Written by Melanie Newman
A claim that UK higher education cannot be considered a success while it receives a £14.3 billion annual public subsidy has been dismissed by senior sector figures.
The suggestion is made in a report published today by the Adam Smith Institute, a think-tank that promotes free-market policies.
The Broken University is written by James Stanfield, a fellow of Newcastle University's E.G. West Centre, which is privately funded.
The report claims that state funding brings no economic benefits to the sector, and identifies a series of negative consequences.
It states that as a result of the public subsidy, philanthropic donations are "crowded out", places are rationed, innovation is stifled and institutional autonomy is undermined.
It also attacks the Universities UK report The Impact of Universities on the UK Economy, published last November, which states that the sector earned £23.4 billion for the UK and employed more than 314,000 people in 2007-08.
Such claims are "meaningless", The Broken University says, as removing £14.3 billion of taxpayers' money, which would otherwise be spent by individuals, also has a substantial economic impact.
Steve Smith, president of UUK, responded that higher education provided an "outstanding return" on public investment.
"For every 61p of public investment received, universities also lever out 39p of private and international investment," he said.
"Compared with other sectors, this represents an excellent return. Universities now generate £59 billion a year for the UK economy, £15 billion more than in 2004."
He added that the sector achieved this despite receiving lower levels of public and private funding than competitor countries.
Mr Stanfield's report also criticises research council funding, highlighting costly projects that it considers to have been a waste of money. It adds that the lack of a profit motive in higher education has had a negative effect on the qualifications universities provide.
"Without government intervention, there would now be a variety of different, competing private qualifications providing a variety of educational experiences - many of which would have more purpose and relevance to an individual's future career than a degree," it says.
It recommends abolishing the cap on fees, allowing "full freedom of entry" into university, and extending tax benefits to for-profit institutions.
Terence Kealey, vice-chancellor of the University of Buckingham - the UK's only private university - said the report "demonstrates that Britain would be healthier if universities were privatised and the £14.3 billion subsidy was returned to the taxpayer".
But Paul Marshall, executive director of the 1994 Group of smaller research-intensive universities, said the sector already "drives positive social change that benefits individuals, the nation and the world".
A spokesman for the University and College Union dismissed the report as predictable fare from the Adam Smith Institute.
"It's hardly groundbreaking or surprising stuff from the brains behind the poll tax, rail privatisation and other policy disasters," he said.
"It is disappointing that politicians have not publicly distanced themselves from proposals that would destroy higher education."
Published in Times Higher Education here.