The government cannot delay much longer making a decision on whether or not to continue to pay Oxbridge college fees for all home and European full-time students regardless of their means. An announcement of some sort must surely accompany next week's economic forecasts for 1998/99. The government will need to tell the funding councils how much money they will have to distribute next year and how they are expected to spend it.

Doing nothing is not an option. The special pleading has been flagrant and offensive to the rest of higher education. Oxbridge's protagonists have made the mistake of appearing to claim that their universities have a monopoly on excellence. The warden of New College, Alan Ryan, has irritated many with his assertion that Oxford and Cambridge's students are "more educable than their peers" and therefore better able to benefit from tutorial teaching. Lord Dahrendorf's apparent view of the rest of higher education - including presumably a part of it over which he was once pleased to preside - as "grey mediocrity" sounded scathingly dismissive.

When other universities are struggling with financial difficulties undreamed of in Oxbridge, Sir Christopher Ball's mea culpa over the colleges' negotiating tactics has not provoked the scepticism the colleges might have hoped for. The evidence of their wealth appears to bear out the charge that they have used the money for teaching to invest in low revenue earning long-term assets. John Tomaney (left) reflects the resentment felt in the north at the golden triangle's dominance.

If the government bows now to the special pleading of the Oxbridge establishment, its credibility, already dented by the Formula One imbroglio, will take a further severe knock - and make it impossible for the prime minister to accept any honorary degree his alma mater might offer him lest he be accused of buying it with favours.

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Instead the government should instruct the funding council to begin to reallocate the Pounds 35 million additional public subsidy received by Oxford and Cambridge according to criteria which are consistent with declared policy aims, particularly wider access and the support of excellence wherever it may be found.

At the same time the government should announce that it is altering the grant regulations to move the payment of college fees back across the means testing line for students entering from 1998, restoring the pre-1977 position. Additional subsidy would thus continue to be available to help students from poorer families attend these excellent universities (and perhaps others?). The universities would have an incentive to recruit more such students. In so far as they continued to recruit rich students, their revenue would be protected by those students' fee payments. Direct pressure from those students would provide a useful control on fee levels.

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In students' eyes, of course, all fees are wrong, but the government has taken the view that tuition fees should be charged so long as poorer students are exempt. In the government's terms, if means testing is all right for flat-rate tuition fees, why should it not also be applied to college fees? Reducing the public fee subsidy in this way is simple. It will allow time for adjustment while ensuring that Oxford and Cambridge continue to be adequately funded. Reducing it any other way will run the government into long drawn out legal, constitutional and political wrangles which it can do without.