The Coalitions university funding policy is turning into an entirely predictable shambles. It was right to raise the level of tuition fees, both to shift the cost of university education from the taxpayer to the students who will reap the economic benefit, and to encourage a genuinely competitive market in higher education. However, by imposing a cap of 9,000, that market has been badly distorted. Initially, ministers were insistent that universities would charge the maximum only in exceptional circumstances. To no ones great surprise other, it seems, than the minister responsible, Vince Cable the overwhelming majority are charging the maximum fee. This is already being described as the Stella Artois route: even our less illustrious academic establishments want to be seen as reassuringly expensive. Indeed, Graham Henderson, vice-chancellor of Teesside University in Middlesbrough, made no bones about it in this newspaper yesterday, when explaining why his institution wanted to charge 8,500 a year, almost as much as Oxford, Cambridge or Imperial College: Our students are checking that we are not charging the bottom of the spectrum, because they dont want to be seen as second-rate. The result is not just sky-high fees all round, but a significant shortfall in the higher education budget. The Government will have to advance more money than expected in the form of student loans, leaving less to fund university places: it is estimated that up to 36,000 will be lost as a consequence. While this newspaper has long argued that too many youngsters are being shoved through the university system, the rationing of places should be based squarely on academic ability, not on a cash shortage caused by an ill-designed funding mechanism. Once again, a sensible Tory policy has been fatally compromised by the necessity to pander to the Liberal Democrats a common theme in so many of the Coalitions reforms. What can be done? One solution would be to remove the 9,000 cap, and allow a true market to develop. Our best universities which are world-beaters would be able to charge significantly more, channelling much of the surplus into bursaries for poorer students, while the less distinguished would have to charge significantly less, or fail to fill their places. The more innovative could also start to market two-year courses as the University of Buckingham already does that would offer an attractive lower-cost option. Mr Cable seems to spend much of his time these days perfecting his role as the Coalitions licensed dissident. It is a pity that he does not spend longer ensuring that the policies for which he is responsible are fit for purpose. Telegraph