The Lib-Dems, who were in denial about higher education's financial problems at the election, have been forced to make a rapid U-turn to an uncomfortable reality

This is not a perfect world, Vince Cable lamented during his uncomfortable hour defending the Browne report on higher education funding in the House of Commons yesterday. Indeed it is not. That is why Labour set up the Browne review in the first place. Universities were running out of money, students were facing financial hardship and the whole public sector, higher education included, was staring at early serious cuts in the budget, whatever the general election result. Every aspect of the problem had its unpalatable side. All those things are still true today, and are likely to get tougher. That is why the Liberal Democrats, who were in denial about higher education's financial problems at the election, have been forced to make a rapid U-turn to an uncomfortable reality.

The great virtue of Lord Browne's report is that it recognises the realities while attempting to uphold a core set of policy principles that should be broadly supported. These principles are that higher education should get more money than at present, that everyone with the potential to do so should have access to higher education, that part-time students should be treated on a par with full-time students, that students should pay back part of the cost of their education over the course of their working lives, depending on their earnings – and that the least well-off should be protected from costs that might otherwise deter them.

Looked at as a whole, the Browne report has come up with a well-judged but less-than-ideal solution to the real-world higher education funding problems facing this country. There is no point pretending that it augurs an easy future for England's colleges. It does not. But nor, absolutely crucially, do any of the alternatives. (Browne does not apply to Scotland, Wales or Northern Ireland, though its boost for English university funding has huge and challenging implications for them.) Not everything about the report is right, and significant parts of it should not be accepted – the case for a more realistic but still effective cap on fees remains a strong one, for example, and the student loan repayment terms of the proposed system still have dangerously regressive aspects which Mr Cable seems to accept must be sorted.

The scheme devised by Lord Browne is in many ways a development of (and a vindications of) Labour's existing tuition fee system, though the average student would be better off in cash terms while at college than at present, the IFS calculated yesterday. Much of the complexity of the present system of student support would also be reduced by the universality of the proposed loan system. Browne's plan, with its strong support for the less well-off, is also better than a full-on graduate tax. This is partly because fee-based co-payment schemes ensure that the bulk of the money goes straight to the universities and colleges, thus enabling them to set their own budgets (though this will be daunting when the spending review bites), rather than to the Treasury, as a graduate tax would do. In this specific sense, the Browne proposals are good for academic freedom.

Politically, yesterday was a difficult day for the coalition – a sign of things to come. But Mr Cable was frank about the options and right to promise progressive amendment. He was helped, too, by the lack of clarity in Labour's position. But he needs to stop the trend towards a private-public divide in higher education similar to the one in secondary schooling, which Browne does little to deter and perhaps something to encourage. Action will be needed, too, to mitigate the scale of loan repayment. Headlines about £90,000 bills for a degree are unrepresentative – the typical graduate will face around £20,000 of repayments – but, even so, the Browne scheme will undoubtedly frighten families unprotected by the support system for the poor and not rich enough to be indifferent, and for whom £20,000, especially in straitened times like these, is a truly daunting sum.

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