In this, my last column before being what the editors euphemistically call "rested", I want to address some broader issues about the nature and purposes of higher education that the Dearing inquiry should address.

Too much higher education today is knowledge-driven. The education provided is largely passive. At its worst, students are seen as empty vessels into whom knowledge is poured. Education becomes a commodity with students as consumers. Courses are packaged into usually over-large bite-sized chunks, and the same knowledge is handed down, often unchanging from year to year. Learning outside the classroom is ignored or marginalised.

In the knowledge-driven institution, teaching is reduced to a delivery service. Teachers become the managers and controllers of students' learning. The institution itself becomes merely a site on which this commodification is organised and achieved.

We need to embrace a model of active learning in which students are able to access a whole range of learning resources, including staff, other students, library, computing and media facilities. Most importantly, students should be required and enabled to take responsibility for their own learning.

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Education depends on the effort that students make as well as the leadership and support staff provide. Students are producers as well as consumers of their own learning. Knowledge is no longer delivered as largely fixed, but is transformed and created in the education process. Education is no longer something that happens to you. It is something you do.

Teachers become inspirers and leaders, rather than gatekeepers and constrainers. The institution becomes a community of learning, providing facilities and a culture that encourage effort and responsibility. Learning is no longer restricted to the classroom. Quality assessment and audit are realigned to recognise the new learning environment.

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In this model, diplomats and graduates are no longer simply holders of qualifications. They are also active citizens, committed to learning, able and willing to play full roles in the communities and the society to which they belong. The skills that employers want are the skills needed to be successful in higher education itself.

If we achieved this, we would be recovering and reclaiming traditions lost in higher education, traditions that have been undermined and devalued in the rush to the market-place.

Most importantly, we should recognise that higher education is increasingly central to our society. It is a precondition for a successful economy rather than a more or less affordable outcome of it. Any economy requires investment to be successful, not just subsidy from the taxpayer. The parlous financial state of higher education shows how desperately such investment is required. In 1989, after a decade of cuts, an institution received Pounds 6,800 for each full-time student. This year, an institution receives Pounds 4,300.

Education is also a social priority: one of the few remaining links between the individual and the society. Education is, therefore for social cohesion and citizenship.

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There is a real danger that in the knowledge society those without education will be excluded and dispossessed. The new outsiders. Already, one in every eight 21-year-olds in this country is functionally illiterate.

There is a clear lesson for the Dearing inquiry. A society that makes and sustains investment in higher education has a future. A society that fails to make that investment does not.

Mike Fitzgerald is vice chancellor of Thames Valley University.