Why I am quitting as head of the LSE

Just over a week ago, the Committee of Vice-Chancellors and Principals (CVCP), a little to my embarrassment as a member, refused to listen to a promised speech by the Minister for Higher Education, Eric Forth. Instead they sent a message via a senior civil servant: "Either we get more money to teach our students or we must reduce their numbers."

The committee was incensed that no one had seemed to notice or care about the cuts imposed on the universities in this year's budget - amounting to some pounds 500 per student per year for the next three years.

The very future of the British university system is at risk. Yet no one seems to be prepared seriously to address the problem. For me, it has come to the point where I no longer feel able to remain at the head of one of Britain's - and the world's - leading universities in such circumstances.

The crisis - for that is what it is - has been a long time coming. In 1990, I chaired a working party of university vice-chancellors and polytechnic directors that considered the implications of the expansion of higher education. It concluded that if the Government wanted expansion to continue, then it would have to rethink the way in which higher education was funded.

"Simply to continue with present policies will lead to a demoralised, poor-quality [higher education] system which will be incapable of meeting the real needs of society," we predicted. "Wait and see is not a viable option."

Tragically, the Government did no such rethink. First it waited while the expansion continued, then it stopped the expansion. What we now see is a demoralised system of declining quality with restricted access.

The committee has decided to call a special meeting next February to discuss which of two options it intends to recommend to deal with the crisis we predicted. One option is to reduce the number of students. The other is to ask those students who currently do not pay for their tuition to make a contribution towards it.

Until now everyone has opposed the latter, but there are signs that some are shifting their view. This has to be a good thing.

Reducing numbers is not an option. The expansion of higher education and the greater opportunity thereby given to so many young people to obtain good jobs is one of the great achievements of this government. Cutting off those opportunities should be the last, not the first, resort of those who profess to be educators.

The other option would address the real mistake made in the past decade - which was to sanction the expansion of university places without ensuring that there was in place an appropriate funding mechanism. The Education (Student Loan) Bill currently in committee in the House of Commons could begin to remedy this if Parliament takes the opportunity to improve the details of the loan scheme itself and also allows the loans to be used for the payment of fees.

Until recently, the CVCP has been reluctant to agree to this. But opinions are changing fast under the pressure of the financial crisis that confronts us. The committee now supports a student contribution towards tuition fees provided they have access to a fair and equitable income-related loan scheme.

This represents a significant change of heart since 1993. When I suggested that the LSE introduce a "top-up" student contribution fee the idea attracted only nine votes out of a possible 700 or so in the LSE's academic community and caused a breach between us that has never really healed.

Two years on the picture is rather different. Now a direct contribution from our students to the cost of their education seems the key to institutions such as the LSE obtaining the resources they need to provide a world-class education. A new scheme, of course, needs to be equitable, fair and to preserve opportunities of access to all able to benefit.

I believe that can be done. It would certainly not be difficult to improve on the present situation. It is only full-time British and European Union students who have their fees paid wholly by government grants. There are around 1.5 million British students currently at our universities; of these, one-third are studying part time and therefore pay their own fees, as do those students from countries outside the European Union.

Fees for British and EU undergraduate students in classroom-based subjects are set at pounds 750 for this academic year. At the LSE the rest pay pounds 7,800. Even when allowance is made for the grant that comes to the college from the Higher Education Funding Council for England, one set of students pays in direct fees at least three times what the British government pays for the others.

This is highly inequitable and the manifest unfairness is beginning to rankle. An American student working his or her way through the LSE might accept, for example, that she should pay three or four times what a British student is charged for the same course. But why should they also subsidise a German, an Italian or a Greek? And should a Bangladeshi from a poor family subsidise a Belgian from a rich one? A funding system which, on average, transfers resources from the poor to the rich does not fit my definition of equitable or fair.

But the real issue for me as director of the LSE has always been excellence rather than equity. LSE is one of the world's leading universities and my primary duty is to maintain that position. Keeping up with the best in the world is expensive as well as difficult. Securing the best teachers, the best libraries and the best facilities, particularly computer-based information technology resources, is very expensive.

Other institutions have other missions and other purposes. For them keeping up with the international competition may not be so important. For the LSE it is vital. It is also vital for standards in British universities in general that that some of the nation's universities stay among the world's best.

As long as Britain has some institutions that are genuinely centres of world excellence, the rest of the system has a benchmark against which to measure itself, and our students will know that they are being taught by those who know what is the international meaning of "excellence". But if we lose touch with that standard, then British degrees will sooner or later become devalued. This will happen unless those universities in a position to do so, such as the LSE, keep their international reputation.

Sadly - and with considerable reluctance - I have come to the conclusion after 16 years as head of two universities (at the University of Salford before the LSE) that this cannot be done unless the students and/or their families make a direct contribution.

The universities have explored other alternatives. Both at Salford and at LSE I have established and persuaded my colleagues to support fundraising campaigns to obtain more research grants and contracts. The strategy has had some success: the LSE Foundation has raised pounds 7m in its first 18 months and the university's research income went up by 23 per cent last year. We have also set up short course activities, commercial companies and established external study programmes, all of which have yielded significant profits.

Our reward is to be faced with ever-declining public funding. If our British and EU students want an education that is better than can be provided on this funding then they, too, have to begin to make a contribution to our costs.

We should ask them to do so. The universities have the power. They are still autonomous institutions; it is only a convention that they allow the Government to dictate their fee levels. I have long made clear to my colleagues that in my view charging is preferable to rationing and that we should act while we still have something worth protecting.

The Government will not do it; it has a different agenda. My colleagues (both at the LSE and some still on the CVCP) deeply dislike what is, admittedly, an unattractive solution. They have not wished to hear.

That is their privilege and their problem. Come September, it will cease to be mine. I shall be leaving the job to others. I hope that in February my colleagues in the CVCP will prove that they are not willing to preside over the degradation of institutions that were once among the best of their kind in the world.