Editor's Chair: When the university goes public

On a sweltering 18 July in Brussels, a group of 40 academics, lobbyists, journalists and commission officials gathered at the local offices of the British Council to discuss a politically charged topic these days in Europe: academic reform. But as usual for Brussels, the real action was elsewhere.

The topic at hand was a well-reasoned essay, published in May by a liberal think-tank, the Centre for European Reform, that advocates a revolution on campus. The report, by former Financial Times editor Richard Lambert and BP strategy vice president Nick Butler, berates Europe’s university system as ossified, unproductive, irrelevant – and, for the most part, unsuited to providing Europe’s economy with the skilled workers and new technologies it needs to prosper.

“There is a kind of drab uniformity across the sector: many institutions are struggling to cope with growing numbers of students and inadequate resources, delivering uninspiring teaching in dilapidated buildings,” they write.

Forever under?

Europe under-invests: 1.2 per cent of GDP goes to higher education, compared with 2.6 per cent in the US. It under-performs: just nine European universities (five of them in Britain) make the international rankings of the top 50 universities, and their share of Nobel Prizes has been in decline for decades. It over-promises: state subsidies and open-admission policies, nearly universal since World War II, now have 56 per cent of 20- to 24-year-olds attending university – yet, because of poor funding and bad teaching, about 40 per cent of them won’t graduate. (In Italy, it’s close to 60 per cent.) And it over-reaches: while most of the nearly 4,000 universities in Europe dabble in research and postgraduate education, the more concentrated US system has just 215 universities granting postgraduate degrees, and about 100 doing most of the research.

This is sad but uncontroversial. In fact, EU education commissioner Jan Figel joked at the conference that as he was reading the report “I thought I was reading our own papers” inside the Commission.

But the solution is disputed. Lambert and Butler propose a stridently British, liberal programme – so British that, as one Commission official noted, it’s flatly unacceptable to most Continentals. (The cross-Channel entente is not very cordiale these days.) They advocate the institution of tuition fees, so universities get funded and students have a reason to work. They advocate concentration of resources at fewer, better universities. And they advocate greater autonomy from education ministers – the autonomy to control their own admissions, to specialise in fewer disciplines, and to experiment.

Vision across the Tunnel

The most eloquent argument, however, wasn’t in that Brussels conference room – but across the Channel.

There, Imperial College London had just set the date for the start of a most-radical experiment in university management: the flotation, on London’s small-company stock market, of its tech-transfer unit, Imperial Innovations Group plc. The flotation, to raise up to £26.5 million, has been years in preparation.

But the impact will be huge – not just on Imperial, but on other universities in Europe and beyond. Most universities, prodded by their governments to “bridge the gap” with industry, have dutifully created technology transfer offices to sell licences, win research contracts or fund spin-out companies. In fact, most of them in Europe are pitifully unsuccessful. For instance, collectively they earn just 5 per cent as much licensing revenue as their American counterparts.

The idea at Imperial is simple: use the disciplines of the market to force better and more. That doesn’t mean the market will dictate what the professors research; public funding and faculty committees will continue to dominate that decision. But it does mean that the market will decide which of their discoveries gets the most and fastest private funding, to develop their ideas into new products and services.

The Imperial flotation doesn’t stand in a vacuum. The University of Sheffield was first to start down this stock-market path, when it spun off its life-sciences discoveries into a separate (and narrower) company, Biofusion plc. And seven other UK universities are now flirting with the market, having signed representation agreements with an independently listed company, IP Group plc. The biggest un-dropped shoe is at Cambridge, where plans for the university’s enterprise unit are about to get an overhaul from an American venture capitalist hired for the purpose.

But the Imperial flotation is, in itself, a revolution. It will draw new political attention, from Madrid to Moscow (and maybe in Massachusetts, too), to the idea of market-oriented reforms at universities. And that’s to the benefit of all, in Brussels and out.