Private businesses will be able to award their own degrees in direct competition with the traditional higher education sector under government plans published this week.
Launching a consultation on new criteria for the granting of degree-awarding powers, the Department for Education and Skills admitted that the rules had been clearly framed "so that they could be met by organisations that... fall outside the traditional university and college sectors".
The document also reiterates the government's determination, in the face of stiff opposition, to allow teaching-only institutions to apply to use the coveted "university" title, currently restricted to bodies that carry out both teaching and research.
The THES reported last November that ministers planned to open up the degree market to allow a wider range of bodies - such as large corporations, private education providers and specialist colleges - to offer their own degrees, and the government announced a review of the system in its white paper in January.
Publishing the proposed criteria this week, the DFES said it had toughened up the rules in relation to guaranteeing quality and made the granting of new powers dependent on six-yearly reviews for the first time.
"The criteria have been consolidated to make it simpler for an organisation to focus on what is essential for the granting of degree-awarding powers," it said.
The current criteria, while they do not preclude applications from private business, are considered to be too biased in favour of traditional campus-based institutions, presupposing standard structures of governance and management.
For example, the new criterion on governance structures makes clear that "organisations" - as opposed to institutions - must be "governed, managed and administered effectively". It states: "In the case of an organisation that is not primarily a higher education institution, its principal activities are compatible with the provision of higher-education programmes and awards."
Sally Hunt, general secretary of the Association of University Teachers, said: "This is a blatant attempt to move higher education into the commercial sector... it takes us one great stride towards the McDonaldisation of higher education and will lead to a further erosion of academic freedom."
The consultation paper also re-iterates the government's proposals to allow teaching-only universities. Currently, to call itself a university an institution must have the power to award taught degrees as well as research degrees, must have a minimum of 4,000 students and must offer a broad range of subjects - with no fewer than 300 students in each of at least five disciplines.
The paper says: "These requirements limit the diversity of the university sector and discourage institutions from focusing on their areas of strength."
Instead, just taught-degree awarding powers will be needed. The requirement that a university must have a wide range of subjects will also be removed.
The government plans to keep the minimum student numbers requirement for now but the paper hints that this could be removed.
It says: "We recognise that smaller specialist organisations, by their very nature, may find this criterion difficult to meet and would welcome views on how appropriate it may be for such organisations."
A spokeswoman for Universities UK said UUK remained opposed to plans to let teaching-only institutions become universities.
Higher education minister Alan Johnson said: "There are many excellent higher education colleges focusing on providing high-quality teaching.
Their role should be recognised. Where teaching-focused organisations meet our high standards - which are independently assessed - it is right that they should be eligible for university status. We are also strengthening the standards that organisations will need to meet to be able to award degrees."
Consultation ends in December and the final criteria are expected in January 2004.