Sir Howard Newby, chief executive of the Higher Education Funding Council for England (HEFCE), told the Council's annual conference that it must re-engineer its funding model to encourage greater diversity of research and courses in the country's educational institutions.
"[They] must seek out their comparative advantages rather than trying to do everything," he said. "Institutions need to focus on what they are best at."
The HEFCE plans to develop a "core plus" model, Sir Newby said: "We want to identify the core areas in which we believe all institutions will be active. Institutions would then choose to focus their efforts [in a specific area] to obtain the "plus" funding."
The HEFCE's board will consider a draft plan in September with a view to publication around October or November.Sir Newby said: "We hope our funding method will encourage diversity. We also hope it will enable us to consolidate our funding into fewer streams in order to increase focus. The timetable [for change] allows us to consult widely with our stakeholders through the summer."
John O'Reilly, chief executive of the Engineering and Physical Sciences Research Council, mirrored his comments.