It is slightly worrying, therefore, that the Chancellor did not make more of the long-term commitment to increase education spending as a proportion of GDP. Yet, the size of the cake is only part of the problem. The Government has an increasing number of education priorities but very few principles to divide up the cake.

The PBR identified schools spending as a priority. No surprises here. It also tied in with the Department for Education and Skills strategy until 2006, which emphasises 11 to 13 provision and the national key stage 3 strategy. But it is in post-14 education and training where the priorities come thick and fast.

Soon the DFES will publish a consultation paper on 14 to 19 provision. The Treasury remains unconvinced of universal education maintenance allowances on the grounds of deadweight. By contrast, the PBR signalled Treasury support for the mass youth apprenticeship system and the general thrust of the Cassels Review: Modern Apprenticeships: The Way to Work - published in September and on which the Chancellor made further statements the following day.

Yet, there is more. Priorities in adult learning are also mounting. On the higher education side, the PBR confirms the ambition that one in two 18 to 30-year-olds should be able to participate in HE by 2010. The Treasury and DFES will be publishing a consultation paper in the New Year on the role of maintenance grants and income contingent loans for fees and maintenance support with market interest rates.

But the PBR has also opened up a new funding front - adult learning outside of HE. It quotes the Confederation of British IndustryTrades Union Congress Submission to the Productivity Initiative published last month, which included a report on Level 2 adult skills and the performance and innovation unit report - In Demand: Adult Skills in the 21st Century - published an hour before the Chancellor got to his feet. Both reports examine the role of employer training tax credits, which the Treasury has agreed to pilot from September 2002, including the payment of wage costs to employers in return for time-off for learning. They also call for a fully-funded tuition entitlement for adults without a level 2 qualification.

The Performance and Innovation Unit has suggested that adults studying part-time should receive means-tested grants to cover indirect learning costs such as travel and books. This would go some way to meeting Labour’s manifesto commitment of tackling financial barriers faced by adult learners in further education.

Against this background, the reasons why the Government needs a set of funding principles to determine the allocation of scarce resources are obvious. Broadly speaking, the principles for the funding of foundation learning are in place. Young people do not contribute towards the cost of tuition whether they are studying for a level 1, 2 or 3 qualification. And, notwithstanding future decisions on EMAs, the Government has been committed to increasing maintenance support and training allowances to encourage participation and retention of young people in education and training between 16 and 19.

It is in adult FHE, however, where funding principles are thin. Yet, 18 to 19 is precisely the age when individuals are expected to contribute towards fees, and glaring inequalities exist in maintenance and learner support funding for HE, over pound;2 billion a year, compared to adult FE, which is little over pound;100 milion a year.

One principle emerging in the area of adult FHE is the rate of return principle. This states that the greater the financial rate of return to the individual of achieving qualifications, the lower the public subsidy, and the lower the financial rate of return to the individual of achieving qualifications, the greater the public subsidy. It is, in fact, a polite way of saying that those on level 4 learning programmes should receive less public support for tuition and maintenancelearner support costs relative to those on level 1 to 3 learning programmes.

Clearly, a just allocation of scarce public resources must be based on an assessment of funding priorities for 14 to 19 provision, HE and adult FE, together. Yet, there is no need to compare the whole of the LSC system with the whole of the HE system. The right comparison is between LSC funding of adult learning and HE, and the relative redistribution of public resources - hopefully within an expanding pot - from those on level 4 learning programmes to those on level 1-3 learning programmes.

Mark Corney is director of MC Consulting