Lonely piper plays on above the bloody battle

The struggle between state and universities has had some positive effects, writes Simon Jenkins.

Margaret Thatcher made a revealing reflection in her memoirs. She confessed that "our universities" had, during her time, been victims of "unintended centralisation". This had led many to think that "Thatcherism meant a philistine subordination of scholarship to the Treasury", which allegedly threatened "the future autonomy and academic integrity of universities". This, she said, was never her intention.

Before she could rectify this mistake, she was toppled. She was sorry, but university centralisation was the fault of those who toppled her - the "oops" theory of history. Here is a prime minister who could crush the Russians, smash the unions, obliterate Galtieri and confront all the demons of Brussels. But "our universities" merited an apology.

The Treasury became and remains the lead institution in policy for the universities. It was the Treasury that marshalled the government assault in what has been the 30 years war of British higher education.

Thirty years ago, British universities enjoyed extraordinary autonomy. They received unaudited subsidies. Academic staff enjoyed tenured employment and did well from the Robbins expansion. It was the world's most luxurious higher education system. It was a golden age.

Then, in 1976, the International Monetary Fund ordered the Callaghan government to set its house in order, a process that led to its downfall.

The Treasury received a boost from the election of Mrs Thatcher in 1979. Her first education secretary, Sir Keith Joseph, was the last to show any respect for academic autonomy. He struggled to protect the University Grants Committee, but in vain.

The Treasury had to institute discipline on universities that were, and still are, deeply conservative, expensive to the state and catering for what will always be a privileged middle class of students. Over the course of the 30 years war, the Treasury did not go the whole Stalinist hog. It tried to meet some of the universities' concerns. It did not dictate that all state funds to universities should go on teaching. It did not treat research as a privilege of the scholar and not an obligation on the state. It went on funding pure research. It did not hand research lock, stock and barrel to the private sector and the subject research councils. It merely sought a mechanism to ensure that £1 billion met some criterion of value for money.

Likewise with teaching. It allowed the universities to "own" the quality assessment assurance system. It held back from a full university inspectorate, as in schools. Assessment was to be run by a company owned by the universities. That system is now collapsing, but only because the universities defy quantification.

Breakdown came because universities lost government trust. They were inefficient, failed to ration research in the 1960s and 1970s, or to defend arm's-length funding. By going for growth in response to unlimited capitation grants before 1994, they broke the line on staffing ratios as the key indicator of quality.

But they never formed a coherent lobby for their case. The most remarkable failure of the 30 years war was the failure of universities to fight: the ultimate "treason of the clerks". Universities behaved like primitive tribesmen, feuding among themselves while the enemy was at the gates. Visiting universities this past decade has been an eerie experience. They seem terribly alone.

After the 2001 research assessment exercise, a few elite research universities will sit above a mass of predominantly teaching ones. The next wall to tumble will be fixed student fees. Variable fees will mean greater divergence between best and worst institutions. Oxbridge and the big metropolitans will become semi-private, charging high fees and running their own scholarship schemes.

The 30 years war was inevitable. Taxpayers will want eventually to call tunes. The bureaucracy put in place to achieve this was ridiculous. A nervous and enraged Treasury went too far. Like many wars, it was bloody. But universities are more focused as a result. They are more accountable. They work harder and waste less money.

The function of a university has been described as creating "spaces where contestation can take place". Above all, it is a building, a place, a location, a cockpit of ideas. It must be paid for. The paymaster will call the tune, unless the piper persuades him he has better ones. In the late 20th century, the universities lost that power of persuasion.

Tension between university and state is natural where universities purport to sustain and enrich the state, at the state's expense. The genius of the university is to make that tension creative. The struggle continues.

Simon Jenkins is a former editor of The Times . This article is based on his lecture ,"Academics and the treasury: the 30 years war", given at University College London on Wednesday.