Universities should be freed from central government management, according to the man charged with seeking industry's views on the running of higher education institutions.
Richard Lambert told The THES: "If anything, universities are over-managed from the centre now, and their lives are made harder than desirable by the earmarking of funds and policy funding structures."
This week, as the preliminary findings of his review into the links between business and universities were published, Mr Lambert again underlined his independence from the Treasury - despite press reports suggesting that he had echoed the chancellor's call for Oxbridge to modernise or face government discipline. But he did say that Oxford and Cambridge universities had to confront "rather bigger questions", with both failing to modernise quickly enough and "a general sense of unease" about their direction.
Mr Lambert, former editor of The Financial Times and a new member of the Bank of England's monetary policy committee, said that ideally there would be more trust between the government and higher education, with the government acknowledging that universities run themselves well enough to decide for themselves how they allocate resources.
"That's the $64 million question - what do universities need to do to be able to say to the government 'give us space'?"
His review will look at ways for institutions to prove they can handle their affairs. He said there had been a lot of governance modernisation since the Dearing report in 1997 and he would flag up good practice. But he said that in a more businesslike university sector, closing departments that were unpopular with students or were not attracting research funding would have to be accepted.
Universities UK welcomed Mr Lambert's call for more autonomy, but it disagreed about the more "businesslike" approach. "Where it is in the regional or national interest to maintain undersubscribed but economically important courses, it is vital that adequate funding be provided to avoid damaging wider economic and social interests," a spokesperson said.
Peter Cotgreave, director of Save British Science, said: "If, as a country, we need, say, chemistry knowledge, then it is silly to allow universities to close chemistry departments because it is somehow 'businesslike'."
On foundation degrees, Mr Lambert said that industry involvement would be crucial to their success. He also stressed that students' brains "should be sweated". "Companies heavily involved in research and development don't want skills taught to undergraduates and postgraduates diluted by soft skills such as communication," he said.