Since the end of World War II, top British universities have experienced relative decline in the international league tables. Most especially, the Universities of Cambridge and Oxford have really struggled against top private universities in the United States: Harvard, Princeton, Yale, Chicago and Stanford. The reasons, of course, are (1) that no government agency can compete on even terms against a private counterpart and (2) that government funding of Oxford and Cambridge has simply not matched the private funding of the top US universities.
English universities are now about to experience a revolution in their relationship with government. This week the coalition government is expected to announce cuts of 80% in government funding for undergraduate instruction. At the same time, caps are expected to be lifted from the tuition fees that universities are allowed to charge the undergraduate student population. But with one serious proviso. Once fees move above £6,000 per annum, universities will be required to return a large proportion of the excess fees to the Treasury.
For many universities, the new arrangement will allow them to plod on at a mediocre performance level. And no shock waves are expected. For Oxford and Cambridge, however, this is not the case. Educating an undergraduate at those universities, in the collegiate tradition, costs around £18,000 pounds per annum. Even now, the government funds less than 50% of this cost. Government funds only 18% of the overall costs of these universities.
Significantly privatised as they have become, Cambridge (and surely Oxford will follow) is apparently considering removing itself completely from government funding. By so doing, it would release its admissions officers from strangling equity rules that force it to accept a rising number of students who are not top-ranked. They will be free to take whomsoever they wish, offering bursaries to less well-off candidates, much as is the case in the US.
Much more important, as private ventures (albeit non-profit in nature) they will attract market-oriented faculty and will adopt market-oriented curricula. Inevitably, they will show ever cleaner sets of heels over their stumbling bureaucratic competitors. Ultimately, their success may take all the top universities in England into the private sector. And then the US leaders will truly have to step up if they are to retain their international dominance.
Since public choice scholars rarely consider that governments act in error, the presumption must be that the current British government desires this outcome, and relishes the effective denationalisation of what used to be one of England’s best performing industries.
An earlier version of this article appeared on Charles Rowley’s blog.