A modest proposal that we can all agree on

How to raise money for universities and keep the left happy

Just occasionally there comes a problem that is really not complicated at all, yet people still contrive to tie themselves in knots addressing it. Such a problem is that of university funding and variable student fees. Consider the common ground that most people occupy.

First, British universities as centres of excellence in research and teaching are losing ground, particularly to the Americans. Second, the amount they spend on each student has declined. Third, the bill for raising all British universities or, more accurately, all university departments to a state of international competitiveness would be prohibitive.

It follows that if we are to have any internationally competitive university departments at all, they will be a minority. They will be elite institutions. Some people do not like elitism in any context. Yet perhaps a majority - on the left more than the right - would go along with the John Rawls theory of justice: inequalities are justified if they improve the situation of the worst off. It can plausibly be argued that the country as a whole, including the worst off, would benefit from having some first-rate university departments. But academically elite institutions, it is agreed, should not become socially elitist. If we have elite institutions, we cannot have thoroughgoing egalitarianism. But we can certainly have meritocracy without ossifying divides of wealth and status.

So we need to spend more on universities; we need to spend differentially to foster centres of international excellence; and entrance to such centres must be meritocratic. The old solution was to support universities from general taxation and make entrance depend exclusively on competitive examination with all fees paid. All academic studies now agree, however, that if government spending is to help equalise life chances, it should be targeted at pre-school and primary school children.

The increase in spending on universities must then come, at least partly, from elsewhere. Why not those who benefit from that education? Those contributions can be obtained in a way that does not disadvantage the less well off and does not prejudice their entry to elite institutions. All that is needed is a scheme that is clear and transparent and wears its fairness on its face. Here is one.

For select university departments - those rating highly in research rankings, with the capacity to be internationally competitive - the government should issue coupons, entitling students to attend courses. The face value of the coupons and their value to the university department would be higher than the flat fee universities in general can charge. The university agrees not to admit anyone without a coupon.

A prospective student has to pass all the usual tests and selection criteria imposed by the university. Only then can he or she apply for a coupon. The government then sells the coupon to the student according to a sliding scale, depending on the means of the student and his or her family. Poor students pay nothing at all; the rich pay full whack. Payment for the coupon could be on the never-never and dependent on subsequent income just as the government is currently proposing. If some people drop out or fail to take up coupons, the opportunity is offered to others strictly on the basis of their ranking in the academic entrance tests.

It could be protested that this scheme would accomplish little or nothing that the government's present policy does not. But presentation is all. The device of the coupon makes it clear that there is not a "free market" in higher education but that the state is engaged to ensure fairness and even to discriminate positively. Who on the left could disagree with that?