Fear and loathing among the vice-chancellors

Universities were told last week that they would have to change and accept a marketplace in higher education. Lucy Hodges heard Margaret Hodge, a Government minister, deliver the unpalatable message and witnessed the seething reactions of vice-chancellors afterwards...

"Well, we're skewered," muttered one vice-chancellor after listening to the speech by Margaret Hodge, the higher-education minister, in Aberystwyth on 11 September. Other grey-suited university bosses at the Universities UK conference were not so polite, preferring to criticise the minister for not understanding them, not knowing what she was talking about, and lacking all vision.

"It was absolutely scandalous," said one, sipping champagne. "I think we were all disappointed or angry. We presented a clear case and didn't get a response to a single thing. We would not have tolerated that speech from a Tory minister. We would have booed and heckled her."

Malcolm McVicar, vice-chancellor of the University of Central Lancashire, made a special plea to the minister. "I wish they would talk to those of us who are involved in the business of higher education," he said. "I wish they would talk to the people who are delivering widening participation, talk to us before they are embarrassed and have to retreat from their plans."

Vice-chancellors are reeling from the wake-up call Mrs Hodge gave at their annual meeting and repeated this week at the conference of new universities in Leeds. They have never been treated like this before. Coming as it did on the anniversary of September 11, it intensified their gloom about the changing world in which we are living – and their unfair treatment at the hands of New Labour radicals.

Mrs Hodge suggested that the state should cease to prop up institutions and departments that were not up to snuff. To the vice-chancellors that means one thing – closures among the 106 universities and 56 colleges of higher education.

Universities should play to their strengths, she said. Those that are good at teaching should concentrate on teaching; those that are good at research should concentrate on research. "We do need to work with the grain of acknowledging and celebrating difference – otherwise I'm afraid I believe that we will end up supporting mediocrity in the name of uniformity and equality," she said.

Such criticism was not what the universities had come to hear. And the minister irritated them further when she said that she wanted "the market to play a much stronger role" in student choice and research investment. Last week could well mark a watershed in British higher education. The market is still a relatively alien concept in the university world. Many people in higher education reject it. The sector has, after all, been state funded for more than half a century. "It's a public service like the fire service," said one vice-chancellor. Others wondered how the minister could advocate more of a market when fees were set by the Government.

Things, however, began to change in the direction of the marketplace in April 2002. At that time the Government took the first step towards freeing up the market by lifting the rigid cap on student numbers and removing the generous safety net for universities in difficulties. "I accept allowing a freer market may create more turmoil in the sector," said the minister. "But if students and research funders do not want what is on offer, why should the state, the taxpayer, you, carry on funding it?"

By the time she sat down the vice-chancellors were furious. They were angered by the content, and by the fact that she had failed to reply to the points made by Professor Roderick Floud, president of UUK, who had pleaded impressively for more money in a speech that preceded hers.

They were also angry at her swipe at universities that jealously proclaim their autonomy and then expect "a guaranteed and permanent underwriting of their activity and funding by the state". And there was resentment at the suggestion that universities had become "ossified".

The vice-chancellors became angrier by the minute when Mrs Hodge refused to answer their questions. Her reason for staying mum was fair enough. At the end of next month the Government is publishing its strategic review of higher education, containing plans for the funding of universities and students over the next decade. She could not give any details in advance of that.

In reply to questions from the press, Mrs Hodge said a little, though not much, more. "I do see the pattern of universities changing," she explained. "If you are allowing a freer market I think there will be more mergers. I think there will be a blurring of the divide between higher education and further education and we may see the development of new universities. There's an issue about whether some of our smaller institutions can survive in that context."

That kind of change can be extremely painful for institutions, and for staff and students caught in the fallout – hence the vice-chancellors' reaction. But, as Jane Davidson, the Welsh Education Secretary, reminded the university bosses, it has begun to happen in Wales, where a strategic review produced a plan for rationalising or reconfiguring the sector. The 13 higher-education institutions will be reduced and strategic alliances are already being formed between, for example, Lampeter and Trinity College Carmarthen, and Cardiff University and the University of Wales College of Medicine. And it should lead to a leaner, stronger system.

Outside the vice-chancellors' circle Mrs Hodge's views have been received with much more equanimity. Higher-education observers who believe that there are too many universities in the UK think the minister is right. "I think it's the future," says Professor Alan Smithers of Liverpool University. "I think she is absolutely right, though I'm surprised the Department for Education and Skills has come out so strongly with the market-driven approach."

The Council for Industry and Higher Education also supported the minister. "We have said that institutions, rather like businesses, do need to focus on their strengths," says Richard Brown, its director.

But all the pundits had qualifications. Employers are concerned about whether there will be enough courses under a market-driven philosophy to meet the needs of lifelong learners and those who want to combine work with updating their skills, according to Mr Brown.

Two things follow from that. Funding per student must be maintained and institutions that are engaged in widening participation should receive more of a premium. "It costs 30 per cent more to reach out and deliver quality learning to those from non-traditional backgrounds," he said. "The premium is 10 per cent now. It needs to be increased substantially." Second, employers need to become more aware of the relative strengths of institutions and courses.

Professor Smithers was sympathetic to the universities. They have been chronically underfunded for the past 12 years, he said, so they are not starting from a strong base now. Some will prosper under a market approach, but some will be very vulnerable. "They are so dependent on state funding that for them to adjust will mean the Government coming up with some sort of arrangement that gives the universities hope of survival while they adapt to the new harsher climate," he said. "Some will manage, but some of the former polys, like Thames Valley, and Luton, which was a college of higher education, will find life much harder."

What really matters is the detail: how the mechanisms operated by the Higher Education Funding Council will change to reward universities for what they are good at. "I think that the idea of institutions playing to their strengths is a very good one and it's long overdue," says Roger Brown, director of Southampton Institute. "But I don't see an obvious way that it can be done. The key thing is what to do about research."

Professor David Warner, director of Swansea Institute of Higher Education and an expert on mergers, accepts that there are too many institutions of higher education in the UK, but is not convinced that bigger institutions are always better ones, as Mrs Hodge seems to imply with her mergers comment.

"There is no question that the system has grown and nobody would start from where we find ourselves," he says. "However, life is not a greenfield site. One has to take into account what is already there. At the same time there is room for change, for improvement and for greater efficiency."

For all their annoyance at the minister, the vice-chancellors would be wise to reflect on who Mrs Hodge's speech was also directed at. Yes, it was aimed at them, for they were its hapless recipients, but it was also meant for the ears of the general public and for Chancellor Gordon Brown. It is understood that the Treasury has given guidance to the DfES on how it should spend the cash that is being doled out in the comprehensive spending review. Just as Estelle Morris made her gratuitous and unfortunate comment about not touching some comprehensive schools with a bargepole, so Mrs Hodge may feel she has to give the vice-chancellors a piece of the Government's mind to meet the bargain she has struck with the Chancellor. They may find that the rhetoric is a lot worse than the reality of change.

education@independent.co.uk