Leader: Taylor options put v-cs on spot over tuition fees

Universities need more money. The Taylor report, published today by Universities UK, sets out figures showing the sector is underfunded by many hundreds of millions of pounds a year. And it talks through the options for bringing in new cash.

The next stage is for UUK to improve on its predecessor, the Committee of Vice-Chancellors and Principals, by agreeing which option it favours and putting its weight behind it.

Of the eight options set out, four are put aside with scant ceremony. The most radical is the abolition of all funding for undergraduate teaching and the complete deregulation of fees. This has the merit that it would remove universities from state control, but the fatal flaw of being proposed by Lord Owen. Another, individual learning accounts, is not a funding mechanism for universities so much as a distribution machine for state cash.

The four options that Taylor takes more seriously include some genuine contenders and some less probable ones. One is for the state to come up with the required cash. This would be nice and would allow, as Taylor says, politicians to boast of their generosity. A case can be made: society gains economically and socially from having a lively higher education sector. Graduates not only do high-grade jobs, they are more socially tolerant and they even commit less crime -universities are a public good deserving of public money. Alas, the chance of any government finding the full sum Taylor demands is slight. If it were a practical possibility we would not be where we are.

The endowment scheme proposed by the Tories is worthy of further study, if only because of its promise to reduce government control of universities. But here Taylor spots the flaw. The Conservatives do not propose allowing endowed universities to set their fees or numbers: freedom would be severely curtailed. Add to this the unfeasibility of finding about £100 billion to endow the sector and the mess that would result if only part of it were endowed, and the disadvantages seem insuperable. Nor are the advantages that great since even the proposed level of endowment would only replace present inadequate university income, not produce extra money.

The bravest of the options is to free universities to set fees. The trouble is that to close the funding gap Taylor identifies, an average Pounds 700-a-year increase per student would be needed without taking account of extra needed to provide bursaries for poorer students. There is already evidence that today's student finance system is deterring applicants. The Labour project of expansion to 50 per cent participation would sit uneasily alongside a price rise on this scale.

The most politically plausible solution is a graduate contribution (distinguished from a tax because the sum to be paid would be capped not open-ended). As a replacement for fees, this has the drawback that the government has to fill a cash gap of many years until upfront fees from students are replaced by payments from well-salaried graduates. But with government cashflow in its present state, this might not be too big a problem. The real issues are the size of the contribution, the payment threshold and again, whether the resulting fund would add to or merely replace public money.

The challenge now is for UUK members to choose an option and mount a united campaign to get it. The time is right. The run-up to a general election and its aftermath provide a once in four-or-five years opportunity to extract the means to provide better staff:student ratios, better-paid staff and better facilities to the benefit of students, staff and society.