Universities must stop trying to emulate each other and instead improve their "clarity of mission" to face the challenges of the future.

So said David Eastwood, chief executive of the ÖйúAƬ Funding Council for England, as he outlined the issues to be addressed in 2009, "a year of challenges".

Professor Eastwood, speaking at Hefce's annual conference this week, said the fiscal climate for the next spending review would be "tight".

He added that it was increasingly important for universities to align resources with their own academic priorities. "I still think there are too many institutions slavishly replicating (Hefce's) resource allocations," he said. "Block grant is there for institutions to use to drive their own academic priorities, and the institutions that thrive are the institutions that do that with imagination and with wisdom.

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"There needs to be a greater clarity of mission ... The era where you can (adopt) a strategy that is essentially making you more like some other university is over. The institutions that thrive are the institutions that prosper on their own terms."

Professor Eastwood said the sector needed to address issues around pay, pensions and affordability.

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"The level of cash increase the sector is enjoying will be much lower than it has been in this settlement, so it is important in those discussions that affordability and sustainability issues are on the table," he said.

Referring to next year's fees review, he said: "Can I remind you that all the Government has said is that it will do a bit of good social science: look at the impact of fees since 2006, look at the impact on the social composition, on student choice, on particular disciplines and institutions. This doesn't mean that the issue of fees or the fees cap will be resolved in 2009."

• - Six physics departments are to benefit from an injection of ?12.5 million to "sustain" the subject in the South East of England. The funding to promote collaboration between universities was announced this week by Professor Eastwood, who said that a review in 2006 indicated that all the departments involved faced deficits if they continued to operate in isolation. The six institutions are Queen Mary, University of London; the University of Kent; Royal Holloway, University of London; and the universities of Southampton, Surrey and Sussex.

john.gill@tsleducation.com.