Rama Thirunamachandran is correct when he observes that the current model for student finance is unsustainable (¡°Bring in the banks: vice-chancellor breaks cover on student finance¡±, 20 February). And it¡¯s good to see that even Nick Hillman, David Willetts¡¯ former special adviser, now accepts this ¨C although I?didn¡¯t notice the word ¡°sorry¡± appearing in his interview in the same issue in relation to his advice on this topic (¡°Hillman holds his hands up over RAB charge ¡®mistake¡¯?¡±).

Unfortunately, Thirunamachandran¡¯s proposed alternative seems to follow the last Labour government¡¯s view that private sector finance could act like a fairy godmother and magic-away problems through private finance initiatives.

Banks are going to lend to students only if?they make a profit from doing so, and they will almost certainly require their risk to be minimised through government loan guarantees: in other words, a?win for them, at the taxpayer¡¯s expense. The result is likely to be, as with the London Underground PFI, a complex set of contracts that ends up costing the taxpayer far more than straightforward public spending would have done.

Paul Temple
Centre for Higher Education Studies
Institute of Education, University of London

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Tim Hall¡¯s review of Danny Dorling¡¯s All That is Solid: The Great Housing Disaster (Books, 20 February) highlights the tragic inequalities in the UK housing ¡°market¡±. A common reaction to the problem of young academics and researchers having to live in poor-quality, insecure and/or distant accommodation is to demand higher salaries. However, as Dorling points out, it is the rich who push up prices for everyone. Pay rises for academics will only shift the problem on to others.

Commercial banks create new money whenever a?loan is made and deposited into another bank account. About 97 per cent of the money in circulation in the UK is created as debt. The majority of loans go into property and speculation in financial markets, which are more profitable in the short term. The results are higher house prices, booming stock markets and the temporary illusion of wealth. When these bubbles burst, the taxpayer steps in to rescue the banks while funding for ¡°luxuries¡± such as research and free education is squeezed.

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What if some of this money had been channelled towards research and technological advancement? Would we be mining on Mars or harnessing fusion energy? University leaders should be asking: Why doesn¡¯t the monetary system work in favour of long-term investment in research and education? Are we happy to ride the boom-bust funding roller coaster, or should we be exploring and promoting alternatives to our broken financial system?

Bob MacCallum
London