Curtail this cash crisis

As professors quit Britain's crisis-ridden universities, Kenneth Baker calls for funding changes.

Our universities are in crisis, suffering from chronic underfunding. The government has received three reports over the past year highlighting the danger to teaching and research from their inability to recruit and retain staff. Since 1981, the real pay for academics has risen by just 1 per cent against a 40 per cent increase for all workers and a still higher level for most professions.

More than a third of academics are now over 50; young graduates do not opt for academic careers with a starting salary of Pounds 16,000; for the fourth year running applications to study PhDs have fallen; and the quality of the infrastructure for research has declined. Professorial posts are left vacant and the "brain drain" is in full swing. Three professors of philosophy are leaving Oxford over the next three months to go to the United States and Australia.

The government claims it is increasing higher education spending by 11 per cent up to 2002, but readers of The THES know this is a real-terms cut. This year the government is spending 1.12 per cent of the GDP on higher education - some Pounds 10.1 billion. The average for the 18 years of Conservative government was 1.22 per cent. If the government was to match this, it would need to increase spending this year by Pounds 800 million. That should be the starting point for any increase to be announced by Gordon Brown.

One of the ironies of this under-funding is that Birkbeck College, where higher education minister Baroness Blackstone used to preside, has suffered this year with a real-terms cut of 1.2 per cent. As King Lear said:

"Ingratitude, thou marble-hearted monster."

I have come to the conclusion that no government is going to provide the money needed. Higher education is in fact a nationalised industry with all the characteristics of one:

* An under-funded mass system n National pay negotiations, when regional and local would be better

* Top-down regulation of subjects and student numbers

* Incessant trivial intervention - step forward Gordon Brown n Under-investment in libraries, laboratories and computer-rooms.

Universities started as private institutions and they should become private again - independent and in full control of their own affairs. This is in effect the American system that Mr Brown is on record as saying he admires. We cannot get there overnight but the building blocks are there.

When I introduced per capita funding of students in 1989, I envisaged that universities would get their funding in a variety of ways: from the government through per capita grants; from students, initially by loans and then by fees; and from endowments given both by the state and by individuals and companies. It is the endowments that are missing in our system. I introduced access funds as a state endowment to help universities recruit students on a needs-blind basis. That now amounts to Pounds 45 million a year. Universities are already operating in the market place for overseas students: 63 per cent of the total student body at the London School of Economics are overseas students, most of whom are paying full fees. At Oxford 50 per cent of postgraduates; at Cambridge 40 per cent; Nottingham 32 per cent; and 26 per cent at Birmingham are overseas students paying full fees.

The government has introduced fees and I expect that we are on the way to full fees where significant scholarships are available - the maximum at Harvard is 60 per cent - and where students can repay through the tax system after they have left college. Scotland may well show the way.

But this will only come about with additional endowments from the government to universities. I would suggest that the government should give as much as the Millennium Dome has cost as a capital endowment, which it can top up. The tax relief that has been given for the donation of shares to universities should be extended to personal donations by individuals and companies.

In 1989, I set a target for the expansion of higher education participation, which was running then at 12 per cent, to reach 33 per cent by the end of the century. I am glad to say that target has been exceeded: it is now 35 per cent. The government wants to increase this to 50 per cent, but it cannot be done under the existing funding system. Radical changes are needed.

Tory peer Lord Baker of Dorking proposed a House of Lords debate this week on the state of the universities.