This is Part 2 of Professor Eastwood's paper given as the AUA Annual Guest Lecture on 24 October 2007. In Part 1 he summarised the historical development of British higher education and reflected on five topics which appear to be settled in the HE debate: desirability of mass HE; desirability of sector diversity; a mixed economy for funding; appropriateness of research concentration; and the importance of widening participation. Here he describes those aspects which are still contested, and those which are new and novel in the debate. (Contains 6 figures.) [For Part 1, see EJ799152.]