Sir Adrian Smith was at the heart of Whitehall during perhaps the most tumultuous four years for higher education in living memory.

Now five months into his new job as vice-chancellor of the University of London, he spoke to ̽����Ƶabout his record at the Department for Business, Innovation and Skills, and his plans for the capital’s confederate institution.

He has strong words for “naive” figures in the sector that do not see the need to demonstrate the impact of research when public money is scarce.

But he also has a warning for the government about the unintended consequences of letting the decisions of teenagers drive the new market in higher education.

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“Putting students at the heart of the system is double-edged,” he says, referring to the title of the government’s 2011 White Paper that set out a regime of competition between universities for students who would be paying up to £9,000 a year.

There is a “great deal of concern” over whether students will continue to opt for certain subjects, for example modern languages, he says.

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The number of full-time undergraduates accepted on to European language and literature courses in the UK fell by 11.1 per cent in 2012, according to statistics released earlier this month by the Universities and Colleges Admissions Service. For non-European languages, the drop was even greater - 13.9 per cent.

Although Sir Adrian stresses that we have only “one data point” about how the new system will operate, a “careful eye” must be kept on strategically important subjects.

“If there were three years in a row [of] certain subject areas…going down 10 or 15 per cent a year, somebody would sit down and think: ‘Do we care? And if we do, what are we going to do about it?’” he says.

“It’s 17-year-olds who decide what the shape of the [system] is going to be, and you constantly have to think, ‘Is that sufficient?’”

He also questions government assumptions when asked whether the new way of paying universities for teaching - replacing direct grants with student loan money except for high-cost courses - is actually just a trick to get debt off the state’s books (and on to the balance sheets of graduates).

“In the short term there’s an accountancy angle to it,” he acknowledges, but he thinks that the government prediction that it will recover 70 per cent of student loans - an assumption many critics say is too high - is “not an unrealistic total”.

Still, this projection involves some “heroic modelling assumptions about future earnings levels [for graduates],” he warns. “But don’t forget successive governments will have the ability to manipulate thresholds for repayments,” he adds.

What alternative is there?

But despite these notes of caution, it would be a mistake to think that Sir Adrian is a critic of the government’s overall approach. When it took office in 2010, it was constrained by the “financial situation and the need to reduce, ultimately, government spending” and so could not fund an expansion in student numbers.

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In addition to this, ministers - who are “elected and have the perfect right to think whatever thoughts they have” about the sector - wanted to increase competition for students.

As a result, universities are now competing, without restrictions, for students who achieve AAB or above at A level - a threshold being reduced to ABB in 2013-14. “It’s pretty hard to think of anything else that you might do” if you want to control numbers and introduce a market, Sir Adrian argues.

He has little time for critics - such as the eminent scholars who launched the Council for the Defence of British Universities in November last year - who believe that the requirement to prove “impact” in the research excellence framework distorts the mission of the academy and is near impossible to measure properly.

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“Some people have taken a rather naive view that beauty, truth and goodness is so self-evident that people will queue up to give you money…well, we’re looking at cuts to the number of firemen, cuts to the number of police,” he retorts.

The idea that you can stand “aloof” in the current climate is not in touch with reality, “so I shan’t be joining” the CDBU, he concludes with a smile.

Yet Sir Adrian and the CDBU would probably concur on at least one issue: the importance of the future of humanities. He hopes the University of London will provide some “national leadership” through support for its School of Advanced Study, a collection of 10 research institutes in the humanities, the social sciences and law.

There is also “incredible potential” to expand the university’s International Programmes, which offer distance-learning courses that lead to London degrees. Currently, they cater for 52,000 students at 600 assessment centres. It is a “huge enterprise” that “people just don’t appreciate the scale of”, he says.

In rapidly developing countries, “there is a huge potential demand for higher education that can’t possibly be met by building capacity within individual countries”, he explains, so systems such as the International Programmes could provide the answer.

Sir Adrian has launched a “root and branch” review of the programmes with London’s constituent colleges (which provide the academics who make it work) to plan its future, including a response to the potentially “disruptive” rise of massive online open courses (Moocs).

Given that Moocs are free, whereas the International Programmes are not, do they pose a threat to London’s offer?

“There’s a major difference between that kind of online education that you dabble in and a systematic programme that leads to a degree,” Sir Adrian counters. In fact, Moocs could be a “great marketing ploy” for the programmes, as a small number of London courses put on the Mooc platform Coursera have garnered a huge number of hits, he points out. “If 5 or 10 per cent of those converted into [London] degree programmes, that’s serious numbers,” he says.

david.matthews@tsleducation.com