The vice-chancellor of Cambridge, Alison Richard, caused an outcry last week by suggesting that the job of her university was education. Rubbish, said one and all. It was to promote social justice or advance the working class or make money or produce more technicians or bat for Britain. Paid by the state, it should be an engine of the state. Education? Dear me, no. On what planet did modern Cambridge live?

Needless to say, Richard has an agenda of her own. She not only wants to free herself from the shackles of political correctness, the obsession of Labour’s university policy, but she wants more taxpayers’ money.

Hence Richard lurched into the current Olympics rhetoric of “competing on a global academic stage”, in this case against the great foe, America. That country, she said, invested 2.9% of its national product in higher education, compared with Britain’s paltry 1.1%.

Universities therefore had to stop treating students, especially postgraduates, as income and treat them instead as “investment in the future”. Nor should they be “construed as handmaidens of industry, implementers of the skills agenda or engines for promoting social justice”.

In fact British universities had this fate coming to them since, in 1987, they capitulated to Margaret Thatcher’s de facto nationalisation under Kenneth Baker. His reform act and the abolition of the arm’s-length university grants committee was widely compared to the dissolution of the monasteries. Scholars forgot what they were about and let the piper call their tunes.

Lecturers became civil servants and research departments worked to Whitehall contracts. Academics submitted to quality control and research assessment while the Treasury ordained every penny. One anonymous vice-chancellor was quoted last week as saying, “The government gives me a cheque every year and I have a public duty to do what the government says.”

Stalin’s professors would have put it likewise. Erasmus would have fainted.

Tony Blair, an ardent supporter of selection by ability in secondary schools, curiously believed that universities should somehow correct the outcome of that selection in their admission policies. They should take 50% of each age group irrespective of ability.

The majority of universities duly became little more than a substitute national service. As a result, most are pretty rum places, their inmates half-stoned and half-plastered, and their staff teaching for barely half of each year. As “investment”, they must be the worst value-for-money in Britain.

Is the fact that America spends so much money on them a cause of its wealth, or rather an outcome? Graduates may earn more than nongraduates, but so what? It could be because they are already “socially advantaged”. The high-growth “tiger” economies of Asia famously underspent on higher education until after they were rich. If Britain is so far behind the rest of the OECD in spending on universities, how come Oxford, Cam-bridge, Imperial, UCL and many other British academies top international league tables? Could it be that we have the least wasteful universities in the world?

It was therefore facile for John Denham, the universities minister, to hit back at Richard with a load of nonsense. Universities, he said, were not facsimiles of Plato’s school of Athens. They were rather “the most powerful tool we have in achieving social justice . . . to seek out, support and nurture talent wherever it exists”. Just as Richard declined to define a university education, so Denham declined to define social justice.

But there was bite in his conclusion. Highly selective institutions “that draw from a narrow social base will ultimately lose out if they deny themselves access to talented students from all backgrounds”. Denham implies that for a school-leaver to “achieve full potential” means Oxford or Cambridge. It is a view shared by Gordon Brown, who professed outrage when a working-class girl, Laura Spence, was refused a medical place at Oxford in 2000 and had, of all horrors, to go elsewhere.

The government even set up an agency, the Office for Fair Access, whose mission was to ensure that Oxford and Cambridge were helped in creaming the best secondary talent in Britain, coded as “fairness”. Of all the fatuous tasks assigned to Whitehall, this must be the worst. If some universities want to restrict access to some social group, which they do not, more fool them. What business is it of the government? Should there also be a quota restricting the number of Scots in the cabinet?

More to the point, why should not the Londons, Manchesters and Sheffields – even Denham’s alma mater, Southampton – enjoy an equal right to the brightest of Britain’s school-leavers? How will they compete with Oxbridge if Denham is making sure the latter gets the pick? The truth is that Denham is a covert snob, who wants to keep Oxbridge in the lead.

Universities have allowed themselves to become the casual plaything of politicians. Confronted with recent evidence that Labour Britain is more class-bound than under the Tories, ministers are thrashing about for someone or something to blame. What better than Oxford and Cambridge? Because these institutions have become addicted to public money, they are easy victims. Ordered to increase the roughly 55% of state-school pupils they take, they panicked. Cambridge employs 40 staff to roam the land in search of totemic proletarians.

There is only one way out of this bind. Universities have spent the past quarter-century cosying up to government in the hope of being rewarded for their servitude. This Faustian pact has been a betrayal of the academic enterprise, expressed in Cardinal Newman’s words as “self-governing communities of disinterested scholars”. In the great fees battle of the last parliament, the universities won “freedom” to charge a paltry £3,000 in return for a continuation of their teaching grant.

They have become little more than departments of state. By kowtowing to government policy, they lost the autonomy that used to be so precious to scholastic freedom. So chaotic is government research funding that university staff do too much that is too trivial and curtail their prime duty, to teach the young.

Recovering their autonomy and self-respect means copying the American institutions with which they constantly compare themselves. It starts with finance. Universities must bite the bullet and charge their students what their courses cost. For the half who allegedly cannot afford this, the Treasury should be challenged to convert teaching grants to bursaries. For British universities to deny themselves the revenue base enjoyed by their American competitors is self-defeating. It denies the poor the financial help that might attract them into higher education so as to relieve the middle classes of paying their way. It is yet another Labour policy for snobs.

Most universities remain independent foundations. They can raise money on the open market. They can call the government’s bluff, “go independent” and charge what fees they like, involving pupils, parents, alumni and sponsors. American academies do so. It is hard work but the result is prosperity and quality.

Cambridge cannot plead for Harvard’s liberties if it and its fellow institutions will not accept the commensurate burden. It cannot accept the chains of the state and then complain when they hurt.

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