all the good news there are signs of a chillier wind. The maximum aggregate student number has gone. The system will be more driven by student demand, though there will be limits on unbridled expansion. While that means opportunities for strong recruiters, it will make life uncomfortable for those who rely on picking up students in clearing. The method of calculating the clawback for under-recruitment has been changed to make the penalties sharper. And the research allocation, which has to some extent protected the best, has produced some ugly cuts, chopped down many up-and-coming groups and provided only bread and scrape for others.

It would be a mistake to conclude that all is well with funding and the chancellor can relax over the higher education entry in the spending review want list. There has to be more money for poor students and for support services if participation is to be widened socially. The research settlement has brassed off a number of people whom higher education cannot afford to lose. Pay is a scandal and higher education establishments are too tatty. As a holding operation, the settlement will do. But if real relief is not on the way, England's higher education will not be able to deliver what is expected of it.