UK universities are the most autonomous in Europe, according to the European Universities Association. That does not mean they face no regulation, but rather, as the EUA's president Jean-Marc Rapp points out, the state provides "an appropriate framework in which universities can fulfil their missions in the best possible way".

If that is so, then some universities might need to prepare themselves, for the house could soon come tumbling down. The government has proposed legislation that could erode English universities' cherished freedoms. At the heart of the changes is the ³ÉÈËVRÊÓƵ Funding Council for England, which doles out cash for research and teaching. Although the monies it is given to distribute are shrinking, its powers are not. Instead they are to be reinforced, giving Hefce a new role as lead regulator for the sector - OfHed, if you like.

"Almost every aspect of a university's life is now influenced by the higher education funding council," Dennis Farrington, visiting fellow at the Oxford Centre for ³ÉÈËVRÊÓƵ Policy Studies, says in our cover story.

The danger is that Hefce could end up being seriously squeezed (trying to both assess and reward research quality while also protecting students) and facing conflicts of interests (being charged with regulatory oversight of the use of the funds it allocates).

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For now, Hefce is in safe hands with Sir Alan Langlands, who has walked the funding-standards tightrope in the NHS and has bravely denounced cuts to the teaching grant for the humanities. But what happens when he leaves?

More to the point, what happens if some institutions decide to leave the system? Over the years, there has been talk of just such a move by a handful of English universities with a low reliance on Hefce funding, such as the London School of Economics (only 14 per cent of its income in 2009-10). In the summer, an anonymous survey of vice-chancellors revealed that two (non-Russell Group) heads were giving serious thought to such a move, and privately there have been murmurings from some Russell Group vice-chancellors as they despaired at increasing governmental encroachment.

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Under proposed legislation, any higher education provider seeking access to student loans could face obligations so onerous that forsaking that state-backed income stream could not be dismissed out of hand. Established independent providers would not be fazed by this prospect. But it could tempt some of the research elite to leave the fold in pursuit of a more tantalising prize: the same status - and true independence - enjoyed by the US Ivy League.

To accomplish this, however, they would have to be able to offer loans to students (or at least some kind of tuition-fee support for the poorest) through a deal with banks or by using their endowments. And they would still have to be allowed to continue to access government research funds. The government could make this possible by separating agreements on teaching and quality-related research. The question, and it's a big one, is would it want to? Or is the political risk of heavyweight universities leaving the system too great, especially for the Liberal Democrats?

But when cash comes with so many strings attached that institutions can see themselves trussed up like a Christmas turkey, the obstacles to opting out become smaller and the rewards ever greater.

ann.mroz@tsleducation.com.