Pay up now or else...

If the government won't pay, higher education will have to seek funds elsewhere, says William Taylor.

Today, the main committee of Universities UK discusses the final report of its Funding Options Review Group. The group was established because of widespread concern in the academic community over the effects of two decades of falling per capita funding. Some academics were enthusiastic about a radically different approach, now spoken of (inaccurately) as "top-up fees". David Blunkett had called for a vigorous debate on the issue.

It was not the group's job to identify, let alone advocate, a single funding model. Its task was to calculate the "funding requirement" -the additional money universities and colleges would need to maintain and improve international competitiveness and enhance social inclusion -and to review the strengths and weaknesses of a range of possible funding options.

We often hear that, in advanced economies, it is the institutions that generate and disseminate the knowledge and skill that are the engines of social improvement and competitive success. Without sufficient fuel, lubrication, maintenance, repair and upgrading, these engines cannot work efficiently or effectively. True, but for higher education there are dangers in too readily adopting industrial metaphors.

One such danger is to interpret a 50 per cent-plus reduction in resources per student over a 20-year period as testimony to greater productivity without considering its other consequences. For average staff-to-student ratios to decline from 1:9 to 1:17 -and, excluding money for research in the average unit of funding, to 1:23 -does not bode well for the long-term quality of the student experience, or for the ability of staff to keep up with subject developments.

The recent decision not to demand continuing efficiency gains from the sector suggests that the dangers have been recognised. The additional funds are most welcome, but they do not meet the funding requirement.

An additional £900 million a year from 2003-04 would be required to maintain the purchasing power of existing levels of grant, to fund staff recruitment and retention, to meet statutory requirements for institutions to offer equal pay, to correct under-investment in infrastructure considered in the transparency review and to enhance to 20 per cent the "postcode premium" designed to raise recruitment and retention of disadvantaged students.

It has been central to the group's assumptions that increases in resources must be real additions to core per capita funding. Money for specific short-term purposes does not meet the bill. Nor is money "additional" when increases in private contributions are offset against public expenditure.

Realistically, there will always be an element of jam-jar funding. Priorities change. Democratic practice requires frequent policy initiatives. The something-for-something principle demonstrates responsibility in use of public money. But all this has costs for universities -in time and attention, in compliance and in terms of what is available for core funding.

Our main criterion in deciding which options to put to the main committee of Universities UK has been their potential for producing additional money to support teaching and learning. Any one of the four main options -public funding, market fees, graduate contributions and institutional endowment - could raise what is needed if adequate levels were set.

Research funding has a separate place on the programme, as does student support.

The crucial decisions must be taken by governments. Universities can point the way, but it is governments that have responsibility for the outcomes of funding decisions. If they do not find the resources to meet the need, then inevitably pressure will grow for adoption of other means.

The effects of the expansion of the past decade on the importance of the student, parent and partner vote is reflected in party policies. But student support is not the whole of the agenda. Without well-funded institutions in which to study, the experience of mass higher education will become a great -and politically embarrassing -disappointment.

Sir William Taylor is chair of Universities UK's Funding Options Review Group.