What does the future hold for a small, self-styled liberal arts college in a higher education world where next year virtually all state funding for teaching in the arts, humanities and social sciences is set to disappear?
It is an intriguing question but one which has particular urgency for Professor Gerald Pillay, vice-chancellor and rector of Liverpool Hope University. Because of its historic strengths in theology, English and other non-funded subjects, from 2012 Hope will lose 96 per cent of its budget for undergraduate teaching – compared to around 50-60 per cent for large universities with a wider spread of disciplines.
One option to help plug the gaping hole opened up in its finances would have been to ramp up the tuition fees to the maximum while simultaneously expanding the number of students. But Hope, alma mater of Liberal Democrat luminary Baron Alton and Scouse playwright Willy Russell, has rejected this strategy.
Instead it has decided to charge £8,250, one of the lower fees in the country, while setting an upper limit on the number of students it will recruit at just over 10,000 – around a third more than it currently caters for, including more overseas students.
And Hope is continuing – for now – its high-minded practice of opting out of the university league tables so assiduously pored over by schools, potential students and their parents because, it says, of the propensity of too many institutions to indulge in the "fiddle factor" to climb the ranks.
To further confound the logic of post-austerity, market-driven tertiary education, it is continuing its policy of raising the required grades to ensure that it is harder to get in.
Sitting in his study overlooking the university's main garden campus in the leafy Liverpool suburb of Childwall, Professor Pillay argues that under his stewardship since 2005 the institution remains in harmony with the radical 19th-century vision of its founders. That is despite damaging strike action from unions earlier this year over mass redundancies, which coincided with an embarrassing row over his own personal 20 per cent pay rise.
As Europe's only ecumenical university, where the Church of England and the Catholic Church have come together, Hope prides itself on the fact that its two original colleges were the first to offer post-secondary education to women, as well as Catholics and Jews. Today nearly one in five students come from low participation – or economically disadvantaged – neighbourhoods, while less than 2 per cent come from private schools. "We are built on that solid vision for education being the vehicle for social mobility and social transformation. It is in the DNA of the place to make a contribution to social mobility," says Professor Pillay.
As Britain's only ethnic minority vice-chancellor and one whose early career saw him rise to become the first Indian Professor at the University of South Africa in Pretoria under apartheid, the former theologian is well placed to speak about social change – although he is cautious in his approach.
"One is shaped by one's historical circumstances. I have seen the negative side of trying to limit human potential artificially. That is why I am nervous of social engineering of any kind, whether it is government interventions or whether it is directives. I am nervous of it simply because it will always lead to consequences you cannot imagine," he says.
The new fee regime represents one such great leap into the unknown. "This is a tsunami, not a storm," he predicts. "The market is mindless and no one knows what will happen in 2012. And all of our projections based on historical data mean nothing. England has never before implemented such a policy. Nowhere in the world has. We have very few places to learn from. None of our data can help us prophesy."
So where could it lead? Professor Pillay believes that within three years the present course will result in a greater fracturing of the higher education system, ultimately "impoverishing" the whole sector. "You may end up creating a kind of super-elite and you may end up creating a place – without being disparaging – that will offer a cheaper alternative, simply because you make up the numbers in that way," he says.
Hope began adjusting to this new world order – albeit a much less extreme vision of it – five years ago when it was observed that higher education policy-making under Labour was becoming "quixotic" and that "claw-backs" were beginning.
He believes that it was necessary to make the 102 job cuts – only one of which was compulsory – which saw academics vote for strike action earlier this year. "In normal times we could pull up the drawbridge because of this impending storm, whereas the university got itself in a position where we could maintain our solid position and actually invest in new academics and in solid scholarship and research instead of waiting for the storm to pass. That was part of a planned strategy," he says.
Last year the university ran a surplus of more than £4m – its best performance for seven years.
As for his own pay increase, which saw his salary rise by a fifth to £199,077 just a few months before the announcement of redundancies, he remains unapologetic. He says it was an externally awarded increase recognising Liverpool Hope's elevation to university status in 2005 and points out that he has donated the lion's share of the two year's increases to the student scholarship fund.
"This was nothing to do with unions and this restructuring. It was about keeping faith with my staff," he insists, before adding that industrial relations on campus are now "very good".
"Change is difficult and convincing people about a new existence is always difficult because we can become captives of the past. There was no future if we did not become a place of distinction," he adds.
Being distinctive is at the heart of the Hope strategy. It prides itself on its pleasant surroundings, smallness – student numbers compare with illustrious American institutions such as Yale and Princeton – and there is an emphasis on pastoral care.
Because of this, Professor Pillay says, Hope also has the lowest drop-out rate in the north-west and 97.3 per cent graduate employment or postgraduate education puts it ahead of Oxford, Cambridge, Liverpool or Manchester.
A striking feature of the university is the presence of a thriving chapel, where devotees say their lunchtime prayers just a corridor away from the bustling student refectory.
Hope has built heavily on its strong links with faith schools to become a national recruiter away from its traditional geographical heartlands. And although the education here is religion-free, it is part of an international network of elite Catholic institutions, including the Catholic University of East Africa and the Ateneo de Manila University in the Philippines.
Students and parents from faith schools are said to be attracted by the strong ethic and academic culture. There is also something of the Oxbridge college feel about the place, with its Harry Potter-style halls of residence and high-table dining. "England does need places like this, too, that only a very prestigious college of an elite university would be able to offer those who are able to get in," Professor Pillay says.
Ironically, considering its present funding plight, Prime Minister David Cameron chose to launch his Big Society at the university's new Creative Campus. Not that Professor Pillay believes what he is trying to achieve is particularly well understood in Whitehall. "We are not widening participation in what people assume widening participation is, where the very best go to elite places and the rest go to universities like ours, which is just not what we are about. I don't think everyone grasps that and I wish our ministers who make policy would understand that," he says.
Higher fees, fewer courses
The first signs of the impact of the new tuition-fees regime on university provision are beginning to emerge .
A survey at the weekend showed that universities are planning to provide about 5,000 fewer courses next summer – 38,417 as opposed to 43,360 this year.
Early indications are that the courses suffering the most are those with the worst employment records amongst graduates – so-called "soft" subjects not rated by élite universities as they attempt to sift through a plethora of candidates.
London Metropolitan University, for instance, has significantly reduced the number of courses it has on offer – cutting subjects like philosophy, performing arts and history.
The argument is that students – now that they are paying up to £9,000 a year for their courses – are more likely to want as good a guarantee as possible of a job at the end of their course of study. Of course, there are other pressures on universities now that funding for teaching is being slashed by ministers by as much as 80 per cent. (The income will come through the loans taken out by students to pay their fees.)
Under the Government's plans, many courses will receive no funding at all for teaching. These would include the creative arts and humanities.
Considered vital for the future of the economy, the so-called Stem subjects of science, technology, engineering and mathematics will retain some funding.
A third threat to the future of funding for courses, of course, come from student numbers. Initial figures from the Universities and Colleges Admissions Service (Ucas) show a drop of about 12 per cent in UK student numbers.
However, applications from overseas students are more than holding up and even increasing in some subjects.
In addition, some students may be holding off from applying until financial arrangements become clearer. A total of 27 universities have applied to the Office for Fair Access, the universities' access watchdog, to reduce their average fee in light of the Government's decision to hold back 20,000 places for those universities charging less than £7,500 a year. The result of their requests will be known by the end of the month.