The future of funding

In peril from the £24m black hole

As the new vice-chancellor of the University of Cambridge, I have taken on many challenges - academic, administrative, fiscal and political. The most urgent and intractable of these is to deal with the financial challenge facing Cambridge, which is symptomatic of the chronic underfunding affecting every university in the country.

At university, in Jeremiah Day's memorable phrase, students acquire "the furniture of the mind". Universities nurture scholarship and research. Reporting recently on relationships between universities and industry, Richard Lambert championed the role of universities as economic drivers. But the role of universities in creating less tangible forms of wealth deserves equal recognition: the wealth represented by scholarship in the social sciences and humanities.

Britain's universities play these roles in various combinations and in distinctive ways. In doing so, they contribute mightily to society and should be valued and supported accordingly. Cambridge is among a number of British universities that also has a significant international impact. These universities attract students and scholars from many nations, and have research collaborations that reach around the world. They are a global asset of which this country can be proud.

Despite this, we have seen a progressive erosion of public funding for universities. Public support for higher education as a percentage of GDP remains significantly lower today in the UK than in most developed countries.

The government has now published proposals to ease the funding deficit. Higher tuition fees, of up to £3,000, would still be significantly lower than those charged to overseas students and, at Cambridge, would only represent a contribution towards the real cost of a student's education. At Cambridge, our analysis shows that teaching is underfunded by at least £24m per annum. Salaries, both of academic and support staff, have been eroded, and the ability of the university to recruit and retain staff at all levels is at risk. I am clear that without a significant and rapid increase in our income, our position in the first rank of world universities will be in peril. I didn't return to Cambridge to witness its decline and we will not allow it to happen.

Opposition to these proposals has taken two forms that cause me concern. One is that the imposition of higher fees will discourage poorer students from applying to university. Students from very poor families do not apply to Cambridge in the numbers we would like. Why is this so? We don't know for sure, although it seems to be some combination of worries about cost, the academic workload, being academically "up to it", or fitting in.

In an effort to respond definitively to the first of these, last autumn we developed our existing bursary system into an even more ambitious scheme that could be implemented immediately, supported by a portion of the higher fees. Together with government funding, this system would enable the poorest students coming to Cambridge to receive their education almost completely free at the time. Higher fees will allow us to provide more support, not less, for students from disadvantaged background.

The other point of opposition has been that the introduction of variable fees will give rise to a two-tier system, such as is said to exist in the US. Having lived in the US for 30 years and served as provost of Yale University for eight of them, I am convinced that this misrepresents that higher education system.

There is a diversity of financial structures supporting a diversity of institutions, just as in the UK. In the US, the real threat is not variable fees but rather the possibility that historic levels of public support for higher education will decline, with an inevitable dip in the quality of institutions most dependent upon that public support.

I believe the US higher education system provides reassurance with respect to the impact of variable fees, and helpful models for bursaries. It shows how strong and steady public investment can yield universities of outstanding quality. The current government proposals for loans repayable by graduates on an income-contingent basis are far superior to the heavy debts and repayment schedules that increasingly burden graduates in the US.

In the weeks ahead, there will be passionate debate. The government's proposals should not blind us to the fact that other revenues are still urgently needed, including philanthropy and a continuing increase in government investment in higher education. But if this bill fails, it will be a grave matter for higher education because it is vital for the future of our universities, and for the future opportunities of students from all backgrounds.

Reproduced from The Guardian, 13 January 2004.