The primary purpose of this book is to analyse the effects of recent policy decisions to attempt to introduce a market and competition into the university system in the belief that this will increase quality and reduce costs. Given the introduction of student fees as the overwhelming source of funding, it is a presumed consequence that students will increasingly ask questions about value for money. Students are leaving university with up to £60,000 in debt, at a punitive interest rate of up to 6.3 per cent. This will affect their ability to gain a foothold on the housing ladder, or other of the common rites of passage accessed by previous generations. It potentially limits labour market flexibility, both because graduates will not be able to afford to live in some areas of the country but also because they may make career choices limited by their debts.

Before we turn to these issues, this chapter is an attempt to sketch a brief description of historic changes in Higher Education policy and indicate the direction of travel that has led us to where we are. The emphasis will be on universities in England since the policies adopted elsewhere in the UK have recently differed. Scotland under devolution has taken the approach of maintaining free fees, as we discuss at the end of this chapter. This survey is by no means intended to be comprehensive, but an indication of policy issues that have culminated in those which are the main subject of our analysis.

Until the 1830s Oxford and Cambridge were the only universities in England. Early in the nineteenth century a number of medical schools and ‘mechanical institutes’ developed. These relied on private financial support from individuals and local business and were poorly funded compared to Oxford and Cambridge which had ancient endowments and a wealthy clientele. In London, the ‘London University’ and King’s College were established in 1826 and 1829 respectively, but without degree awarding powers. The funding for these new colleges came partly from an increasing concern for moral obligations to the underprivileged and partly for the need to enhance the nation’s capacity for medical, scientific and technical advance. This need was perceived also at government level by the advances in Germany in particular which was seen as a major economic and political threat.