Where next as hopes of extra look blighted?

Bitter words from Manchester University's vice-chancellor, former head of the Committee of Vice-Chancellors and Principals, at this week's degree ceremony. Even those who believed working with government would pay off now apparently expect next week's spending review to be bad news.

The death of hope will leave British higher education in a difficult position. The way out through higher fees for home and European Union students was blocked last week when the minister for higher education rejected the Greenaway report. The British Council has poured cold water on the hope that the books could be balanced through recruiting from overseas. Distance learning and e-universities are not proving to be easy money-spinners.

Which leaves the foundation degree, the government's preferred vehicle for further expansion. With a starting figure of 2,000 students next year, this is not going to make any institution rich. On the contrary, it looks suspiciously like a cut-price option - for the Treasury and for students.

The degree prospectus makes no direct mention of the HND. Explicitly killing this qualification seems to have been a tough decision too far, yet it is unlikely to survive alongside a "degree" that takes the same time but offers higher status and quicker access to honours level. Everywhere HNDs are being repackaged to qualify as foundation degrees. This is especially bad news for higher education institutions that successfully offer the HND but do not have their own degree-awarding powers. They will find themselves relegated to a subservient role as degree-awarding institutions take control of the new qualification and its funding stream. A useful source of innovation may be stifled unless the government reviews its present restrictive position on granting such institutions taught degree-awarding powers.