The future of the UK academy? It's as easy as Oxbridge 1, 2, 3, 4, 5 ..

As we approach 2010 and the looming general election, all political parties will need to hone their higher education policies.

The economically constrained future the public sector faces means it is essential that these policies require little, if any, funding to implement. So here is what is surely a dream set of policies for a future Minister for Higher Education.

The National Council for Educational Excellence has recommended that every sixth-former should aspire to attend the "most selective" institutions. Clearly, this is an impossible aspiration for all sixth-formers who want to go to university: there are just not enough places in the "most selective" institutions - if we take that to mean the universities of Oxford, Cambridge and a handful of others.

Expanding these institutions (if indeed they were willing to expand) would be very costly, but my solution is cheaper and delightfully European, echoing the way things are done in Paris. It is a solution I proposed some years ago in the literature to solve other problems.

First, a line must be drawn on the map, north to south, from John O'Groats to Bognor Regis. Any university located to the left of this line should be renamed "Oxford N", with the numerator "N" determined by that institution's position in a newspaper league table.

Any university located to the right of the line should be renamed "Cambridge M", with the "M" also determined by the same league table. Thus, the London School of Economics would become "Cambridge 2" and the University of Central Lancashire "Oxford 34". Students (and their parents) would be delighted as they could all say they were studying at Oxbridge.

No student would ever be denied a place at Oxbridge - eliminating another major concern of the current Government. Given the prestige this would bring to every institution, universities themselves could reasonably be expected to pay for the rebranding, so there would be no cost to a future government at all.

Since Oxbridge definitively provides a high-quality education, the Quality Assurance Agency could be dispensed with immediately, resulting in a clear net saving.

The Open University would be rebranded as "Oxbridge University" and provide distance-learning courses on behalf of any other UK institution: this would allow any student to study at home, thereby reducing student-support costs.

One of the major political preoccupations has been with the level of student fees. My policy supports the view that there should be differential fees between universities and that they should reflect true costs. Once again, this is a policy that could be implemented in a cost-neutral way by any government.

It is obvious that teaching a less able student is more costly than teaching a very able one. Less able students need longer classes, more tutorials, more detailed feedback on their work and much more hand-holding.

It follows that the funding per student should be in inverse proportion to their average Universities and Colleges Admissions Service points: a university with an average entry level of 480 Ucas points should get half the funding per student of one with 240 Ucas points - a well-known commercial principle copied from private dental insurance, where the healthier your mouth, the less you pay.

However, to balance their well-researched A-level point advantage privately educated students should pay higher tuition fees than state school students. Furthermore, anyone willing to study wholly at night would pay a fee lower than any other student group, as this would allow institutions to introduce far greater efficiency in their use of assets.

Finally, some commentators are concerned that the geographical spread of our most research-intensive institutions is too narrow: not enough are located outside the South East triangle. Since investment to bring everyone up to the desired level of research intensity is now out of the question because of the parlous state of our public finances, a more radical approach is required.

My suggestion follows the moves made by the BBC and other public bodies: relocate institutions to different parts of the country where we really need them. Hence, the staff of "Cambridge 1" should relocate to "Cambridge 34" (the University of Teesside), and vice versa. In this way, within a year the North East of England would receive an economic boost from hosting one of our most research-intensive institutions.

I think you will agree that for too long public policy about universities has been too focused on the expensive way of doing things.