Funding chiefs are acting as an arm of government and are jeopardising academic freedom, the University and College Union claimed this week.
In its submission to the House of Commons Education and Skills Select Committee inquiry into the structure of higher education and its funding, the union argues that a drastic change of direction is necessary to restore the autonomy of the Higher Education Funding Council for England.
Sally Hunt, UCU joint general secretary, said: "An independent funding body is absolutely essential to our democracy. Hefce must be able to distribute funds for teaching and research based on clearly identified criteria and free from government influence."
The union is calling for a legislative review of Hefce's framework to restore confidence in its ability to act independently.
"The Secretary of State not being involved in the appointment of the chief executive would be a good start," says a statement from the union. The UCU also wants extra funds to be available to Hefce for strategically important departments faced with closure.
The future independence of Hefce has been subject to some debate in recent months.
Paul Cottrell, UCU national officer, said: "It has become too compliant to the Department for Education and Skills and needs to distance itself. It also needs to protect higher education from policies originating elsewhere in government."
He said that intervention by the Chancellor in the reform of the research assessment exercise last year, made without consultation with Hefce, highlighted the complexity of the issue.
He added that the decision by David Eastwood, Hefce chief executive, to write to Oxford University this term, pushing for governance changes despite the rejection of reforms by academics, will also raise the issue of academic freedom.
The annual grant letter from Alan Johnson, the Education Secretary, to the council, published last week, calls for significant cuts in Hefce costs.
"I expect administrative costs to reduce to £16.74 million in 2007-08. After that, administration budgets will be further reduced over the 2007 Comprehensive Spending Review planning period," he writes.
Hefce declined to comment on the autonomy issue, but a spokesperson said:
"The efficiency savings will not in any way affect Hefce's autonomy. We continue to look for ways to increase our efficiency and effectiveness through a variety of means."