Leader: A gamble on the market

It was a single clause in one sentence that sent a shiver down the spine. Tucked away on page 31 of the final report of Lord Browne of Madingley's review of higher education funding and student finance, there it was. A tuition fee of £7,000 a year, it says, "is roughly equivalent to what institutions will have to charge to maintain investment at current levels based on our assumptions".

Given that his job was to provide ministers with a plan for, as the title of his report says, Securing a Sustainable Future for Higher Education, we can assume that Lord Browne's assumptions about future public-funding levels for the sector are well informed.

His revelation that annual fees of £7,000 are necessary just for universities to stand still suggests that next week's Comprehensive Spending Review will be the nightmare that vice-chancellors have feared. It hints that cuts to teaching funding of about £3 billion - or 70 per cent - lie ahead. Compounding this misery is the jaw-dropping prospect of the withdrawal of all public funding from arts, humanities and social science courses.

So one of the first questions vice-chancellors will be asking is this: can the Browne review fill this public funding black hole?

The short answer seems to be "not quite" and - more alarming for the sector as a whole - "not at all" for some institutions.

Lord Browne has recommended that if they want to keep all the fee income, universities can charge no more than £6,000. He has set this below the £7,000 needed to "instil a focus on efficiency throughout the system".

Under his recommendations, institutions could, of course, charge anything they like: the sky (or the size of students' and their parents' wallets) is the limit. If, however, an institution charges more than £6,000, it will pay an increasing share of the additional income to the government.

But the fact is that while a handful of elite universities, and perhaps a few specialist institutions, could comfortably command fees well in excess of £6,000 across the board, many others could not.

And Lord Browne's proposed freeing of fees combined with his suggestion that universities "face no restrictions from the government on how many students they can admit" sets the stage for a market in student places that could become a Darwinian bloodbath.

UK higher education is in for a tumultuous and brutal time that could include mergers, aggressive takeovers, private-sector competition, university break-ups and failing institutions. And with sweeping cuts ahead, the sector may find it has no alternative but to accept these huge structural - and philosophical - changes.

Such a shake-up represents a major gamble with a sector that Lord Browne himself notes has "a disproportionate number" of the best-performing universities in the world, including three of the top 10, according to the Times Higher Education World University Rankings. As he says, the sector "matters" - to the UK's economy, cultural fabric and civil society.

The unquestionably profound value of higher education not just to individuals but to society as a whole is the overriding message that people of all political persuasions must keep in mind as the government finalises the CSR and Browne's plan - in whatever form - makes its messy way through Parliament.

phil.baty@tsleducation.com.