Leading Article: Degrees of cowardice

UNTIL as little as 10 years ago, Britain had the most elitist higher education system in the Western world. A small minority was selected for glittering prizes: all the expenses of their teaching met from the public purse; maintenance grants handed out for living expenses; tuition in very small groups from lecturers who themselves spent only a fraction of their time actually teaching. The elite, financed by working-class taxpayers, came predominantly from middle-class homes; armed with their degrees, its members went on to high-earning jobs. Since then, the Government has begun the long overdue move to a mass higher education system - some 30 per cent of young people go to university against barely 5 per cent 35 years ago. But it has failed to work out how to pay for the expansion. That is why ministers are now facing trouble from the vice-chancellors, who propose to find the money in 1997 by raising a levy of some pounds 300 on new students.

How have universities got into their present mess? Though public and academic opinion was remarkably slow to recognise it, the taxpayer could never support 1.5 million students in the same style as it supported a few hundred thousand. The non-repayable grant had to go; so did the old academic way of life. The amount spent for each student has fallen by something like half since 1980. Academics no longer expect, as a matter of course, to spend a third of their time on research. Universities have stopped thinking they can all imitate a semi-mythical Oxbridge ideal of languid afternoons and weekly one-to-one tutorials. They have learnt to earn extra money from industrial sponsorship and hiring out lecture halls in vacations.

One nettle remains ungrasped. How much should students pay and should their choices dictate what universities offer? Until this is resolved, universities will continue to be in financial crisis. Costs cannot be cut indefinitely; lecturers' salaries are already laughable, libraries straining at the limits. The expansion of higher education has stopped. If the crisis continues - it began when parents forced the Government to transfer money to holding down school class sizes - expansion will go into reverse.

Ministers are supposedly defenders of choice and consumer rights; for students, they have reduced choice. Once, more than half the universities' funding came from student fees, paid on their behalf by local authorities. The universities that offered what students wanted got the recruits and thus the income. This system was about as near as you could get to one of those voucher schemes that ministers are always blathering on about. But the Government changed it, so that fees are smaller and the big money comes from annual central government grants. Universities have, in effect, been nationalised: central funding bodies set them "targets" for student numbers in different subject areas.

The answer - restoring consumer choice and university solvency - is to return to a system based mainly on fees, but to charge a substantial sum to the students themselves. This could most easily be done through a special tax, paid after graduation. Students would be taking out a mortgage on their education, without the risk of negative equity because, if their degrees led to unemployment or penury, they would not be taxed.

This was precisely the system that ministers ought to have adopted when they decided to phase out the maintenance grant. Almost every economist and educationist advised it, pointing out that Australia had successfully operated a graduate tax for years. But ministers would not have it, for reasons that bordered on the mystical. It was better for students' souls, they argued, to receive a cheque through the post labelled "loan", so that they could ponder daily on the great cost and value of their education. (What ministers really meant was that future graduates would blame tax on the government.) So they opted for a clumsy loan system, run on the Government's behalf by a private company which, as everybody predicted, has the greatest difficulty collecting repayments.

Ministers hope that universities will resolve the latest crisis by charging a levy and setting up their own loan system to finance it, thus averting political odium for them. This shows cowardice and myopia. Britain must continue the expansion of higher education and the Government's duty is to work out how to pay for it.