Quality street blues

Many existing universities will be forced by government reforms to cut their less financially successful courses, according to Matt Robb, senior principal at The Parthenon Group ("Here be treasure, but sector unprepared for private raiding parties", 12 May).

Institutions will have to act more commercially in the light of increased tuition fees and the introduction of greater competition from new providers, he suggests. But will it happen? If it does, will it be beneficial?

Robb estimates that only about 20 per cent of the market is price sensitive. This confirms the view of most experts that higher education is essentially a positional market, where institutions and their main stakeholders - students and employers - compete for status rather than high-quality education: hence the fact that most institutions have chosen to charge the highest permissible fee, even though a much lower sum would compensate for the loss of their state teaching grant.

But it is mostly lower-status institutions that have decided to charge less than the maximum. Although Robb doesn't say so, they are likely to have the most price-sensitive students - and the ones most likely to forgo university. Assuming that some low-cost private organisations enter the market, these public institutions will be in a strategic bind: they cannot compete with high-status providers and charge premium fees, nor compete on price and flexibility with new entrants (chiefly because of staff terms and conditions).

In the short run, these less favoured universities are bound to respond by cutting less popular courses, though the costs - staff redundancies and loss of goodwill, disruption to student study, more student complaints, increased claims on management time - are not to be underestimated. In the longer run, the only answer will be rationalisation of the number of institutions. Since these providers are in the vanguard of access, this may deal a blow to coalition hopes of increasing social mobility.

At the same time, new providers will be focusing on those subjects and courses that are both more popular and cheaper to provide: there won't be many private entities offering physics or other subjects requiring expensive plant or kit. Nor are there likely to be any gains in overall efficiency, the literature on institutional mergers being little more encouraging in this respect than that on corporate ones. In short, we shall have a far more sharply differentiated university system.

There is only one thing that could upset this somewhat dystopian picture - quality. In a publicly funded system where charges for courses did not vary, quality was not an issue. The assumption was that academic standards among the various providers were broadly comparable, and this was underpinned by a funding methodology that sought, not always successfully, to constrain resourcing differences between institutions. However, we are now entering a market, and in a market quality is the crucial issue, alongside price and availability.

The new quality regime that will apply from this autumn commits the Quality Assurance Agency, for the first time, to ensure minimum "threshold" standards. This is welcome, even though it is by no means clear how it will be achieved. However, it will only apply, by definition, to existing providers. What is of even greater importance, potentially, are the market entry and exit rules. What academic standards will new providers be required to meet and how will they be regulated?

The official message here is not encouraging. In UK universities, the fundamental protection for quality has lain in the notion, still enshrined in the official guidance, of a cohesive, self-critical academic community. Yet if the rumour that the government intends to allow organisations that do not teach to acquire degree-awarding powers is true, there will be no limit to the potential damage to the system's quality and cohesiveness.

Does the sector still have the will to protect itself in these circumstances? Instead of market rhetoric, these are the matters with which the Browne panellists should have concerned themselves.