Give state funding to students not their colleges

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Europe once took 75 per cent of Nobel prizes; today the US does. It is less widely appreciated that this is the triumph of autonomous institutions over government-controlled ones.

Government can finance higher education by funding universities or by funding students to attend universities. European governments mostly do the first and should instead do the second.

There is all the difference in the world between a tax on graduates that raises money for government to distribute to universities and a system of grants and soft loans that enables students to meet the costs of attending autonomous institutions of higher education. The debate over university fees in Britain – which turns on that issue – is therefore fundamental to the future of higher education everywhere.

We shall have better education and fairer access if government money is directed to students, not colleges. With state funding of universities comes state control of universities. This has been disastrous. Government has not been successful at managing banks, airlines or even railways. It is even worse at directing universities, which are by nature pluralist institutions populated by dysfunctional dons and fractious adolescents and fit badly into risk-averse and centralised bureaucratic systems of control.

“Find good people and let them get on with it” is a good management principle everywhere, but nowhere more than in the pursuit of knowledge. It is a long time since such freedom existed in a European university.

Many people now understand that US universities dominate the top echelons of higher education. Europe once took 75 per cent of Nobel prizes; today the US does. It is less widely appreciated that this is the triumph of autonomous institutions over government-controlled ones. In US News and World Report’s rankings, none of the top 20 US universities is state-run. Berkeley – the jewel in the crown of California’s state university – just fails to make the cut. And I doubt if any university outside the US is today as good as Berkeley.

Harvard and Chicago, Princeton and Caltech do not negotiate policies with any government agency: they are accountable to independent trustees, who work hard to raise funds and maintain standards. These institutions are vacuuming up talent from around the world. Maybe Europe can just let this happen. But it is a big risk to take.

In healthcare, the cash nexus undermines the doctor-patient relationship. Higher education is different. I have taught MBA students paying several thousand pounds to sit in my class. I have also taught 18-year-olds for whom an hour a week with me is the price of three jolly years in Oxford at the taxpayer’s expense. When students are customers, the result is well-prepared classes and a demanding and committed audience in institutions that care passionately about the quality of their teaching.

Funding directed to students would make universities more effective and accessible. I was a student in a brief golden age of lavish funding for universities and generous student grants. Many people still long for that era. But it will not return, and probably should not. There are other demands on public expenditure.

So limited public resources for higher education must be directed towards students from poor households and to those graduates who will never earn enough to meet the costs of higher education. Fairer funding will recoup tuition expenses from lawyers and investment bankers but not from writers, people who work in voluntary organisations, or those whose careers fail. And it will provide generous bursaries to bright people who might otherwise find it difficult to attend university. Top US universities offer scholarships more extensively than European ones because they are better resourced. It should hardly be necessary to say more.

But it is. The fees proposal is strongly opposed. Political control of universities is welcome to those who dislike elite institutions and wish to influence admissions policies, internal organisation and the structure of courses. Well-off parents believe, correctly, that they will have to pay more if funding is targeted at needy students. Weak universities think, correctly, that they will do better if the distribution of funds between institutions results from political choices, not student preferences. The future of Europe’s universities should not be sacrificed to these interests.

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