Universities will have to look to the private sector and their own resources for the foreseeable future, he told a seminar organised by the Social Market Foundation. "I believe this Government is persuaded of that and any future government will think the same.
"The case for attracting more people from lower socio-economic groups into education is clear. It is the colleges who will win the Government's support, not the universities, in my view."
With its huge new cash pledge to the NHS, the Government would not have the resources for higher education, he said. In a widely debated paper for the seminar, he insisted that a "leap of public perception" was needed. Universities should be free to set their own fees - if necessary, far more than the curren pound;1,050 a year - with the public funds channelled into a pound;3billion bursary fund for undergraduates from poorer families.
He would not, however, apply the same criteria to FE, "though I do think there are some who could and should pay", he said.
The case for a radical rethink on the funding of universities was urgent, participants at the foundation seminar agreed. Many, including Mike Brown, vice chancellor of De Montfort University, Leicester, warned that they would start to go broke and thus be forced into mergers within two to four years unless the Government took appropriate action.
The most vulnerable were the newer universities - those who did the most to widen achievement - while the most elite, such as Oxbridge, had historically built up huge reserves.
Pressures on both sectors post-16 to find new sources of funding would increase considerably in the near future, they said.
Who pays for FE? page 38