Radical intervention in higher education by the incoming government is needed if universities are to balance the demands of access and excellence successfully, according to Sir David Watson, Brighton University's vice-chancellor.
In a report he calls on the incoming government, aided by universities, to promote alliances and mergers between higher education institutions through carrot-and-stick funding mechanisms.
Sir David said changes are necessary to enable the sector to tackle the government's widening-participation policy, while satisfying the government's and the sector's wish to see academic standards maintained and enhanced. A lack of action could mean the sector failing to do either, Sir David warned.
The paper, co-authored by Rachel Bowden, who is a research fellow at the university's education research centre, says: "Higher education has performed well, but it has not prospered. Financial weakness at the institutional level is matched by continued concerns over pay. The social agenda has yet to be tackled in any comprehensive way, and higher education has yet to make the serious switch from exacerbating to alleviating the middle-class domination of the system.
"Issues of sector organisation are becoming more intense, especially in conurbations such as London, where the universities with the most progressive social missions are beginning to look like market failures."
Concerns are raised about a "universal agenda" designed to homogenise the missions of old and new universities. The paper says this, combined with financial pressures, means that changes in the organisation of the system as a whole are on the horizon.
It says: "In our view, a much more serious effect is the 'reverse academic drift' of traditional universities now being offered compensatory funding to move across fields - such as access and business and community support - in which the polytechnics and colleges have excelled.
"This radical convergence of institutional missions urgently raises questions about alliances, potential mergers and other types of institutional development. The key element in the case for a radically diverse system was that it could aspire to being a genuinely complementary mosaic of differentiated institutions: colleges as well as universities.
"In these circumstances, if we all have to do it all, many of us across the sector are now asking how sensible it is to have so many relatively small higher education institutions."
The paper congratulates Labour on its "courageous" decision to introduce tuition fees and student loans. But it says the decision suffered because fees were introduced on a means-tested basis and grants were abolished.
It also suffered from an "unanticipated consequence" of devolution where the Scottish Executive abolished up-front fees.
Criticism is levied at government micro-management of the higher education system, for instance, in the precise targeting of student-number growth in areas such as foundation degrees. The paper says that this was done in ignorance of market forces.
The government is accused of hi-jacking the access topic when chancellor Gordon Brown attacked Oxford University when state-school pupil Laura Spence was rejected by Magdalen College.
The paper says: "This scheme, and the extra money given to relatively prosperous, more socially exclusive universities, has all of the divisive and regressive qualities of the one boldly ditched by the government for schools."
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