Stand in the vicinity of an English university and you may hear a creaking, groaning sound in the air.

What could it be? The sound of a finance team stretching sinews to make ends meet, perhaps, or academics limbering up to leap out of the way when the axe next falls? Or could it be something else ¨C the sound, just maybe, of ice breaking as sector leaders and government ministers finally edge on to common ground about potential solutions to the funding freeze that has pushed so many universities to the brink.

Fourteen months after Robert Halfon, the former Conservative higher education minister, told Times Higher Education that a rise in the tuition fee cap was not going to happen ¡°in a million years¡±, reports are emerging that the new Labour administration is open to linking fees to inflation as a first step towards a new, sustainable funding compact.

Those reports follow the publication last week of a Universities UK ¡°blueprint¡± for reform not only of the funding system but other aspects of how higher education operates.

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UUK proposes changes to both fees and teaching grant, big increases in whole-of-tertiary participation, as well as a programme of reform to overhaul the way universities are run and ensure they are maximising the return on investment, whether public or private.

After years of being frozen out, then, a limited thaw seems to be under way, although optimists should not underestimate the challenges ahead, including the competing demands for attention in this month¡¯s autumn Budget.

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Another iceberg has been the impact of curbs on internationalisation, with the scale of the damage caused by recent clampdowns on overseas students quantified in a regulatory impact assessment published by the government last week.

According to the study, the ban on dependant visas is forecast to cost the sector almost ?5 billion, and will have a over the next decade, once fees and tax revenues, as well as the cost of providing public services, are all taken into account.

There is, though, another consequence of these issues which goes deeper than the immediate accounting of pounds and pence, and which potentially has an even greater impact on universities¡¯ ability to drive national prosperity.

That is the question of reputation, which features prominently in our analysis of this year¡¯s THE World University Rankings, published this week.

As the results make clear, outside a small handful of universities at the very top of the tables (including the University of Oxford, which extends its grip on the number one position), the UK¡¯s relative strength is in decline.

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The greatest damage is being done by sharp declines in reputation, both for teaching and research, with the UK¡¯s share of votes falling about five percentage points over the past 10 years.

This decline reflects a decade in which the UK¡¯s university sector has been seen less as an asset than as a political pi?ata, with falls in real-terms funding in sharp contrast to the way other sectors, particularly in Asia, have been nurtured.

As Nick Hillman, director of the Higher Education Policy Institute, puts it: ¡°If you underfund¡­while other countries take the opposite route, your relative position is bound to deteriorate.¡±

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There are those who dismiss reputation measures as unworthy of serious consideration, but the reality is that it matters hugely ¨C not least to the future competitiveness of the country as a destination to study or carry out research.

As Oxford vice-chancellor Irene Tracey tells us: ¡°This matters more than maybe people realise ¨C we¡¯ve got to be really mindful of that and mindful of the decisions that need to be taken now in order to address that slippage.¡±

She also offers a dose of realism, warning that on funding ¡°the solutions from the government, I think, will be limited¡±, meaning the onus will be on the sector to light the path ahead.

It is a message mirrored by Dame Sally Mapstone, president of Universities UK and vice-chancellor of the University of St Andrews, in the : ¡°In a world where current success is no guarantee for the future, and where other higher education and research systems are leaping ahead, we need to show that we can revitalise ourselves.¡±

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john.gill@timeshighereducation.com