A merger of this kind - between two confident institutions with substantial reputations, neither of which is staring ruin in the face - would be unprecedented. Past mergers have tended to be between a weak and a strong or a very small and a large institution, or between institutions that were very different. To have a university such as Bath coming together with the University of the West of England in Bristol, one of the best of the former polys, to make a mega-sized regional university of 33,000 students, would be a first.
Although nothing has yet been agreed, except that talks should take place, the two vice-chancellors are talking "very seriously", according to Professor David VandeLinde, who runs Bath. "We are thinking in terms of a commonwealth of institutions," he says. "If we can do it right, we could end up with one institution that is very strong and fits in well to our vision of what higher education is going to be about."
The question is whether this kind of merger, leading to a university on the American or Scottish model, with high-quality research, excellent teaching and a relatively open access policy, is the beginning of something new. It may be, particularly if Sir Ron Dearing gives collaboration a push in his report on the future of higher education, to be published in July.
"If you look at the kind of university that is most likely to be successful post-Dearing, then it is probably something more like an American or Scottish university," said Rob Cuthbert, assistant vice-chancellor of the University of the West of England. "The universities of California and Minnesota are big institutions which are world league players in terms of their standing, their disciplines and their level of work. At the same time, they have a real commitment to their local and regional communities. And they have a mission for access and for helping people into higher education."
In a message to staff, the vice-chancellors explain that the Higher Education Funding Council (Hefce) has already announced plans to develop its regional structure. They also say that they expect the new government to encourage Hefce to take a more interventionist planning role.
The funding council was saying nothing new last week. According to a spokesman, Hefce has no policy on mergers. "We look at each case on its merits," he said.
That could change if the Government decides that mergers are good for educational reasons. It might be persuaded that they are good for financial reasons too. Frank Gould, vice-chancellor of the University of East London, who is a great champion of mergers, thinks there is scope for saving money that way. "The financial situation in the universities is grim," he says. "I am having to lose 80 staff in the next financial year. I don't believe the Government will provide us with additional funding. The question is, what do we do?"
Mergers are not new. But the evidence of the past is that they don't save much money, partly because vice-chancellors have pledged no job cuts. Gould, who is an economist, thinks that must change. "You have to change your mindset," he says. "Job protection is not possible in this financial situation."
Gillian Rowley, who works for Hefce but is shortly moving to lead Bradford University's MBA programme, carried out a survey last year into 30 mergers in the United Kingdom as part of her own MBA degree (to be published in July by Higher Education Quarterly). She found that there had been hundreds of mergers between higher education institutions over the past two decades.
The most successful mergers were those with a strategic and academic rationale - as in the case of Bath and UWE - and the least successful were those entered into out of financial desperation. John Fielden, director of the Commonwealth Higher Education Management Service, confirms that. Because the number of staff is usually related to the number of students, there are not many savings to made, he says. In any case, in the agonising negotiations that take place as part of any merger, pay and conditions are usually levelled up rather than down.
But savings can be made in specialist administrative staff (for example, health and safety officers) and in selling off unwanted property - as London University did in its merger of colleges at the height of the property boom in the mid-1980s.
The cost of a merger in management time is enormous, says Professor Roderick Floud, vice-chancellor of London Guildhall University, whose struggling institution has tried twice to merge with neighbouring City University. "The benefits to merger come principally from the rationalisation of property," he adds.
It is thought that a merger between City and the former poly, Guildhall - first in the 1980s under the Inner London Education Authority's auspices and then in the 1990s with the Corporation of London and Hefce's blessing - failed because City was not prepared to make common cause with an institution that was financially distressed and could bring its research ratings down.
Many of the vice-chancellors with the most positive views of merger are in former polys. That may be because they have the most to gain. Bath's David VandeLinde is unusual because he is American and looks with favour on increasing access to higher education through the further education route. If a survey carried out by Manchester University for the Dearing committee on regionalisation is anything to go by, other vice- chancellors of "old" universities don't share his enthusiasm.
Collaboration and partnerships between institutions, with students doing foundation courses at further education colleges and moving on to universities for degrees, is going on quietly all over the country, however. Such link- ups are bound to grow.
One full-scale merger is taking place now between Southampton University and La Sainte Union college, whose teacher training courses were found wanting. The funding council has given Southampton an incentive - a pledge that La Sainte Union's staff won't be counted in the research assessment exercise. There will therefore be no danger of them pulling down Southampton's ranking.
At Derby University, vice-chancellor Roger Waterhouse is hoping to merge with a college in Derby and a college in Buxton - and to develop a regional network with three other colleges. And at Leeds Met, vice-chancellor Leslie Wagner is planning a merger with Harrogate college. All these are mergers between a university and colleges rather than between two universities. Rumours fly around about universities discussing mergers, but none would go public last week, and some went out of their way to scotch rumours.
Tony Higgins, chief executive of the Universities and Colleges Admissions Service, thinks we're going to see more mergers, however. It is worth remembering, he says, that polytechnics were formed from mergers of colleges in the 1970s. The next century could see the creation of a new tier of community colleges on the lines of the American model, feeding students into universities.
More crystal-ball gazing comes from Ian Crawford, an educational consultant who used to work at the London School of Economics. He believes that more collaboration will come from changes in funding mechanisms. If students are going to have to pay for their board and lodging through income-contingent loans, as Labour pledged during the election, it would be worth their while completing a degree in two years instead of three. "Universities will have to respond to changing market signals," he says. "That could lead to mergers and changes in the way universities function."
But many observers believe that informal collaboration will be the way of the future. As Leslie Wagner of Leeds Met puts it: "We have enough on our plates managing very large institutions and I think the future is about co-operation rather than merger."
Meanwhile, all eyes are on the talks in the West Country. At Bath University, there is substantial staff goodwill. "If we're talking about widening access to higher education, this is one way it could be achieved," says Steve Wharton, lecturer in French and Communications and secretary of the local Association of University Teachers. "It would be wrong to reject the idea out of hand for reasons of intellectual snobbery"
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