In an interview with Times ÖйúAƬ, Sir Alan Langlands said he did not "buy the notion" that putting 85,000 student places up for grabs in the 2012-13 academic year would cause immediate problems for institutions, insisting that they would have time to adapt to the changes.

The chief executive of the ÖйúAƬ Funding Council for England was speaking as the body put the final touches to a strategic statement that it has released in response to the government's recent White Paper.

He said Hefce had access to information on the financial outlook for universities over the next four years that indicated institutions would be able to cope with the government's objective of putting some "grit in the oyster" by allowing funding to follow students.

"I don't buy the notion that there is going to be such huge volatility that institutions will be thrown into trouble very quickly," Sir Alan said.

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"We're dealing here with potential problems with first-year students in 2012-13. So if an institution experiences a fall-off in demand, it will only be in relation to that cohort. You've then got a whole additional year for that institution to solve the problem.

"The notion that there are going to be high-level, high-profile failures in the early stages of this change I think is daft."

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Asked how fair he considered the proposals - which will see universities competing for 65,000 students with top A-level grades and 20,000 further student places allocated mainly on the basis of price - Sir Alan said only that it was "very difficult to judge".

"As far as I'm concerned we go into this with an open mind. Clearly we've done some modelling...but the reality is the important thing, and I am very keen to hear what people say through the consultation process and to see how it plays out in practice," he said.

In its strategy document, Hefce says it will be guided by the principles of "opportunity, choice and excellence" as it works through the implications of the changes.

It will consider allocating funding to institutions "at risk through the early stages of transition" to the new system, but it also pledges to "intervene where necessary to promote progress towards the government's aims and objectives" on learning and teaching.

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However, Sir Alan said the principle of institutional autonomy would remain at the heart of Hefce's approach, including during the overhaul of the regulatory system to include private providers in the same framework.

"I don't think it needs to be heavy duty. I think it can be done in a pretty unobtrusive way. The objective (for the future) is not to impose the current level of regulation on everyone, including the private sector," he said.

Sir Alan also said that the issue of funding for postgraduate education would have to be tackled soon.

He added that Hefce had been asked to keep close tabs on the situation and that its role was unlikely to be one of "passive monitoring". "I don't think we should sit on our hands and wait for a problem in three years, that's for sure," he said.

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"It was ducked in the Browne Review. I remember being surprised when I looked back on the Browne Review and realised that (the postgraduate issue) was in their terms of reference."

Sir Alan added: "One could put a fair bet on the possibility that the higher graduate repayments might well affect the way people think about postgraduate study, both in terms of whether they do it and also in terms of when."

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simon.baker@tsleducation.com.