Academy unbound

The move to raise tuition fees to £9,000 a year was both correct and necessary. But the ultimate goal for the UK's universities ought to be even more radical: complete independence from the state.

The vast majority of research into this area indicates that Europe's overwhelming reliance on state support leads to inferior universities, while the English-speaking world's preference for fees, bursaries and private support leads to superior ones.

Before 1950, three-quarters of Nobel prizes went to Europe, whereas in the past decade the figure stood at below 20 per cent. Even more damning is the shaming statistic that all but one of the European universities in the top 30 of the Times Higher Education World University Rankings are British - all of which rely on at least some form of private funding.

From an economic perspective, it is clear that the old system of state monopoly has failed. Unless we decide to send fewer people to university, the idea of having every student subsidised by the state is no longer sustainable.

Quite understandably, politicians are not inclined to challenge the notion that more people ought to go to university. Consequently, our leading higher education institutions, if they wish to compete with their Ivy League counterparts in the US, have little choice but to rely on private funding in the long run.

Take the University of Oxford as an example. The institution has an operating deficit of £20 million, and an accumulated deficit on teaching and research of £95 million, due to the fact that it costs £18,600 a year to teach an Oxford undergraduate, for which the government allows it half. Oxford is losing £30 million a year on teaching alone. It is fanciful to expect any government to plug that gap.

It is also important to point out that higher education is primarily a private investment, rather than a public one. Given that it is also a privilege rather than a right, it follows that it should be incumbent on the individual and not the state to pay for it.

Opponents of higher fees argue that the net result will be a two-tier university system: leading institutions will be able to charge more and will become the sole preserve of the well-heeled classes, as pupils from poorer backgrounds are put off from applying. However, the evidence suggests otherwise.

When New Zealand adopted fees in 1992, it led to more students enrolling from a broader range of social backgrounds. The American experience confirms that high fees, if allied to generous loans and bursaries, do not necessarily have a negative impact on the social composition of universities.

Despite average fees of $25,000 (£15,370) a year for private institutions and $6,600 for state ones, more Americans than ever continue to apply to college, thanks to large scholarships and bursaries.

For example, California's Stanford University, an elite institution, no longer charges fees at all if a student's family earns less than £70,000 a year. There is no reason to believe that we could not establish a similar system in the UK.

Although it is undeniably true that some poorer students will be put off by the prospect of paying such high fees, the solution to this problem is straightforward: the state should withdraw completely from higher education and the budget earmarked for this area should be used exclusively for the provision and allocation of scholarships and bursaries to academically able students from poorer backgrounds. Under such a system, higher fees would not act as a barrier to greater social mobility.

The good news is that our universities are already, to all intents and purposes, independent institutions. They have autonomous charters and independent governors, and could declare themselves officially independent tomorrow.

Such a move would have a transformative impact on higher education. At a stroke, the UK's universities would be in a better position to compete on the international stage, underpinned by a more equitable and viable funding model. Moreover, a system based on generous scholarships and bursaries would lead to greater social mobility.