Plans for an extension of performance-related pay for academics will be included in the government's blueprint for a free market in higher education, it became clear this week.
Higher education minister Margaret Hodge told vice-chancellors that it was vital to raise the status of teaching and to increase the rewards associated with it. Interviewed earlier, she said that academics had to be given incentives to raise the quality of their teaching.
But the Association of University Teachers warned that it would resist any attempt to introduce PRP. The union claimed that civil servants were already working on plans to link salaries to student appraisals of their lecturers.
Sally Hunt, the AUT's general secretary, said: "The only PRP that university staff would find acceptable would be one that rewarded all of them for their incredible efforts over the past 20 years, during which time they have taught twice as many students, with fewer resources, while producing even more world-class research."
Ms Hunt said that a link with student satisfaction surveys would be "the single most divisive policy this government could introduce". She said any use of student appraisals to determine pay levels would be ridiculous, because "there is evidence that it's the teaching staff who tell good jokes during lectures who end up getting the best marks from the students."
The Department for Education and Skills said that universities would remain responsible for their academics' pay and conditions. But, asked whether the strategy document planned for November would include PRP, Ms Hodge said:
"We have to provide incentives in the system to ensure that all academics view teaching as a central part of their jobs."
Funding chiefs are due to report next month on the success of the government's £330 million staff recruitment and retention fund, which encouraged institutions to implement PRP schemes, and are expected to discuss plans to continue the initiative.
Ms Hodge promised "radical" reform, in which failing institutions would be left to close. She said: "Allowing a freer market may create more turmoil in the sector. But, actually, if students and research funders do not want what is on offer, why on earth should we carry on funding it?"
Earlier, Ms Hodge said that government intervention would be kept to a minimum and that there would be a safety net for universities in trouble. But she said: "There will always be overarching objectives that we will want to be able to fulfil, which a totally free market might undermine.
"The current regime is one-size-fits-all, but if you fund according to that, you inevitably fail to encourage excellence. But as far as the public purse is concerned we will not carry on putting money into failure. What this means for institutions, they must sort out."
Three main challenges underpinned the strategy, Ms Hodge said. They were widening participation, setting up a stable funding system for higher education institutions and the economic and social role of higher education.
Ms Hodge said that the arguments in favour of expansion and widening participation were powerful. She said that research based on the Labour Force Survey, by the DFES, showed that graduates could expect to earn about 64 per cent more than non-graduates.
UUK president Roderick Floud, vice-chancellor of London Metropolitan University, told The THES : "I do not know what a free market in a state-supported system of higher education means. It seems a contradiction in terms. We already have a free market in terms of student demand."