Universities should be funded according to the number of courses taken by students instead of the number of students, the report suggests.
This would give undergraduates more flexibility in pursuing their studies.
Institutions would be given extra money for each student admitted under the proposed credit accumulation and transfer system (Cats).
The scheme also would allow the University Grants Committee (UGC) more flexibility in funding universities accepting mature students and associate degree graduates looking for senior-year places, Lord Sutherland said.
'Cats will affect the way students build up degree programmes, moving between universities and coming in with associate degrees in the second or third years,' he said.
Under the proposal, institutions would be allowed to set 'home rules', for example on how many years a student can spend at an institution, the number of credits earned at a home institution to qualify for a degree, or how long credit units would remain valid.
UGC secretary-general Peter Cheung Po-tak dismissed worries that universities would relax standards in vying for students. 'We monitor the provision of courses,' he said.
