A sense of beleaguered doom hangs heavy on their teaching staff. Go to High Table dinner in Oxford or Cambridge and you sit over nursery food among Fellows who exude a sense of wounded pride and mounting self-pity. Here we are, they say, striving to maintain the excellence of elite institutions in a hostile climate. The newspapers give prominence to any old pile of data which claims to show that the latest redbrick or white-tile institution has overtaken them.
Behind the politics of envy, which drives much of the dislike of Oxbridge, lies an uncomfortable nub of truth: these universities are falling behind the American Ivy League in the standards of their teaching and research. This is not surprising given that the cream of British academic talent, if it hasn't been lured into the city, industry or the media, has taken off to the US in search of better facilities and a decent pay-packet. Their peers who stayed behind look for jobs in the cities with the lowest cost of living in order to be able to bring up families on a lecturer's pay packet.
Yet the Government refuses to allow the best of British universities to charge top-up fees to make up for the net decline in centralised funding. When the dons point out that quality in universities costs money, as it does anywhere, they are accused of elitism and seeking to grab too much of the funding pie.
And the undergraduates. Remember them? They have borne the brunt of the new tuition fees with few guarantees in return. New universities offer seductive-sounding vocational courses which might suggest to the impressionable 18- year-old mind that all they have to do to crack the job of political editor on a national newspaper is to turn up on a media studies course for three years. In return for paying up to pounds 1,000 of tuition fees a year they may be taught well, badly or hardly at all. A degree in the worst department of a badly run university will have cost them the same as a degree from a renowned centre of excellence.
Tuition fees are so unaccountable, because they make up only a tiny proportion of the cost of higher education. They are a first tentative step towards establishing the idea that it is something worth paying for, but hardly a decisive one. Tony Blair, who excels at finding a convincing narrative to sell to the electorate when he really wants to see a reformist idea, has been strangely coy on the reasoning behind the imposition of fees. The middle classes are allowed to labour under the pleasant misapprehension that they can pay less income tax and still escape any responsibility to fund further education which enhances earning power and enriches their choices in life.
Since the Robins Report opened the way to the mass expansion of higher education, no government has bothered to take stock of what this is supposed to achieve. Margaret Thatcher treated the universities as just another field in which to impose her vision of the retreat of the state. Expenditure cuts were implemented and managerial techniques applied in the vague hope that wondrous improvements would surely follow.
The present Government has not substantially changed this wing-and-a prayer approach. Consider the disproportion of discussion given to the future of schools and the impact of Ofsted, compared with the studied lack of interest the Government and its advisers take in the fate of higher education. I can't think of a subject which would make most senior New Labour eyes glaze over faster than trying to talk to them about the Government's plans for higher education. "How do you think we're doing on health/schools/transport/Europe?" they ask. Not once have I heard anyone at the heart of New Labour ask how they are deemed to be doing on the universities.
Over a third of school-leavers now go into tertiary education of some kind and the Government's stated intention is to move this figure upwards towards 50 per cent. The more crusty interpretations of the purpose of universities bemoan this as just another example of the slide in certainties in Britain. "My God," said the don next to me at an Oxford dinner, "There are places out there where one can get a degree in knitting. What is the point of that?"
Well for a start, anyone who wants to spend such a chunk of their life learning about knitting is probably highly motivated in the field of wool and quite likely determined to make a career expanding the horizons of its design and function. They are likely to be a damn sight more employable than someone who has sloped through a bad degree course in one of the more traditional subjects, on the lame principle that they "did" French or Geography for their A-levels and couldn't think what else to apply for.
No, there is nothing wrong in encouraging breadth in higher education. What is daft and counter-productive is to pretend that entirely different subjects and institutions are comparable and should be subjected to the same measures of how they perform. It is even more culpable to pretend that this does not demand a change in the hide-bound, centralised framework in which the universities presently exist.
In this month's Prospect, Alan Ryan, the philosopher and warden of New College Oxford, argues that the whole system needs a vast overhaul along American lines. "The US combines mass higher education with elite excellence in both its state and private sectors. But it only achieves this through allowing wide diversity of standards, salaries, tuition fees and so on. This is the direction in which Britain is inevitably going. We can either get there in two years or 10."
It is not an unfamiliar argument - right-wing free marketeers have long espoused the loosening of a centralised grip on higher education as elsewhere. Professor Ryan's contribution, laid out in a forthcoming book, Liberal Anxieties and Liberal Education, will be taken seriously outside right- wing bastions because he belongs in the political centre, and is a determined meritocrat: in short, the type of thinker who should appeal to Mr Blair.
Professor Ryan is not calling for the expansion of the market in higher education because it has the status of theological dogma in his political thought, but because he acknowledges that the existing centralised restraints do not produce good outcomes for those who need them most. As he points out, the vast growth in numbers of students has not been matched by a similar widening of access.
I fear the Professor is erring on the optimistic side when he ventures that Britain can reform its universities in a decade. These things do not happen by chance. They demand political vision and the will- power to enforce it. So far, the Government's response has been to turn a blind eye to the manifest contradictions of the system. We already have vast differences in standards. It would be far more transparent to allow the market to attach a price to the various institutions and then increase the tax incentives to business and alumni to set up endowments and scholarships which would widen the access of poorer students.
There is no reason why government could not soften the transition by setting limits on tuition charges until alternative funding has established itself, or even agree to support some scholarship programmes directly. The American system is an imperfect meritocracy: there is no free society in which the children of rich parents will come out worse in the education race than the offspring of the poor.
But it has a far better record on enhancing access to higher education than Britain does. In the universities, as elsewhere in the public sector, what is right is what works. You said it, Prime Minister. Now make it happen.