Leader: Pay attention - it's not the year to take a breather

The year 2005 might be expected to be the lull between two momentous periods for higher education: the big decisions were taken in 2004 and their impact will be felt in 2006 and beyond. But the next 12 months are likely to be just as significant for UK universities and colleges. Whether on fees, bursaries and admissions, or the detail of the research assessment exercise, the decisions taken in 2005 will determine the fortunes of individual institutions for years to come.

At any other time, the imminence of a general election would be the pre-eminent cause of uncertainty. That it is not speaks volumes about the state of the Conservative Party and the mountain the Liberal Democrats have to climb even to hold the balance of power. Four months may be a long time in politics, but there seems no real likelihood that spring will see a premature end to top-up fees, access regulation and the continuing expansion of higher education. Instead, it promises to be a time of confusion, particularly for applicants seeking places in 2006.

The array of bursary and scholarship schemes already submitted to the Office for Fair Access  confirms that this, rather than fee levels, is where the competition will be. Many of the universities and colleges that find it most difficult to recruit students are still working out the details of the package that they hope will tempt them. A handful may yet follow Leeds Metropolitan University's lead and plump for fees below £3,000, particularly for foundation degrees and other courses below undergraduate level. But the most sensitive area - for Offa as well as individual institutions - will be in the balance between bursaries and scholarships. If US universities are any guide, managers will want to use as much fee income as possible to attract well-qualified students, regardless of background. Sir Martin Harris, the Director of Fair Access, will be reluctant to reject universities' plans, but this will be the subject of delicate negotiations in the next few months.

For other universities, fee income from home and European Union students will remain a minor part of their financial calculations. What will matter most to them will be the run-up to the RAE, both in terms of their own submissions and the way in which the subject panels choose to judge quality. Although the ground rules for the exercise have been set, the panels have considerable flexibility of operation and there is no way for even the most successful research establishments to be certain of the financial consequences that will flow from the eventual grading. Expect more painful reorganisations as institutional preparations continue.

Nationally, there are decisions to be taken that will have lasting consequences for admissions. Ruth Kelly must decide (with more help than she might want from Downing Street) how far to go with Sir Mike Tomlinson's proposals for an A-level-free sixth-form certificate. Anything other than a fudge will be a surprise, especially given the long lead time envisaged for the changes. Who knows how many more education secretaries may have to be convinced? The response to Steven Schwartz's proposed shake-up of admissions may be even less dramatic. Some universities are already nervous at the prospect of a post-qualifications system. But a halfway house, in which applicants have a second chance to choose courses if their results are better than expected, is the most that is likely to emerge.

One theme that surely will survive Charles Clarke's move to the Home Office, however, is internationalism. African universities had already been identified as one focus of the UK's presidency of the G8; last week's tsunamis will ensure that the development theme is widened. Universities will have an important role to play in the aftermath of a tragedy that has seen domestic machinations pale into insignificance.