A levy to weigh on v-cs' minds

The autumn conference season is underway and the effects of a forthcoming election are present in both agenda setting and political bidding. Taxation will be the main battle.

This is bad news for the vice chancellors, meeting shortly in Sheffield. They will presumably consider the proposed "levy" threatened last autumn if the cuts to revenue and capital are not reversed in the next Budget. All the signals point to the Government seeking a reduction in taxation in November to restore the faith of traditional supporters and win over "floating" voters and those suspicious of "New Labour".

A change of heart looks remote. The Government is unlikely to capitulate to avoid a row. A vice chancellors' revolt is little more than a minor irritant when elections loom. Higher education carries few votes compared with health.

Nor can the vice chancellors look for redress if Labour wins. The traditional ideological division between tax-cutters on the right and spenders on the left has broken down. New Labour has discovered the political and economic benefits of tax cutting. Higher education is unlikely to top the agenda for any incoming Labour government.

So what should the vice chancellors do? The decision to issue threats was always risky. It brought a short-term benefit in the shape of good media coverage and an almost unprecedented unanimity for ratcheting up the row with the Government. It probably brought a bit of excitement too, for some, in the shape of an echo of a more radical past. However, the Committee of Vice Chancellors and Principals is now hoist on its own petard. If the Government fails to reverse the cuts, politically, the threatened sanctions have to be activated. Failure to do so would be to risk looking foolish and render any future strong-armed tactics redundant.

Securing a consensus is likely to be more difficult this year. Reaching agreement on a threat is different from agreeing to implement it. Few vice chancellors can act autonomously. Persuading their boards and councils may prove difficult. While some may feel confident about "top-up" fees as a ready source of additional income, those with an "access" mission may be concerned about the impact on recruitment when the market is already distorted by anti-competitive behaviour.

Financially, the impact on individual universities and colleges has differed. Some have opted for premature retirement and redundancies to reduce staffing costs, deferred equipment replacement and, where feasible, are attempting to sell "surplus" assets. This may generate short-term savings but underinvestment in human and physical resources in the long term hits quality.

Similarly, grant reductions lead inevitably to the search for alternative sources of funding. This makes financial sense but carries risk. The trend towards financial devolution requires greater management skills, bureaucracy and overheads.

Further, "soft" money tends to be granted for a specific purpose and contingent on satisfactory performance. Increasing hypothecation clearly reduces the flexibility of an institution to achieve its more general and strategic objects.

This goes to the heart of one issue on the Dearing committee's agenda - the extent to which the nation needs and can afford a comprehensive and publicly funded higher education system.

In the short term, vice chancellors can only hope that legal advice will provide them with an honourable retreat.

Diana Green is pro vice chancellor of the University of Central England at Birmingham.