Britain's world-class universities, including Oxford and Cambridge, will "wither away into mediocrity" by 2012 if they are not privatised and deregulated, concludes a book from an Oxford University-based think-tank.
The Economics of Higher Education by David Palfreyman, director of the Oxford Centre for Higher Education Policy Studies, argues that universities must be freed to charge market-based tuition fees in the region of £10,000 a year.
Mr Palfreyman, bursar of New College, Oxford, says in the book that the Higher Education Bill, which will introduce variable tuition fees capped at £3,000 until 2012, is only a "rather small and tentative step" towards addressing the dangerous underfunding of higher education.
But he says it is at least "a step in exactly the right direction towards the deregulation and marketisation of higher education, towards its denationalisation and (re)privatisation, towards the beginning of its Americanisation and away from the bleak prospect of its increased Europeanisation".
The book, sub-titled Affordability and Access; Costing, Pricing and Accountability , argues that British universities should go the way of the US system, where private Ivy League universities charge tens of thousands in tuition fees, funding generous bursaries for poor students and freeing up money for competitive academic salaries and the best facilities.
The alternative, Mr Palfreyman argues, is for British universities to "sink further into under-resourced Galbraithian public-squalor along the lines of some other European systems", where universities are seen as an exclusively state-funded "nationalised industry", free to students, but characterised by decline.
The book builds on research by Oxcheps, an independent think-tank based at Oxford University, which found that Oxford would need to raise its tuition fees to £10,500 a year if it wanted to keep up with its US competitors.
The study put the true cost of teaching each of Oxford's 11,000 undergraduates at £18,600 each a year, with Government funding covering less than Pounds 10,000 per student. It says that unless the £3,000 cap on top-up fees from 2006 is lifted, Oxford's teaching deficit will rise from £13 million to £35 million by 2012.
This view was echoed by a Centre for Policy Studies report in March, by Robert Stevens, former master of Pembroke College, Oxford. Professor Stevens argues that universities should become private institutions free to set fees according to the market.
Michael Sterling, the chairman of the elite Russell Group of 19 top universities, told The Times Higher in February that the introduction of £3,000 a year fees would still leave British universities £4 billion worse off than their US counterparts.
Mr Palfreyman's book warns that the debate about the funding of British higher education must not cease with the expected passage of the Higher Education Bill into an Act of Parliament in July.
"So, has the great debate now ended, with universities firmly off the political agenda until the Government's promised review of fee levels in 2009, and hence the cap on the £3,000 variable tuition fee not to be increased until 2012? If so, we can expect the world-class status of Oxford, Cambridge, Imperial, the LSE and UCL to wither away into underresourced mediocrity."