How much should be spent on education in Britain and who should pay? The controversy now raging about whether students should contribute to university funding is only part of this wider debate.

Should universities get more state help, or should some of their Government money be given to further education or schools? Just as important, should institutions that have difficult-to-teach students be given relatively more, or should there be an elite system rewarding high-achieving institutions?

Sir Ron Dearing’s recent review of higher education raised the question of whether undergraduates should contribute more. Equally important, though less publicised, was his committee’s proposal that funding should be reformed to encourage universities to take more non-standard students. Dearing also pointed out that part-time students had to pay their own fees, while full-timers did not.

Helena Kennedy’s recent report on further education was more direct. It only just stopped short of proposing that higher education should lose resources in order to better fund FE. Kennedy compared the generous treatment of full-time university students with FE students who often had to pay their own fees. Moreover, full-time university students often qualified for a maintenance grant while FE students did not.

The future of local authority and schools funding is also under review. The Department of the Environment is looking at standard spending assessments - the amount government allows councils to spend on local services. Major elements of the education SSA, including the calculation of additional need, are under investigation. The Government’s decision to end the nursery voucher scheme will mean that funding for the under-fives is also to be reformed.

Finally, the Department for Education and Employment, along with other departments, is looking at all public spending. So every major part of education funding is currently under review. Dearing and Kennedy await the Government’s full reaction to their proposals, while local authorities and schools may have to wait possibly until next year, to discover how SSAs are to change. Details about the replacement of nursery vouchers will become public later this year.

If the expenditure review is to be in any sense fundamental, it ought to look at the relative balance of public funding between one part of education and another. The table (above, left) summarises public spending in England on universities, further education, secondary schools, primary schools and under-fives. Similar figures would emerge for Wales and Scotland.

Figures in the table have been rounded. The precise numbers are less relevant than the relativities between the parts of the system. For example the difference between secondary and primary schools is controversial: the primary sector has long argued that it should receive a larger share of funding, even if this is at secondary schools’ expense. In fact, as the table shows, the secondary sector receives 45 per cent more funding per pupil than primary education.

But perhaps the most startling element in the table is the relative similarity of funding per head in all parts of the state education system outside the universities. Anyone in public education outside the universities gets, on average, about Pounds 2,000 per year for their education. If sixth-formers are left out of the equation, funding per secondary pupil would reduce from Pounds 2,650 to closer to Pounds 2,000.

The universities, by contrast, receive about Pounds 6,000 per head to educate their students. The figure would be higher - closer to Pounds 6,500 - if overseas students were excluded from the calculation. It is this discrepancy that doubtless struck the Kennedy Committee as being a bit odd.

Of course some universities have to buy state-of-art scientific and medical equipment and laboratories. But universities - particularly the best-funded ones - also enjoy the advantage of students who are willing to learn and easy to teach. Schools and FE colleges, by contrast, have to cope with all society’s problems in terms of difficult pupils and adults needing remedial help.

Helena Kennedy suggested that FE funding should be more directly related to the previous educational attainment of a college’s intake: students with the lowest qualifications would attract the most money. This would create a funding system more closely linked to need.

There are implications for schools in the Kennedy proposals. SSAs for “under-fives”, “primary” and “secondary” education are currently given a substantial weighting for additional needs by the use of “proxy” measures, such as free school meals, one-parent families and ethnicity. But such indicators are only substitutes: Kennedy proposed the use of real measures of the likely ease or difficulty of teaching a particular population of pupils.

If Kennedy’s ideas were adopted as the basis for SSAs, local authority funding could be linked to the pupils’ actual achievements (presumably exam performance). Similar principles could also be adopted within local management formulae.

Virtually opposite principles govern the way money is allocated within higher education. The Higher Education Funding Council gives it out in a way designed to reward “quality”, particularly in research.

In reality, this means existing elite institutions get the highest level of grant per student. Since universities are highly selective, the elite institutions will tend to contain both the cream of students and the academics most likely to rate highly in HEFC rankings.

In short, the university sector is more generously funded than any other part of the state system and it allocates resources within itself on significantly different principles to those adopted for schools and, to a lesser extent, further education.

It is small wonder that Dearing quietly raised the question of whether students should contribute rather more towards the cost of their education and also whether the university funding mechanism should in future encourage universities to make more of an effort with “non-standard” students.

This is not to say that higher education has necessarily got it wrong and that schools’ funding is inherently unfair. Perhaps Britain wants to have an elite, “world-class”, higher education system and the only way of achieving such a thing is relatively generous state funding targeted at a few institutions.

On the other hand, perhaps Britain could gain something by a relative shift of resources towards those parts of education that have not traditionally been given the prominence of the universities. No one ever talks about Britain needing “world-class” primary schools or further education colleges. Perhaps they should.

Tony Travers is a local government analyst at the London School of Economics