Leader: Time for Tories to embrace reality

Higher education was one of the first areas on which David Cameron left his mark when he became Conservative leader. His party's opposition to tuition fees - lauded as a populist masterstroke at the time - brought no electoral gain and was not seen as a genuine and lasting commitment. Its swift demise was inevitable. But now comes the difficult part: how to fill the great lacuna that is Tory higher education policy.

The espousal of expansion by both David Willetts and Boris Johnson frees the party to start thinking seriously about how to fund a modern higher education system. It is a debate that the Tories have long shirked.

Who now remembers half-baked schemes such as the proposal to free universities from the state using endowments raised through the sale of mobile phone licences?

The obvious question to be addressed in the forthcoming review is whether to raise (or remove) the cap on tuition fees. Mr Cameron has written in this newspaper of a need to ensure that higher education is well funded.

The chances of significant extra cash coming from the public purse under a Tory administration must be close to zero - which leaves fees.

But the review will also need to look seriously at student finance and institutional funding in a market-driven system. Mr Johnson's telling comments on social mobility in this week's edition indicate that he - and his leader - see education as an agent of social mobility. While free-market theorists may be tempted to let students struggle through on loans, Johnson's remarks suggest a different frame of mind.

On institutional funding, the Conservatives will also need to decide whether the market can be left unchecked. It is widely anticipated that higher education will do less well in the next comprehensive review.

Universities are about to benefit from top-up fees - extra income that the Government fought a bitter battle to secure. The Prime Minister has launched another initiative to boost numbers of overseas students - and their fee income - yet further. Science, too, has benefited from the Treasury's enthusiasm for innovation. Most expect that this will be the limit of the Chancellor's largesse.

But both top-up fees and overseas fees are volatile sources of funding. The Conservatives will have to decide whether to go the whole way with a more market-driven approach and let some institutions go to the wall, with all the political fall-out that will entail. How the new review on higher education approaches these issues will give important clues as to whether the party is really serious about contending for power in the centre ground. Cameron's Conservatives seem keen to embrace the values and aspirations of Britain's new graduate middle class - just as Thatcher embraced the values of a rising working class two decades ago. But that involves choices that may go against the Tory grain.