This Parliament began with a crisis in higher education. Direct public funding for universities was sharply reduced and higher fees sent application numbers into decline.

This crisis has passed. The latest applications round has seen over half a million students placed for university entry for the first time, including a record number from poorer backgrounds. The influx of fee-payers has resulted in university incomes rising despite austerity.

Two critiques of the newly minted higher education system survive the recovery in its fortunes: one based on the challenge of sustainability and the other on the downsides of marketisation.?

A new essay by the Labour shadow higher education minister Liam Byrne, Robbins Rebooted, published by the Social Market Foundation today, falls into the latter category.

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Byrne¡¯s view is that the market in higher education undermines cooperation on research; it fails to account for the necessary role of government in finding and funding innovations to bring to market; and it creates the wrong kind of growth in student numbers (for example, more of what Byrne calls the same old three-year degrees and no more of the technical degrees that can provide apprentices with a route to graduate-level jobs).

The force of these arguments is underlined by looking at our peer economies, where industrial strategy is pursued more confidently with universities at the heart of the interaction between government and business.

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Byrne would give government a firmer role in directing university research, pick races if not outright winners to guide innovation funding, and unapologetically shape the future expansion of higher education rather than leave student demand to settle what is supplied.

The problem with this approach is that it doesn¡¯t remove universities from the marketplace.

If, for example, we think that marketisation via fees endangers Classics and literature departments, it¡¯s hard to see why they will fare better under a system in which major engineering employers help to set the priorities for teaching and learning. I¡¯d wager that dreamy 18-year-olds are more interested in the other-worldly roots of our culture than 50-year-old CEOs. So I¡¯d rather students¡¯ choices directed funding ¨C as they do in a system driven by fees - than committees of businessmen.

But that¡¯s not to say that universities should resist the influence of industry altogether. Nor do they, since their students now demand a sharper focus on future employability.

Similar tensions are likely to emerge with regards to fundamental research. Byrne would have government take a more directive role in targeting funding and identifying strategic challenges for researchers to take on. But it¡¯s far from clear - at least to me - that government direction is more likely to create economic value, if that is to be our measure, than curiosity-led research.

These issues aside, what is surprising about Byrne¡¯s essay is that it contains very little comment on sustainability, the second category of critique of the present system.

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You¡¯d expect the opposition to be saying at this proximity to the election that the system is fundamentally broken, not merely that it needs some technocratic tweaking. Certainly there are many who are worried that the present system is unsustainable, with the costs to government higher than once forecast and the likelihood that many graduates will never pay off their loans in full.?

Labour¡¯s difficulty on these issues is that they don¡¯t yet have an alternative to present. If higher education on a mass scale is expensive, then what do they want to do about that? The options are to make it cheaper per unit, shrink the numbers of students or tolerate the cost.?

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Doing the first - draining funding, for example by capping fees at ?6,000 rather than the present ?9,000 without making up the difference in direct public funding - undermines the role of higher education as part of an industrial strategy as well as degrading quality.?

Reducing the numbers of students is likely to affect those from the poorest backgrounds the most. If Labour accepts this as the price of a headline on reducing fees then it will be benefitting the ¡®squeezed middle¡¯ at the expense of those who are less well off.

And accepting that higher education is expensive? Well, that hardly seems to follow from the critique that the present system is financially unsustainable - moving part of higher education funding out of fees and back into public subsidy costs more, not less.

In the end, Labour will choose one - or a combination - of these three strategies for dealing with what they will want to claim is a sustainability problem.

For the moment what we have in Byrne¡¯s essay is a sketch of the wider strategy for higher education, one that rejects marketisation as the mechanism for deciding the future role of the university and replaces it with corporatism.

He may be right that our future economic strategy requires this change in how universities are oriented. It is a significant shift and merits careful scrutiny.

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in full.