Terence Kealey: The state should keep its hands off Oxbridge

Every five years, the Higher Education Funding Council for England conducts an assurance review of the universities it funds. Cambridge's one is coming up, and it is rumoured that it will fail. Why might Hefce condemn Cambridge?

The problem is governance. Oxbridge has always been self-governing, and its vice chancellors have been elected by their colleagues. But Hefce does not approve. It believes that Oxford and Cambridge should be run, like every other British university, by a council of non-executives. Yet every time the Cambridge vice chancellor proposes handing over the university's government to non-academics, the dons vote him or her down.

Hefce is out of order. It is merely a funding agency, so its only legitimate concern is that the taxpayer's money be well-spent. If Cambridge has a traditional yet effective method of government, Hefce should not interfere. Unfortunately, Hefce has been empowered by illegitimate legislation.

Historically, the universities have been exempt from the oversight of the Charity Commission, but the 2006 Charities Act ended this. Fair enough, but under the act the universities' principal regulator is not the Charity Commission, it is its funder, Hefce!

This flouts every principle of corporate governance, but it enables Hefce to bully Oxbridge into changing its governance. The Charity Commission would not do that because, under the grandfather principle, it accepts long-standing governance arrangements if they are effective. But Hefce, acting as both the principal regulator and the principal funder, can ignore the wisdom of 800 years and destroy Oxbridge's governance.

Our fundamental problem is that the universities have surrendered their autonomy. A university is, by definition, a self-governing academic body: if non-academics rule, academic freedom is imperilled. Until 1919, all the British universities were independent of government, and even the councils of the redbrick universities respected the autonomy of the scholars. But the Great War bankrupted the universities: their investments were destroyed by extraordinary inflation and fee income disappeared. So by 1919, all the universities, including Oxbridge, were bankrupt, and government had to fund them.

Initially, the funding was distributed under the Haldane Principle by which, to protect university autonomy, the taxpayers' money was provided to scholars who disbursed it according to academic criteria. But, to allow ministers to rule, the 1992 Further and Higher Education Act installed the higher education funding councils. The Haldane Principle is now indeed dead, as evidenced by two current issues – namely, the introduction of RAE metrics and the ELQ initiative, both of which were imposed by ministers.

And the Quality Assurance Agency, too, flouts academic autonomy. Its predecessor, the Higher Education Quality Council, was run by the Committee of Vice Chancellors and Principals, but the QAA was created in 1997 to displace the vice chancellors. Academic self-regulation has died and only government rules.

The best universities in the world are those of the American Ivy League and Oxbridge, and they have self-rule in common. The presidents (VCs) of the Ivy League chair their councils as well as their senates, as they do in Oxbridge. This shows that the executive chairman model – where the VC is both chairman and CEO – is the best model for a university. That maximises accountability because, as John Hood and Larry Summers showed at Oxford and Harvard, the academics are always the first to know when a VC has to go, and if empowered they remove him or her swiftly. Unfortunately, councils of non-executives tend to protect incompetent VCs.

Moreover, non-executive trustees know little about universities, so empowering them is dangerous. Charity law demands that most members of the governing council of a university be non-executive trustees, but the dangers they pose are minimised in the Ivy League because its non-executive trustees are alumni who have already contributed money, so they are stakeholders, not auditors. They are insiders, not outsiders. They are not independent, they are partisan. Moreover, they are chaired by the president, who sets their strategy.

Administrative autonomy survives in the US because the Ivy League remains financially autonomous. But because our universities were forced, through no fault of their own, into state dependence, the state is now destroying them as self-governing institutions. But we have weapons: Cambridge (and Oxford) should threaten Hefce with judicial review over its conflation of roles.

We scholars have no choice; to recover our administrative autonomy, we must recapture financial autonomy and re-embrace the market. Non-Oxbridge universities, moreover, should revisit their councils to ensure that non-academics do not usurp the scholars' perquisites. Only in this way will academic standards be protected.

The writer is vice-chancellor of the University of Buckingham