BUFFER bodies separating the Government from higher education institutions in funding matters must be maintained for the sake of university autonomy, says the report.
The committee places so much importance on funding councils that it recommends introducing one for Northern Ireland, where the Government now allocates funding directly (Rec 84).
But it warns that the greater the scale of higher education and the more impact it has on the economy, the greater the temptation for the Government to interfere and threaten diversity.
The solution, it says, is a larger role for market forces.
This should come naturally from better-informed students, paying some of the costs of their higher education and so forcing institutions to deliver the kind of course they want.
If the funding recommendations are adopted, more than half of the cost of a full-time undergraduate programme will flow to institutions with the student. This includes the money from funding bodies allocated for student numbers, fees from local education authorities and the new 25 per cent student tuition contribution.
But the councils will still have a vital role to play. Because of their size and market position, the committee believes they are the only bodies able to act as expert buyers of services, influencing quality, effectiveness and price.
They will also have to offer funding incentives to encourage students into disciplines which are expensive to provide or where the state is the major employer, such as teacher training.
Their importance in monitoring institutions' financial health could become even more important as institutions face greater pressure from market forces.
And they will need to support Government policies such as widening participation and strategic reviews of governing bodies.
They will also continue to fund research under dual support.