Victors and spoils

In November 2010, Vince Cable, the business secretary, told the Girls' Schools Association that one of the reasons for raising the cap on tuition fees was to prevent "Oxford, Cambridge, the London School of Economics, University College London and a few others" from going private. "If we had not opened up the system, they would have a very strong incentive to do so," Times Higher Education quoted him as saying.

The raising of the cap, together with the abolition of number controls on the admission of students with AAB grades or better at A level and the introduction of a "core and margin" system of funding, on top of renewed concentration of research funding, shows how the aspirations of a handful of "world-class" institutions are seriously distorting our higher education policies. Due to their market power, elite institutions usually receive high levels of public funding, so it is appropriate to consider whether the benefits of having such institutions outweigh the costs.

Barring local costs, the only justification for high levels of funding is higher levels of quality. There is certainly some evidence that selectivity in research funding leads to higher quality, although this is clearer at departmental than at institutional level, where diseconomies of scale can arise. But there is no evidence at all that more selective institutions necessarily provide a better student education. To quote Ernest Pascarella and Patrick Terenzini, the authors of a mammoth US survey of teaching practices that examined the relationship between selectivity and student learning: "attending a selective institution in no way guarantees that one will encounter educationally purposeful academic and out-of-class experiences that are linked to a developmentally influential undergraduate experience."

But if the educational benefits of highly selective institutions are unproven, the costs and detriments are very clear. First, because of the pricing behaviour of elite institutions, US higher education costs far more than it should. This would have happened here if ministers had acceded to the Russell Group's demands to abolish the cap. Second, if the quantity of resources for higher education is constrained, it is almost certain that leading institutions are receiving income that could and should have gone to institutions playing a more socially useful role. The AAB+ rule effectively transfers resources away from less prestigious institutions to more prestigious ones, exacerbating the already substantial resourcing gaps between them. Third, there are the costs of the emulatory behaviour of institutions that hope to become "world-class", under which spending escalates as each institution tries to outdo its competitors. This wastage is likely to be seen on a global scale as more and more institutions aspire to elite status with the support of their governments. Fourth, there is the damage that singling out certain institutions does to the notion of a higher education "system" as such, when one of the UK's great strengths is what Sir David Watson once memorably called "a controlled reputational range". Finally, there are social implications. It is not only in the UK that there is an unhealthy nexus between the leading private schools and the elite universities, with highly damaging effects on social mobility.

The coalition government has followed New Labour in privileging institutions that are already privileged. Higher education policy should reflect the needs of all the institutions, and the groups and interests they serve. We need to adopt measures to enable us to get the best value for money from the considerable public and private resources invested across the whole of higher education. These should include reinstating block grants to institutions alongside the tuition fee, controlling research selectivity for most subjects, and redoubling our efforts to open these institutions to students from a wider range of social groups. Do we want a fair and cost-effective university system or don't we?