Institutions will finally enjoy era of autonomy

Kicking off a series of articles from Britain's think-tanks about universities in the 21st century, Madsen Pirie of the Adam Smith Institute predicts a diminishing role for government.

It is unwise to allow words such as "consensus" on the battleground of higher education. It seems inappropriate to talk of a cessation of hostilities. Instead, there seems to be a sullen truce, more of an armistice than a peace treaty, as participants recognise the realities of the terrain.

It seems very unlikely that higher education will ever revert to being the prerogative of a small elite. Just over a generation ago, some 5 per cent of the age group, one person in 20, went to university. When Margaret Thatcher first took office, it was one in nine; now it is one in three. The proportion seems more likely to increase than to decrease. People look at the United States, where about 45 per cent go through university or college, and speculate that the experience could quite easily become the norm here for half or more of the population.

The second reality is that it is difficult to pretend that the quality is uniform. The official line used to be that a degree from any university was roughly equal, given some variation for good quality departments and teachers here and there. It was always untrue. Oxford and Cambridge were streets ahead of anyone else, with Scottish universities in a separate class and the English ones divided between campus-style universities, such as Durham or York, and big-city universities, such as Birmingham or Sheffield. Neither the experience, with its effect on character and confidence, nor the quality of work was ever the same.

The admission of the polytechnics to university status, begun under Thatcher, has changed that. Students who had previously "failed" to gain admission to universities, are no longer given second-class certificates and diplomas. They are awarded degrees. It is very difficult to pretend now that university education is consistent throughout the institutions that offer it. There is an unofficial league table, widely known, by which people rank the quality of the place, the teachers and the experience. No one supposes that universities offer equal value.

The third totem took longer to topple. It was that higher education was a gift of society to be awarded free to its recipients. The idea was that those sufficiently lucky or diligent to qualify for admission would receive their education in return for the benefits they brought to society. Society does undoubtedly gain from the presence of educated people. The presence of an educated workforce helps to bring wealth and employment to the country, and there is a general civilising effect that education imparts.

That said, the educated individual always received a more immediate and direct benefit than that which society enjoyed. They gained the enrichment of life that education can bring, and the more literal enrichment that a higher salary brings in its wake. Not surprisingly, when students were questioned in a Mori poll conducted for the Adam Smith Institute ("The Next Leaders", 1999), 83 per cent described a university education as "one of the best investments a person could make".

In retrospect, it seems extraordinary that the state not only provided this gift free of charge, but even paid the living expenses of those who undertook it. It is perhaps a testament to the rent-seeking ability of our elite that it contrived a situation in which those who left school at 16 paid higher taxes to support those who stayed on in education to earn a higher salary for life.

Some argue that inadequate facilities feature among the new realities. The same system that educated 5 per cent of the population now takes 35 per cent without having undergone any major reform. The result in some cases is that facilities are overloaded. This can mean larger numbers at lectures, with less staff time available for any individual student. It can mean excessive demand on limited library stocks or library space. It can mean overcrowding of student facilities such as union buildings or sports centres. It can mean inadequate provision of suitable student accommodation. All of these can contribute to a general decline in the quality of the experience for any individual student.

A further reality is that external funding, other than taxation, is required to keep the universities functioning. The free-ride principle was breached by the requirement of a parental contribution towards maintenance by affluent parents. Next came the imposition of full fees for overseas students, which fortunately did not stem the take-up of places by foreign students. Finally came the imposition of a Pounds 1,000 contribution towards fees and the replacement of student maintenance grants by loans.

Given these new realities, it seems evident that universities need more money and that very little of this is likely to come from the taxpayer. Some of it can be obtained from gifts and endowments, especially if UK tax allowances for charities follow those of the US. Most of it, however, will probably have to come from those who gain most from a university education: the students themselves. In practice, this will mean top-up fees, at the very least, and perhaps the eventual requirement for full fees from those who can afford it. Just as loans replaced maintenance grants, so could they replace subsidised fees. The key will be to ensure that students from poor backgrounds are not deterred from a university education by the cost of it. In many ways the ideal is the Harvard system. Harvard selects its intake entirely on the basis of ability: wealth cannot buy a place. When it comes to awarding scholarships and bursaries, however, the priority is reversed, and the awards are made entirely based on needs. One cannot win a scholarship at Harvard, only qualify for it on the basis of need. Thus Harvard chooses the best and supports those who need it. Unfortunately, only a very rich university can afford such a system.

The future of the universities is likely to be one of increasing independence from government. As they derive more and more of their funding from non-government sources, their readiness to accept the state's controls, directives and priorities will diminish. The right to levy top-up fees that could vary from institution to institution, and even from course to course, has been suggested. The reasoning is that successful courses will attract students and bring in much-needed funds. Naturally there is concern that mechanisms be put in place to ensure that poor students are not squeezed out.

This has two advantages: it goes with the grain of what has already been developing, and it does not make unacceptable or unrealistic demands on government. At the end of this road lies full independence for universities. They will cease to be instruments of state policy and become private institutions providing a service for those who wish to avail themselves of it. They will set their own standards and determine their own priorities. They will succeed or fail on merit and reputation, and on their ability to provide something of sufficient value to justify the investment.

The government, meanwhile, will for a long time have a role to play in ensuring that talented students are not deterred from a university education by its cost. But private institutions, including the universities themselves, might take on an increasing proportion of that burden, leaving the government even further out of the picture.

Universities were once run by the church, and they established an enviable position of scholarship under its relatively benign rule. Recently they have been in effect run by the state, bowing their policies to its priorities. The time seems to be approaching when the universities will be run by themselves. Many people will think this an improvement.

Madsen Pirie is president of the Adam Smith Institute.