'The university sector has become a main charge on the state, where its dependency has made it a lax and wasteful arm of government. As a result it offers less a launch pad to adulthood and more a tail end of childhood. The best universities are American. They show an awareness of their market by persuading those who use them of the value of their service. That means money. That means charging full-cost fees.'

Two groups of Britons are definitely not on holiday this weekend. One is the nation’s cohort of bright 18-year-olds, peering expectant from every newspaper front page. The other is the nation’s education politicians. The first “jumps for joy” at their exam results, the second jumps at the opportunity for an annual soundbite, demanding money with menaces from government.

This year the tables are turned. The number of students is fewer than the number of places and universities are chasing students. This is despite the fact that the 300,000 confirmed in their initial choice of courses is one of the highest on record. A further 90,000, mostly with below the requisite qualifications, will be allocated places through the clearing house system, education’s answer to eBay. A decrease in the latter group is partly the result of a 17,000 drop in overall applications with the start of the £3,000 top-up fee this year (balancing the surge last year).

This suggests that a market economy is lurking deep within British higher education. Worthy students are qualifying for places in unprecedented numbers. Less worthy ones are being mildly deterred from wasting time and money on a possibly lesser degree.

When the means-tested £1,000 fee was introduced by Labour in 1998 a socioeconomic catastrophe of declining working-class studentship was predicted by the left. There was no catastrophe. The same was predicted for this year’s £3,000 top-up fee. Yet there is no evidence that students from poorer backgrounds regard higher education as any less worthwhile than they did a generation ago. Student numbers are continuing to rise.

The government naively hoped that universities would vary top-up fees to offer students a choice. In fact only three of Britain’s 96 universities have not imposed the full amount, which suggests that the fee was far too low. A few universities desperate for applicants are being tempted to reduce their fees at the last minute, because for every £1 they get from an extra student they get £2 from the government, a state subsidy to mediocrity.

Last week a university regulator, Sir Martin Harris of the Office for Fair Access, warned universities not to introduce discounts during clearing. His concern was not for the fee income lost, however, but because discounting would undermine principles of fairness and equity. Harris is a devotee of the Alexander Pope school of higher education that wants to “bring to one dead level every mind”, with every student place as of equal value.

Given the soaring cost of universities to the taxpayer, now about £8 billion, so-called fair access has become a ruling political obsession. Ministers cannot bring themselves to achieve it through the most obvious and economical means, a proper fee-and-scholarship system as in America. Yet since the result has produced the biggest of all middle-class subsidies the government struggles to enmesh it in reverse discrimination. Gordon Brown tried to code A-level results so as to bias entry against middle-class students. His then higher education minister, Margaret Hodge, tried to spot wealthy parents “cheating” any admissions bias by switching from private schools to comprehensive school sixth forms.

This centralisation of higher education began under Margaret Thatcher with Kenneth Baker’s 1988 act followed by Ken Clarke and then Brown at the Treasury.


It sought to turn universities into an educational National Health Service. Government would measure everything and pay for everything, professorial teaching quality, scholarly output and the right socioeconomic balance in each institution.

This Leninist ideal was undermined by the survival of the “voucher” principle that had long applied to British universities. Since the Robbins expansion of the 1960s, money followed the student. Universities were left free to offer courses at will with their total fees picked up by central government. A further expansion to 30% of the age group under the Tories in the 1980s and towards 50% under Labour meant throwing money at any university that could attract more students.

The Treasury’s response, until it won top-up fees, was to reduce subsidy per student by almost two-thirds since 1980. This boosted the average staff/student ratio from 1:8 in 1980 to 1:18 today. Universities, the most ineffective professional lobby in Britain, simply took this on the chin. They did not protest that less money per student would mean lower standards and worse degrees, but the opposite. The less the teaching the more they inflated degree grades. More meant cheaper meant better.

The truth is that nobody can value a university education except its customers and they are not charged its cost. As a result universities remain among the last unreformed corners of the public sector, still working to the medieval calendar. Students are left untaught for half the year so they can attend harvests, pilgrimages and religious festivals (refashioned as pubs, fly-drives and raves).

Expensive campuses, laboratories and libraries are left idle for most of this time. Courses that could be completed in one or two years are stretched to three or even four. Meanwhile, centralised research assessment has become fantastical. About 150,000 academics must overproduce work of doubtful benefit to be measured by peer review, metrics and citation indices.

There is no good reason for not charging students the full cost of their higher education, subject to a test of means. That cost is now between £9,000 and £15,000 a year. I know of no serious economist who can show that this is really a national investment, only that most graduates are richer than most non-graduates.

As Alison Wolf of the Institute of Education, and others, have pointed out, international comparison suggests that a high graduate population tends to be a resulting consumption of economic growth, not its cause. As for qualified scientists, the Soviet Union used to produce half Europe’s entire total, and much good it did that economy.

University education is a benefit that accrues peculiarly to the individual. Whether paying for it should be regarded as surtax on middle-class families or a future tax on graduate incomes is immaterial. There is no justification for forcing the mass of taxpayers, who are nowadays as much poor as rich, to pay for it. Government support should be limited to scholarships and research endowment, not for basic costs. Such subsidy can be targeted at poor students, engineers, doctors or teachers, according to taste. Blanket subsidy prevents such targeting and encourages indolence and indulgence.

The socialist tradition that all public services in Britain should be free at the point of delivery is breaking down everywhere, in health, education, road use, even law and order. Demand for free goods will always be infinite. With no control by price, the public sector can only respond with rationing by congestion, delay, poor quality and red tape.

British universities have been moving away from the autonomy they once shared with America and towards the European tradition of state degree factories. Young people are held out of the workforce for years on end, leaving the economy to suck in migrants from the developing world, denuding the latter of talent. Meanwhile, the latest Times Higher Education Supplement league table suggests that of the top 20 world universities 12 are American, four British and nowhere else had more than one.

Universities must adapt to serve the changing needs of their users, as defined in some version of a market. They are still independent institutions and should discard the subservience to government that has them all dancing to the same financial tune. Left to charge fees at will, they can become good, bad, indifferent or just local.

Those that want to teach should not be penalised for it. Those that want to do research should go in search of the relevant support. If brighter, poorer students go to cheaper universities, so much the better for those universities. That is how the great municipal institutions faced down snobbish Oxbridge in the first half of the last century.