Why top dons are the business

As universities cast around for funding, Lesley Gerard looks at the impact of market forces on academia

Stress, sleaze and macho management were once buzzwords exclusive to business. Now they form part of the central debate in higher education.

Vice-chancellors drive Jaguars, academics are headhunted, and students are courted with increasingly elaborate and aggressive marketing - from television advertisements to CD-Rom campus guides.

British universities are embracing commercialism as American institutions have done for decades. Critics argue this is at the cost of traditional university life and accountability. As public funding is squeezed and demand for higher education continues to grow, many institutions counter that there are few alternatives.

Some universities are better at making up the deficit than others. A national audit office survey recently found that 106 institutions had a financial interest in 240 companies; 44 made a combined net profit of £6m, but 24 suffered combined losses of £5.5m, some of which may have been associated with setting up costs.

A review by the Higher Education Funding Council in September 1994 disclosed that six institutions faced "immediate financial difficulty''. The list has now dropped to four.

Neither the troubled institutions nor those with loss making companies were named publicly. Universities and higher education colleges may be public institutions, but they are afforded greater commercial confidentiality than health service trusts.

Since the early Eighties, when the Government announced the first wave of funding cuts, universities have been forced to turn to other sources of income. British industry has become a key player.

Some, such as the University of Warwick, receive more income from "other sources" (57 per cent) than from funding council grants and home fees. (43 per cent). Whereas in the Seventies most universities would have looked to the latter for between 90 to 95 per cent of their funding.

In 1992-93 the private sector invested well over £160m in the "old" universities alone. This figure does not include many thousands of pounds provided by business for scholarships and bursaries.

The University of Nottingham was the biggest beneficiary. It received from industry in 1992-93 £6.3m in income from research projects alone, according to the most recent data from the Universities' Statistical Records. A further £8.2m was earned for "other services rendered'' - including conferences, material testing, short courses and vocational training.

High stakes are involved. Recruiting the best dons has both academic and financial spin-offs. All the work academics have done during the previous four years counts towards the rating of the university to which they have moved. Top-rated institutions will get the lion's share of the funds. Academics are now transferred like football players. Senior dons are lured with offers of big salaries, state-of-the-art laboratories and research back-up.

Every institution is chasing private wealth. There is no shame in naming an Oxford college after Kellogg, the corn flakes manufacturer, or in some universities paying undergraduates to "cold call" former students and ask for cash.

"Most of us are beginners at tapping into the wealth outside,'' says Professor Frank Gould, Vice-Chancellor of the University of East London, one of the former polytechnics that was given university status in 1992.

"There is nothing wrong with it at all. If corporations sponsor a chair or expect you to put up a building in their names, there is no downside whatsoever.

"Strain would more likely come from trying to earn income, if it took staff away from academic teaching and research.''

But contract research is growing within the sector. The drive for efficiency and cost-cutting has led to an increase in academics on short-term contracts; for example, from 1983 to 1993 figures rose from 12,000 to more than 21,000. The cost is insecurity and lack of career development, leading ultimately to a shortage of skilled researchers.

Dr Douglas Roberston, director of the University of Nottingham's office of research and business services, says: "We do not want to become a contract research institution, an organisation that accepts any job for the right price.

"It is important to have a balanced portfolio. Many of the leading discoveries this century were not the result of commercial ventures but of pure, curiosity- led research and, sometimes, accident.''

The new competitive spirit within UK universities is not solely the product of a funding crisis. The changing ethos was also partly brought about by the granting of university status to the former polytechnics. Managerialism is said to thrive in new universities.

Two recent high-profile cases are cited by critics as evidence that the new ethos is unworkable and that disgruntled academics are ready to fight back.

The University of Huddersfield last year scaled down its golden handshake to the departing vice-chancellor professor, Kenneth Durrands, after staff took a vote of no confidence and the Higher Education Funding Council for England said the severance payment, worth £412,000 plus perks and pension, was excessive.

Last December the University of Portsmouth accepted the resignation of its vice-chancellor, Neil Merritt, after he had admitted to submitting inaccurate claims for expenses incurred on overseas business. Professor Merritt combined his academic post with the chairmanship of Hillingdon Hospital Trust, drove a Jaguar and earned £90,000 a year; he resigned following a campaign by unions and a poll in which almost 93 per cent of 1,380 staff balloted said they had no confidence in him.

The pay for a vice-chancellor ranges from about £70,000 to £120,000 for a select few. A survey by the Monks Partnership suggested that vice-chancellors were not overpaid in comparison with their counterparts in business. Those in old universities tend to earn less than those in the new ones; the vice-chancellor at Oxford, for example, received £73,000 last year. The average salary is £80,000 to £85,000.

Universities disagree about which tactics work best to attract students. The University of Glamorgan spent £400,000 on marketing last year, including producing its own CD-Rom guide. Its reward was a 51 per cent rise in applicant numbers. De Montfort University ran a highly controversial television and newspaper advertising campaign costing £500,000.

Shrugging off accusations that the money would have been better spent on resourcing student facilities, the former Leicester polytechnic insists this tactic put De Montfort on the map - raising its profile after its name change and during a period of rapid expansion.

British universities first came into existence as private institutions when Oxford and Cambridge were established under ecclesiastical patronage. As public funding dwindles and politicians prevaricate, the future of universities increasingly lies once again outside the state.