We must grasp the nettle of university reform

Hundreds of thousands of children will be condemned to second- class degrees - in more ways than one. So say the alarmists who fear a new split in the higher education system. Only years after the old division between polytechnics and universities was finally abolished, academics are now worried about a new hierarchy in higher education: an Ivy League of the top British universities, followed by everyone else.

The worries have been provoked by a plan thought up by the Higher Education Funding Council for England which would link the funding of expansion in universities to their results. This implies university league tables. But when dealing with something as subtle and complicated as higher education, how is a fair and reasonable grading system to be created?

The traditional universities would not worry or flinch. Badly starved of cash, they complain that funding teaching by the number of bums on seats in the lecture hall - factory education - has compromised their standards. Some even contemplate top-up fees for students to raise the money they claim they need.

All in all, it isn't hard to imagine the creation of a new clique of universities drawing in more cash (whether from the HEFCE or from the students themselves) with which to teach Britain's academic elite. Meanwhile - so the argument goes - undergraduates at other universities would have less money spent on them, and receive a lower standard of education as a result.

In fact, however the HEFCE's proposals are sensible, and rather innocuous. It is ludicrous and Luddite to object to the formation of league tables for universities, so long as the grounds for judging them are fair and open. The more information available to prospective students and to employers the better.

Linking the funding of new places to results makes sense too. As higher education has expanded, more of taxpayers' money has poured into the institutions that managed to push numbers up fastest, without regard to the quality of the education provided. All higher education institutions should welcome a new approach whereby quality as well as quantity are taken into account.

So far so good. However, certain controversial questions follow from the HEFCE's new plans. And the first one is the problem of measurement. For government to discriminate between courses and institutions fairly, it needs a clear and well-understood idea about what kinds of education it wants to provide for the next generation. Even more sticky is the question about how far these links between quality and funding should go - and whether Oxford and Cambridge can indeed demand ever more cash on the basis of their results. These are daunting problems indeed - and they fall at the feet of Sir Ron Dearing, head of the Government's commission into the future of higher education.

Deciding the first question - what kind and what quality of education we want - will be a difficult task. Governments are rarely able to judge the sorts of skills that the labour market will need 10 years down the road. Often they get it wrong. But they cannot duck it, either. Teenagers are unlikely to be much better equipped to decide.

Whatever Sir Ron does, however, he must not bow to conservative traditionalists. Minimum standards are vital. But a rich national curriculum for the content of degrees would be a mistake, limiting the diversity and specialisation that should take place in post-18 education. He should bear in mind too that the skills employers tend to value most highly among graduates are not developed in the factory-style education which is cheapest to provide and expand. Enabling students to practise communication and presentation skills means giving them close attention in tutorials and seminars. That's expensive. Shorter, but more intensive, teaching courses may be one option to defray the extra costs.

Furthermore, Sir Ron's remit should not simply include rarefied academic education. High-level, high-quality vocational and professional education for the over-18s is essential too - and is in far greater need of attention and development than the academic sphere. Sir Ron could start by making sure courses in these areas are properly validated and funded.

But it is the second question - determining the relationship between funding and quality, and deciding who pays - that will prove most controversial. Although in the past the state provided extra cash for academic education, and in particular for Oxford and Cambridge, both Government and Labour are moving towards greater equity in funding.

Oxford, Cambridge, LSE et al argue on the other hand that they need the extra money - either from the taxpayer or the student - to subsidise and protect their excellence. Harvard, Stanford and the other Ivy League universities in the US all charge considerably higher fees than, for example, Michigan University. And students are prepared to pay them.

It would be wrong for British universities to get extra cash from the taxpayer just because they had a more academic intake. To justify the extra money, they would need to prove that they added extra value to those already talented students. And given that those privileged students will benefit most from the education, there is some case for asking them to pay more back to their university (through for example a graduate tax) in order to pay for it.

These latest ideas are only the beginning of the tougher and more widespread reform of universities Britain now needs. It should cover all options - how long the courses are, who is entitled to attend and who pays what. Radical change is essential. Given the complexity of the debate it is depressing but perhaps not surprising that the Government postponed Sir Ron Dearing's report until after the election. Confused and worried, the universities will have to stagger on until then.