Our economic performance has improved markedly only since we started to offer opportunities for advanced professional and vocational training to a much larger slice of the population

Nineteen ninety-seven promises to be a bad-tempered year in higher education. The first part of the year will be spent waiting, first for the general election and then for the Dearing committee of inquiry's report. The wait will be spent jockeying for position. It started before Christmas. With the 1996 research assessments scarcely published, the vice chancellors of four of the highest-rated universities - Alec Broers of Cambridge, Sir Brian Follett of Warwick, Sir Stewart Sutherland of Edinburgh and Sir Derek Roberts of University College, London - made a pre-emptive bid for preferential treatment. World reputation at stake . . . needs of the economy require that the best universities be treated as a premier division . . . must have higher salaries, the best staff, better facilities, the brightest students. "If funds are dribbled out evenly and slowly, and excellence is ignored, we will fail," they said.

They were backed up from only a little further down the pecking order: Tony King of Essex University (5 star-rated government department) wrote in the Evening Standard to congratulate the four on pointing out "that standards of teaching at most universities are falling" and that it is "ludicrous" to pretend that all "universities" inhabit "the same scholarly and educational universe". "Puniversities" he dubbed the new universities and described staff at "a former poly in the North of England" as "nerds".

The four are the relatively fat cats of the system. Cambridge along with Oxford already receives unmeans-tested top-up fees for its students. All are in the group which takes the lion's share of research money. All attract a substantial proportion of their students from the most privileged sections of society both at home and overseas. All are able to gear public research funding with substantial industrial and charitable earnings as our reports on successful research teams showed last week. Of course they want more. And they have a case, though it is not quite the one they make. If we are to have research universities equal to the international (which mainly means United States) competition - and it is highly desirable that we should - those universities must indeed have more money. Their staff are paid less than the international going rate, their facilities and premises are too often outdated and squalid and they need to be able to give financial help to the brightest students, particularly postgraduates. Warwick University's success with its research fellowships shows how money can be usefully deployed at this level.

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But the top-rated research universities cannot expect that the large majority of universities and colleges, catering for an even larger majority of students, are going to sit quietly by in the face of their demands. This will be particularly so since, in economic terms, the fat cats' case is weak. When Britain had a small, selective, highly academic and research-oriented university system it was good at research but on the slide economically. Our economic performance has improved markedly only since we started to offer opportunities for advanced professional and vocational training to a much larger slice of the population. Our economic competitors only started to invest in basic research once they had become rich.

In so far as anything is established about causal links between economic performance and investment in education, it is that the highest economic returns come from investment in the earliest years and in vocational and technical work-related education and training in later years. Japan's universities have not been centres of research excellence - its economic success was built on school education and industrial training. The same is largely true of Germany whose education powerhouse in economic terms has been its technical universities, the Fachhochschulen, its industrial training system and its applied research institutes closely linked to industry. (The United States' research universities rely heavily on private money - even those which are state universities.) The economic case is for public investment to go into increasing access to education at all levels and the British Labour party has absorbed that message.

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Whatever else happens in 1997, there will be a general election. That election will probably bring Labour to power. A Labour government will be committed to "education, education, education" certainly, but it will be education on a broad basis. Presently announced policy, correctly in both economic and social terms, gives priority to schools, pre-school provision, further education, vocational higher education, access in general and throughout life, and a university for industry with its feet in workplace training. The tide is running with the majority in the university system, with Professor King's "nerds" and "puniversities," with the people at Liverpool John Moores training as scriptwriters (page 18), with initiatives like Anita Roddick's at the University of Bath (page 5), and not with the elite. When the Dearing committee reports in the summer, it is a fair bet that its recommendations will be carefully honed to be at least broadly acceptable to whatever government is in power. The committee's composition ensures that it will give more weight to vocational and training aspects of higher education than to protecting the international competitive standing of the top research universities. That leaves the top lot with a problem. These are world-leading, royal-chartered autonomous universities with the power to set their own fees, control their own admissions, and appoint their staff at whatever salary they choose. The remedy to inadequate public funding lies in their own hands. They could give up fighting for an extra share of public funding, accepting that institutions lower down the prestige scale cannot afford to sustain the kinds of cuts that would be needed to give them what they want. They could instead decide to charge more for the excellence they offer - both to their students and their industrial and commercial customers. They could themselves raise directly the money the taxpayer may be reluctant to give them.

They have not, however, taken this course in the past ten years and it is one of the safer bets for 1997 that they will not do so now. Instead they will try to secure more of the research money this spring from a Conservative government, which favours greater selectivity. For the longer term, they will try to secure protection from competition through designation as a premier league. They will try to make this appealing to Labour by offering, in return, to perform a regional research role for clusters of higher education institutions excluded from the research tier.

Labour may buy it. The case will be loudly and plausibly argued. But the risks are great. Protected status will breed complacency. Exclusion from the possibility of reaching the top will dampen enthusiasm in new institutions for new initiatives - the kind of studies which, if sometimes rackety, much more often grow from and underpin flourishing new industries in, for example, media and communications or popular music, subjects much despised by the research elite. This is a hierarchical country. If people are shut out of the top tier they will feel downgraded however much the virtues of "diversity" are proclaimed to comfort them.

Paradoxically then, the best way to ensure open access across a growing, diversifying and flourishing higher education system, is to let the market leaders find their own salvation and use such public money as is available to raise the quality of those institutions which provide for the majority of students.

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