Students' evaluation of the courses on offer and their willingness to pay fees for them is a guarantee against dull uniformity says Quentin Thompson

Britain has a ÖйúAƬ system which embraces considerable diversity for the potential student. Within any one subject area, there will be a range of coverage of the topic, in style of teaching and in approach to the subject.

There are many reasons for such diversity: they can be historical, they might reflect the views of an individual academic from some while ago, or they might be a reflection of the ethos of a whole institution from its foundation.

Whatever the reasons, many people welcome the diversity and would want it to continue. One thing is certain. Such differences are extremely unlikely to be able to be delivered all at the same cost. Some approaches will be more expensive than others.

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These cost differences are little to do with other more objective differences such as result from geography or from an institution's capital inheritance. In fact the most expensive university in terms of unit cost for teaching is Leeds Metropolitan (excluding college fees in Oxbridge).

The current funding method seeks convergence to a uniform unit price within a subject area. This is an explicit policy of the funding councils. But even were it not explicit, it is virtually inevitable given a formula-based approach to funding and a large number of institutions to fund (although it would be possible to arrange funding differently in Wales, Scotland or Northern Ireland).

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The results of such pressures towards convergence are likely to be twofold. First, there is a real danger of squeezing much of the diversity out of the system, which many would regret. Second, there is a real danger of the system spiralling down to that of the provider of lowest cost - "if they can do it at that cost, why can't you?" - and thereby risking not only diversity but quality as well. There are many who would argue that this is already happening.

So, if the nation values diversity in ÖйúAƬ, how should offerings be judged as valid ÖйúAƬ experiences? How should they be justified in terms of the extra costs associated with more expensive approaches. And how should they be paid for?

The first of these issues is the task of the new Quality Assurance Agency. The second requires a judgement to be made as to whether the "extra" provision associated with the extra costs is worth it. Those making the judgement about whether the costs are worth incurring should also have to make some contribution to those extra costs, otherwise there is a clear risk of overall costs spiralling upwards. This would be as unsatisfactory as prices spiralling downwards - although perhaps to different constituencies.

Who, therefore, should make this judgement and pay for it? There are only three possibilities. First, it could be the funding council; council funding could not then be on the basis of a formula, but would require judgements to be made, on a course-by-course basis, as to whether the different offering was worth the extra costs associated with it. This would be virtually impossible for a central body to do.

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Second, it could be left to the institutions themselves. Each institution could decide its own position on the diversity spectrum (subject to the QAA check that it was adequate); it would then seek funding at that level. It would be for the funding council to decide how many student places it was prepared to fund at that level and price. This was more or less the funding position prior to the policy of convergence, but it produced cost differences without justification. The policy of convergence implies that the funding council does not accept that historical cost differences reflect valid differences in offerings.

Third, it could be left to the students with (some of) the cost difference being reflected in the fees paid by the student, once the principle of students paying some of the fees has been established. The burden of imposing fees on students is considerably reduced through income- contingent loans. It would thus not be a change in principle to allow the fee level to be different for institutions which had validly different costs as long as such differential fees were also covered by differential income-contingent loans.

The result would be that the high-cost institutions (such as Leeds Metropolitan and Oxbridge) would be able to set fee levels which reflected the higher cost of their offering where those costs were not covered by the convergent funding methodology of the funding council. A (differential) income-contingent loan would mean that the higher burden was not felt by students until they were in employment.

Whether the student valued the "extra" offered by such universities in return for the higher loan would be a good test over time of the value of the offering as perceived by the students. Change would be slow, but there would be change. Universities would need to explain their offering to potential students in such a way as to justify, to the student, the extra fee level; better information would be the key.

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If diversity is valued, as many think it should be, it needs to be paid for. If it is to be paid for, someone has to make judgements about which facets of diversity are worth the extra cost. Without such judgements, much of the system may sink into dull uniformity - or even into mediocrity. The student is the obvious choice for making that judgement, especially if protected by differential income contingent loans. The fundamental question is, if not the student, then who?

Quentin Thompson is a partner in Coopers & Lybrand and funding adviser to the Dearing committee.

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