A new landmark ruling of the German Supreme Constitutional Court has important implications for Germany, Britain and the rest of Europe. In 2002, Gerhard Schroder's government passed a federal law to forbid German universities charging fees to undergraduates. At a time when public spending is having to be cut, the federal government acted to deny German universities the option of developing other sources of income from students, on the lines being pioneered in Britain and a number of other EU countries. Schröder's new law also raised important questions about the functioning of Germany's federal constitution. Was the charging of fees within the jurisdiction of the federal government in Berlin or a matter for the German states or Länder? It is this question that has now been decided by the constitutional court.
The ruling is simple: German universities are, essentially, a matter for the Länder, not for the federal government. The way is open for universities to charge fees in those Länder that want them. Many have expressed an interest in going ahead, and a lively debate is brewing about how this should be done. Much of the debate will be familiar to us in Britain, who are ahead of the game. The levels of fee being discussed - €500 (£345) per semester is being bandied about - approximates to those introduced in Britain in 1998. But they fall far short of the £3,000 annual figure which most British universities will introduce in 2006.
There is also much debate about whether the Land government should set fee levels or only a maximum figure, as in Britain, and whether the money should be paid directly to the university or to the Land. Here, Germany's statist traditions may lead to a failure to develop the direct financial relationship between student and university, which is such an important feature of the British approach - and which is fundamental to the huge success of higher education in the United States.
Different Länder will adopt different solutions, and the process of introducing fees will be modest to begin with, complicated and long drawn-out. But, as in Britain so in Germany, this marks an historic turning point for the universities and, therefore, for the nation. The stage is being set for the re-emergence of the world-class German universities which were a light to the world in the 19th century.
For Britain, this means beneficial new competition. Many German degrees are taught in English. Within the EU, the Bologna Accord is leading to convergence and a reduction in the length of courses. Students from around the world will find it increasingly attractive to study in German universities. So, also, will British students. The time is surely coming when the British Government should follow Sweden, and allow students to take their grant and loan money abroad, and enrol at European universities. This would encourage our young people to study languages and broaden their horizons. It would also help to bring about a better balance of trade between British and continental universities: the number of students coming to Britain from mainland Europe greatly exceeds the traffic in the other direction. Here, the Government should pay close attention to an interesting feature of the German debate: the suggestion that the different Länder should follow American practice and charge higher fees to students coming from outside their own Land.
It should be possible, if this happens, for us to reopen the absurd ruling of the European Court of Justice, that universities in different member states may not discriminate between EU nationalities in the terms on which they admit students. The basis of this ruling is flawed: it applies to provisions in the Rome Treaty, which were intended to open up labour markets by treating university education as vocational training. Although it brings many talented EU students to our universities, it deprives them of significant income, costs the British taxpayer a lot of money and is not balanced by trade in the reverse direction.
The EU is not a federal state - unlike the US and Germany - and it cannot be right that the arrangements for university funding are more "federalist" than they are in genuine federations. We need the European Court of Justice to apply the same intelligence to these matters as the German Supreme Constitutional Court has now brought to bear.
The writer is a former Conservative minister for higher education, now Labour MP for WantageReuse content