Universities would be allowed to exceed their student number quotas by up to 10 per cent to increase competition, the Conservative Shadow Minister for Higher Education has said.
Setting out his personal vision in an exclusive interview with Times Higher Education, Rob Wilson also suggested a "student voucher" system under which government funding for university teaching would follow learners instead of being allocated to an institution.
He also proposed dramatic reforms to free universities from government interference before elite institutions are forced to opt out of the state system.
The Higher Education Funding Council for England (Hefce) sets limits on the number of students universities are allowed to recruit each year, allowing a 5 per cent leeway. Mr Wilson suggested that this should be raised to 10 per cent over one or two Parliamentary periods.
"A move to part of the funding being attached to the student is also worth considering," he said. "This would encourage underperforming institutions to continually improve."
Increased competition would force universities to publish more information about their courses, teaching provision, campus facilities and graduate prospects.
Mr Wilson, MP for Reading East, also suggested a "premium" for disadvantaged students. "Instead of ring-fenced Hefce funding, universities would be incentivised to attract widening-participation students."
Asked how this would be paid for, Mr Wilson said he was reluctant to discuss funding in advance of the Government's review of tuition fees next year. But he said that one option could be to raise money from the sale of student loans, which have a total value of £21 billion. The Government said in the Comprehensive Spending Review that it planned to collect £6 billion from loan sales by 2011.
Mr Wilson suggested that part of the capital raised should be given to universities each year. As well as funding student premiums, this cash could be used to increase autonomy from the Government. "Australia has committed £5 billion to an endowment fund for its universities. I hope that over a Parliament we can do better than that." But he said this would depend on the state of the economy and Treasury priorities.
Mr Wilson said he was convinced that if government interference in higher education increased, some Russell Group universities would opt out of the state system in the next decade. "Nearly every vice-chancellor I have met has made the point that as government funding has proportionately reduced in significance, its demands and level of interference has increased," he said. "There are about 33 earmarked pots of funding totalling more than £1.2 billion. We would like to simplify funding - the only things we would require in return are high-quality teaching and excellence in research."
He said he agreed with Michael Gove, the Conservative Shadow Schools Minister, who has backed Labour's commitment to get 50 per cent of under-30s into higher education by 2010. Mr Wilson wants to increase pathways into higher education by making further education colleges more like US community colleges, which are part of the higher education system, and by expanding a credit-based qualifications system.
But rather than "tweaking", Mr Wilson said he wanted to "change the entire edifice" to boost recruitment, innovation and quality of teaching and research, while reducing government influence.
"Conservatives will need to be bold and offer a new, alternative direction if we are to meet the challenges that universities will face in future," he said. "But that direction needs to be decided in a responsible and measured way."
TUITION-FEES CAP MAY NOT BE RAISED
Universities should not assume that a Conservative Government would automatically raise the cap on student tuition fees, the Shadow Secretary of State for Innovation, Universities and Skills has warned.
Speaking in advance of his speech to the Universities UK annual residential meeting this week, David Willetts said he had heard suggestions that if enough universities operated on the basis of a fee increase, it would become an inevitability.
"Universities should not assume that a Conservative Government would raise the cap and would do so with no other changes. To expect £3,000 to simply increase to £5,000 would be naive," he said.
If universities want fees to rise, they would have to show how future students would benefit, he said. "Students and their parents will rightly balk at the idea of paying more if they cannot see how or why higher fees will provide a better education for the student."
Mr Willetts was also expected to highlight continuing unhappiness with government cuts to funding for those studying an equivalent or lower-level qualification (ELQ) than those they already hold.
He said: "It is an injury universities have not forgotten. One reason is that it was done in such a high-handed manner - something that a future Conservative Government would try to avoid. But also it opened up one of the worst injustices in our higher education system - the poor treatment of part-time and often mature students. We cannot ignore the issue any longer. The current regime is indefensible."
Improving the lot of older and part-time students might mean reversing the ELQ cut, he said, or it could mean more maintenance support or better recognition of the cost of teaching part-time students by the Higher Education Funding Council for England.