The report to the Higher Education Funding Council proposes that only those departments which receive top ratings for research should receive funding for postgraduate research students.
The proposals from Professor Martin Harris, vice chancellor of Manchester University, will be unpopular with some of the new universities, former polytechnics, who are trying to build up their research strengths but lag behind older universities. And they follow a report last month saying that research funds should be concentrated in a few universities because of the shortage of government funds.
Later this year the funding council, which grades universities for research and distributes funds accordingly, will decide whether the bulk of research money should go to a "premier" division of universities.
The proportion of postgraduate students in British universities has increased from 13 per cent of the total student population in 1979 to 21 per cent two years ago. Many postgraduates come from overseas and Professor Harris recommends that universities should still be free to recruit postgraduates by charging additional fees. Only a minority of postgraduate students are carrying out research. Most are doing taught degrees such as Master's.
The report says that postgraduate qualifications differ widely in standard: some are equivalent only to first degrees.
Professor Harris said that there was "substantial evidence" that the rapid expansion in taught postgraduate courses had led to "widespread confusion at home and overseas." He believed there should be standardised descriptions of courses and accurate descriptions might become a condition of funding.
"Provision of high-quality postgraduate education is of central importance to a highly skilled workforce and vital to the UK's position in international markets," he said. "The report concentrates on how postgraduate education can best be funded and organised in the years ahead." The report says there should be no further transfer of funds from undergraduates to postgraduates.
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