Does the British higher education system have too many students?

Immediately after the war, Britain spent an unusually high amount per university student by European standards: in recent years it has cut back rapidly, while most other EU countries have maintained or increased spending per student. So Britain is now closer to the European norm: even so, only a very few of our EU partners spend a higher proportion of GDP per capita on a student's education than we do. Compare British spending with the US or Australia, however, and spending looks far less generous.

Less money per student means less time per student-and this is a problem because what really promotes learning is individual feedback on students' work. Worse, in a growing economy, people, unlike machines, get more expensive. If you raise academics' salaries in line with those in the economy the cost of expanding higher education rises dramatically. If you squeeze academic pay then you buy time - but when they retire (as at least one in five will in the next decade), it will be hard to replace them with people of equal ability when a new lecturer at an old university earns about the same as a new policeman. Some politicians believe that cheap computers will shortly replace expensive people, but this is an act of faith.

So within universities an atmosphere of financial "crisis" is endemic. In England alone, at least 50 institutions of higher education are now running at a loss. Yet the total cost of higher education goes on rising simply because of its expansion, creating endless spending battles within government.

So why doesn't government call a halt? Partly because expanding the universities turned out to be popular with lots of voters, especially the middle-classes for whose support there is such competition. Partly, they were taken by surprise, The first large university expansion in the 1960s was the subject of a government report (the Robbins report) which was widely debated, carefully implemented, and followed by a period of stability. The growth of the late 1980s and 1990s was far less carefully conceived. For example, one key change in the Treasury funding mechanism, which allowed universities to expand in response to demand, produced growth in student numbers which took government by surprise. Other countries have had similar experiences. Increased numbers are only partly anticipated; expansion constantly runs ahead of plan.

However, policies have also been the result of two beliefs which are deeply implanted in the modern state and which act as obstacles to clear thinking about what 21st century universities should be. The first is the belief that educating more people will somehow in itself raise economic growth rates. The second is the belief in "free education." As a rallying cry this carries powerful resonances in democratic societies. It is easy to whip up indignation at the idea that young people might be excluded from university by the barrier of fees and debt, with the subtext that this marks a return to the class-ridden past when money, not merit, opened the gates. Labour's somewhat egalitarian attempts to chip away at the middle-class welfare state in higher education is all too easily caricatured as its opposite.

By 1997, when Lord Dearing was completing the report of his National Committee of Inquiry into Higher Education, a consensus view had developed on the Labour and Tory front benches. Higher education had to have more money, and it was reasonable for those who benefited to share the costs. Dearing's committee was established by the Tories, but it was Labour who received its (expected) recommendations and duly introduced fees in 1998, to the predictable outcry. Student associations have been especially vocal, tapping easily into the feeling that education is a "democratic right". But there is no reason why student leaders should be any less self-interested than airline operators, transport unions or farmers. Politicians, too, have the interests of core supporters to accommodate. The Liberal Democrats have campaigned consistently against university fees: their website trumpets that "Liberal Democrats in Scotland abolished tuition fees completely", and urges people to vote Lib Dem as a "vote for scrapping fees". Bear in mind, though, where the greatest beneficiaries of that policy are to be found. It is in the Liberal Democrat heartlands-the Guildfords and Newburys, the Kingstons and Cheltenhams, not in Peckham, Govan, Gateshead or Merseyside.

The argument that education is a universal entitlement, and should be free at all levels to anyone, has had an enormous impact on higher education's development, not least because, when joined to a mass system, it guarantees low funding per student. This impact has been particularly evident in the countries of continental Europe; and, as Britain has acquired a mass system, it is noticeable how our universities have moved much closer to the European model.

European universities are, almost without exception, large, state-run and funded at a uniform level, with a commitment to egalitarian provision. In the Netherlands or Italy, for example, the state commits itself on principle to the idea that universities should be equivalent, so that students - mostly living at home - are not disadvantaged by where they live. Entry to higher education is also very commonly an entitlement, available by right to anyone who obtains the threshold entry certificate. Germany is an example: a few courses (notably medicine) have competitive entry but beyond that students have the right to enrol anywhere simply by obtaining their Abitur. France follows the same principle with its universities, though the elite is educated largely in the competitive Grandes Ecoles; so does Belgium.

Uniformity has political advantages - there are no Oxbridge-style rows about access - but obvious disadvantages too. Large public systems demand standardised recruitment and salary conditions - and their size means those salaries will be low. With uniform pay and conditions across the sector, you get an excellent scholar here, a dedicated teacher there, but no possibility for institutions to build up a critical mass of excellent staff, top-class research facilities, and a global reputation. And European university systems are nationalised industries. Consequently they devote large portions of their time and energy to relations with the public agencies and politicians.

As British higher education has ballooned, higher costs and greater public visibility have brought more detailed political control here too. British universities are, legally, private corporations: in theory, each could institute its own policies, including setting its own fees. But in practice they do no such thing and behave, instead, like the semi-nationalised industry they are. Centrally-established bodies (notably the Quality Assurance Agency and the Higher Education Funding Councils) now inspect internal procedures, lay down supposed "benchmark standards" for degrees, provide ring-fenced grants for government initiatives, and monitor the composition of student bodies. The cost is inevitably enormous, in academics' time, energy and motivation.

No government is going to hand over billions of pounds a year without accountability or control. If our mass university system were doing an effective job of enriching us, or promoting social justice, then one might argue for accepting the burden of centralised uniformity, and the loss of excellence, as acceptable costs. But one can make no such argument, as we have seen. Should we, in that case, continue towards increasingly centralised, highly subsidised and largely uniform mass provision provided by a low-paid workforce? Do we have an alternative?

In theory, we might simply reverse university expansion, and with it the pressure on costs. In practice, this isn't possible. The political fallout would be too great. The main alternative is to opt for a model based on competition, private funding and inequality - but also of innovation, scholarship and world-class research in the best institutions. Such a system can certainly be combined with a level of teaching quality in all institutions which is no worse than students receive under the uniform model. But this is a difficult approach for democratic politicians to select. It is one thing to inherit a highly diverse system of public and private universities, as the Americans have, and quite another to encourage divergent funding in a de facto nationalised one, against a backdrop of political opportunism and voter anger.