WHATEVER the outcome of the election, the smart money is on an outbreak of new universities in the next few years. Some will come from the ranks of today's colleges of education, including deserving cases which have missed out on the university title more or less through ill luck.

More controversial is the scope (page 2) for private-sector companies to set up quasi-universities in response to what they perceive as inadequate courses at established universities, or skills shortages that have not been cured by the expansion of recent years.

Like Unipart U, set up by the car-parts firm of the same name, they will not be able to call themselves universities or offer their own degrees. And staff will find that corporate objectives replace academic freedom to a degree beyond even the worst nightmares of today's university sector. But such new institutions will be able to produce learning materials and customise those of other providers.

Academics will welcome this development to some extent. Such institutions will offer both jobs and worthwhile part-time teaching contracts. And there will be contracts for validating and auditing what is being done.

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But such plans also provide a warning which universities have to heed. In research, there is no serious political opposition to central direction of funds - in other words, telling universities that they are incapable of deciding what to do. If large companies are now sending the message that university teaching, too, is failing to produce the goods, ÖйúAƬ must take note.

Universities will argue that there is a world of difference between the training for the mind they offer and the company-based institutions being planned by Sir Dick Evans of British Aerospace and others.

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Few people contemplating going to university would be willing to attend a university whose students had only one possible employer. And sophisticated companies ought to have learnt enough about employment in the 1990s to know that graduates with a broad outlook, able to contemplate a range of career options, are more likely to be good for employers than people inculcated in the ways of a single organisation.

Someone who has spent three years being taught how a large multinational does things is hardly in a position to act as a change agent when they start work there.

It follows that firms like BAe have more to gain from strengthening existing universities than from setting up rival institutions of their own. This applies especially in engineering, where the rate of technical change is very rapid and there are too few capable teachers. New company-based institutions would compete for staff and resources with existing ones, when what is required is more attractive engineering courses and more prestige for engineering. Putting the money into pay rises for engineers might do more good than spending it on attempts to recreate engineering education.

However, no institution can react with complacency to the sight of its customers threatening to take their custom elsewhere, and this applies to engineering education as much as to private enterprise.

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At the level of master's degrees, universities and firms (such as the University of London and British Telecom) have been collaborating for years in specialist courses for small numbers of people. Some MBAs, for example in finance, have such a tight focus that their alumni have only a small number of possible employers.

The same applies to the MBA now being launched in airport management by BAA and the University of Surrey. These courses, for people who already know what they want to do with their lives, are to be applauded as a way of enhancing the skills of the British workforce, but do not provide a precedent for the world of undergraduate teaching.