For many academics, the future hangs on which departments have the best chances of winning research funds, and which are financially viable under the new arrangements. More importantly, young people's chances of gaining university places in two or three years' time will be crucially affected - with all that entails for pupils now on GCSE and A-level courses, and for people who would like to be mature students.
After rapid expansion of student numbers over the past four years, the Government wants to stamp on the brake now, and press the accelerator again in three years' time.
The once-visionary target of 30 per cent of young people in higher education by the turn of century is within the Government's grasp - but ministers seem to have lost their nerve and are becoming alarmed by the cost. Participation is already running at 28 per cent of 18-year-olds; ministers want to hold that steady until 1996, when university intakes will be encouraged to rise sharply as the number of school leavers increases again. In Scotland, the intention is to hold the participation rate at the current 34 per cent and expand to 40 per cent by 2000.
The funding councils in England, Scotland and Wales are faced with the tricky task of translating this slowdown into practical financial terms. 'It's not a U- turn, it's an S-bend,' commented one official.
It will take at least a year for the brakes to bite on university admissions, but the Government's change of policy is already having some effect. Loughborough University said this week that applications for 1993 had jumped by 20 per cent but it would not be able to expand its intake.
Jeffrey Rooker, Labour's spokesman on higher education, said: 'This year's lower sixth are not going to get the same opportunities when they get their A-levels as those who passed in 1992. Some of them will find the gates to higher education closed. That's unacceptable if it is because of a restriction on resources and an unwillingness to explore new areas of resource. The issue is how we pay for higher education as a society. Do we restrict access because we are short of pounds 100m?'
The details of university finance are arcane, shrouded in talk of funding methodologies and the like; but the effects of whatever system the funding councils adopt will be far reaching. The phenomenal growth of student numbers from 637,000 in 1988-89 to an estimated 834,000 this year was most marked in the former polytechnics, and was driven by a funding system that pushed institutions into taking in more students to keep up their income.
The universities may complain about the stresses and strains of expansion, but they are now so geared to growth that they may be in financial trouble if they stop. In the early Eighties the University Grants Committee simply ordered institutions to limit their intakes and penalised them if they did not.
The English funding council is not considering penalties yet. But universities will find themselves under severe pressure to limit student numbers. The Government's first step was to reduce the tuition fee for arts and social science students from pounds 1,855 to pounds 1,300. Although the funding council has promised that the balance will be made up in grants for the 1993 intake, this removes an incentive for universities to expand. Should any universities attempt to expand despite this, the council will use its role as a financial watchdog to push them back into line.
The council's efforts to be more selective about where it channels more than pounds 600m for research may have a greater impact on what kinds of university we have in the Nineties. Until now, all departments were funded to do research; indeed it is an article of faith among academics that good teaching is inextricably linked to research.
But with the former polytechnics knocking at the door there is not enough money to go round. An exhaustive assessment of research was published last month, grading university departments on a scale of quality as judged by peer review. Today, the council members have to decide how the money should follow these judgements.
Few departments have yet suffered the fate of Mediterranean studies at Queen Mary and Westfield College, London, whose hopes of remaining open were killed off by a low rating when the research exercise was published. But there will be tough decisions ahead for any department scoring below average. A university will have to decide whether to boost funding in order to improve that department's research, or whether to dispense with it.
Academics will fight hard against the concept of teaching-only universities, even if they have to concede teaching- only departments. Stewart Sutherland, vice-chancellor of London University, is the latest to argue the case. An influential figure, who is the chief inspector of schools as well as heading Britain's largest university, Professor Sutherland said that it was not necessary for every good teacher to be a researcher: 'It is more subtle than that. It is rather that the fields of study appropriate for university degree work are such that in principle they extend to . . . that particular frontier of human knowledge.'
He said that despite the huge variety of types of university and subjects studied, it was not the case that 'anything goes'. If London cab drivers voted to become an all-graduate profession, for instance, a university would not respond with an honours BA in contemporary society and 'the knowledge', he said. Decisions on academic standards and what was acceptable for university study ultimately had to be taken by academics themselves.
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