University funding: the great debate

Faced with top-up fees and the prospect of universities going bust, higher education chiefs are suggesting radical solutions like telling universities exactly what they can (and can't) do.

In his landmark Greenwich speech in February, the Education Secretary, David Blunkett, lit a fuse which is now beginning to fizz. The headline-grabbing bits - e-universities and foundation degrees - were part of a grand vision for higher education. Colleges and universities in the United Kingdom face intense global competition from other countries and corporations, he said. High quality is essential, but institutions should not be trying to be all things to all men, as at present. That is inefficient and wasteful, he implied. Why should all institutions be engaged in research and aping the old élite university? Instead, they should play to their strengths.

The University of Poppleton should concentrate on what it's good at, teaching media studies, reaching out to the community and recruiting ethnic minorities, while Ivy Clad University should carry on being excellent in research and turning out some of the best graduates in science and technology. Moreover, he added, universities needed to forge alliances and to collaborate with one another and with the private sector. They should share expertise and resources rather than compete, thereby becoming more innovative and responding better to students and employers.

It so happens many of these views are shared by higher education experts, notably Professor Howard Newby, Vice-chancellor of Southampton University and president of the Committee of Vice Chancellors and Principals, who believes the university system needs restructuring. Their thoughts were given added impetus by some unscripted remarks Mr Blunkett made after his speech about the need for a debate on top-up fees - higher fees for students at élite universities.

Within days the Russell Group of top universities let slip they were studying top-up fees. (Their report on how such fees can be introduced without disadvantaging poor applicants will be published towards the end of May). The buzz was that Downing Street was encouraging them. Meanwhile, the rest of higher education sat around wondering what had hit it.

Now an ad hoc grouping of experts has begun to talk about a new idea for funding universities which would avoid the marketplace model implied by top-up fees and escape the current formulae, which promote homogeneity and give high value to research. This idea goes by the ugly title of "funding by mission". It means funding universities according to their own strategic plan - to what extent they meet the targets they set themselves rather than the rules laid down by others.

"I think funding by mission is probably the only solution," says Dr Roger Brown, principal of Southampton Institute. "Universities would agree to deliver students across a range of subjects and would set out their priorities. Some might choose to emphasise the recruitment of students from poor backgrounds or how entrepreneurial they were; others might choose research excellence. They would then be measured by performance indicator and receive funds accordingly. That would create much more diversity."

Another supporter is Richard Brown (no relation) who runs the Council for Industry and Higher Education. He argues that the structure of UK higher education means it's not equipped to seize global opportunities or give students "the quality experience they deserve". That's because it's so fragmented and so hard-up. There are 111 universities and 60 colleges of higher education, some small, others big, many offering degrees across a similar subject range and pretending that a degree at one institution, for example, Derby, is worth the same from another, for example, Edinburgh.

Universities should hive off or close down the weaker parts of their business just as companies do, he thinks. And they should form partnerships with the private sector, particularly with companies with special expertise in, say, communications. That way higher education could benefit from their superior know-how and technology; at the same time it could help the private sector to upgrade its skills.

The Council has been putting its money where its mouth is. In particular, it funded two projects involving Derby and Middlesex universities and a clutch of local/further education colleges. A number of functions - staff development, purchasing and marketing - were pooled, thereby saving the institutions money.

It is possible the Council will be helping the Committee of Vice-Chancellors and Principals make a case to the Treasury for extra funding to restructure the university system to enable more partnerships to be created and mergers to take place. That fund - a collaboration fund - would be administered by the Higher Education Funding Council (Hefce), according to Mr Brown.

Dovetailing with that would be funding by mission. "Higher education institutions need to develop more seriously their strategic planning processes," explains Mr Brown. "As part of that strategic planning they need to enter into a contract with Hefce, which says this is our mission, these are our objectives, these are the measures by which you can judge whether we're performing and achieving what we said we would achieve.

"Give us the money on a five-year rolling basis rather than the current one-year funding cycle. We will move and change in that process. You can encourage us to develop our excellence, our world-class quality, to achieve the objectives we agree on through the collaboration fund."

The Council is commissioning Professor Gareth Williams at London's Institute of Education to develop a model of funding by mission. It is also carrying out three pilot schemes, bringing higher education and business together to develop new courses or "learning nuggets", as Mr Brown calls them. One pilot involves the communications giant Granada developing modules in presentation and communication skills (the Open University, the University for Industry and the British Council are involved too); the second entails BAe Systems redesigning engineering degrees so they can be delivered worldwide; the third involves PricewaterhouseCoopers finding gaps in the market for continuing professional development courses.

All this activity shows how much has happened in the two months since Mr Blunkett's speech. The signs are that the funding by mission idea is being well received in government circles - particularly in the Department of Trade and Industry. In fact, it is expected to feature in a White Paper to be published later this year by the Office of Science and Technology.

Another idea being mooted is the Wisconsin model (see box above) which involves gathering institutions in a region into a federal organisation and giving them differing functions. Professor Newby and Dr Brown visited Wisconsin in November 1999 to see this for themselves, and Professor Newby, who once worked at Wisconsin, is keen on it. "I am in favour of loosening up funding," he says. "Universities should be funded for what they are good at. If you leave it to the marketplace, universities will go to the wall.

"It's not in the national interest to have a university sector in which the main, if not the only, criterion of excellence is excellence in research. Institutions without a history of research should be given incentives to do well at what they're good at. You can't label two-thirds or three-quarters of the sector as failures." The objection to the funding by mission idea is that it's central planning under another guise. In fact, it could well lead to more bureaucracy. Critics point out that the world has been moving away from big government and central planning towards the marketplace and letting the customer decide.

Moreover, the new idea would not do away with financial misery. As Sir David Watson, the Vice-chancellor of Brighton University, says: "If it gives the impression that everyone will be a winner that could be a cruel deception because everybody can't win."

Some experts believe the marketplace would be beneficial for universities. Professor David Robertson, of Liverpool John Moores University, says the marketplace is beneficial when customers want different things from it, as is the case with higher education. Universities have nothing to fear from the market, he argues. "There's no reason any university would go to the wall with top-up fees."

27 April 2000

l.hodges@independent.co.uk