Is all rosy in higher education?
By Mike Baker
BBC News education correspondent
Is everything in the university garden looking rosy?
In England, the political battle over top-up fees is over - the opposition parties' threat to abolish fees melted away with the election result - and institutions are earning large amounts of cash from overseas students.
So why are universities still so worried about the future?
At an Anglo-German gathering in Berlin
last week - the 55th annual Konigswinter Conference - leading educators joined forces to express their concern that European universities are falling behind their American counterparts.
China crisis?
And they had a new worry: is China about to turn its back on Europe - where it currently sends large numbers of graduate students - to develop its own international higher education sector?
The gathering, which included several leading British vice-chancellors and academics, was far from complacent about the future.
Even the prospect of being able to charge undergraduates "top-up" fees of £3,000 a year from 2006 did not make much of a dent in their perception that the big universities in the US are leaving them behind.
They felt no British university could compete with the vast fund-raising foundations at Harvard, Yale and Stanford.
This funding gap was creating a "brain drain" with, as one vice-chancellor put it, a "prevailing wind blowing academics westwards".
With state funding likely to remain tight, and with schools likely to have a stronger hold on any additional government investment, the overwhelming view was that European universities would have to look to other sources of income.
If anything, German university leaders were even gloomier than the British.
They have been talking for some time about the necessity of charging fees to domestic undergraduates, but as yet have not taken any tough decisions.
The principle of free higher education is still firmly rooted in the German social democratic model. But for how much longer?
Meanwhile, German universities, like their British counterparts, are hoping to boost their depleted coffers by recruiting more overseas students.
There are an estimated two million students who study outside the country of their origin. Europe remains a net importer of students but competition from the US and Australia is intense.
There have been murmurs that top universities, like Oxford, could go private
And, according to one vice-chancellor, British universities are competing with one arm behind their back.
He runs one of the country's most prestigious universities yet believes that he currently "loses" about £2,500 per domestic student.
In other words, the combined income from the government and student fees falls far short of the costs of educating each student.
One way he can make up for this loss is by charging higher fees to overseas students.
Quite apart from the question of fairness of using overseas students to subsidise domestic students, this makes it harder for his university to compete internationally.
To put it bluntly, his argument was that if domestic students were not a loss-making activity, he could charge lower, and more competitive, fees to overseas students.
So how do universities get out of this difficulty? There have been murmurs that top universities, like Oxford, could go private.
'Fantastical'
By giving up state funding, the argument goes, they would gain the freedom to charge market-rate fees and so earn the income to compete with the wealthy American universities.
One attendee at the conference, a former minister of higher education, described such proposals as "fantastical". He argued the real question was not whether universities should be privatised, but how they could raise more private funding.
But on this issue there was yet more doom and gloom, with experts warning that some big scientific companies were already shifting their research contracts to India and China.
Indeed they argued that China's strategy has been to send lots of graduate students to the UK, and elsewhere, to gain PhDs and then, when they return home, to compete with European and American universities for global research contracts.
China's aim is to have its own big players in the global higher education market.
Like many international conferences, the Konigswinter Conference failed to reach many hard conclusions about how European universities could continue to compete in a global market.
But it did at least set out, in all its starkness, some of the problems that lie ahead.
The tough decision to charge domestic students fees may have been taken in England, whereas it is still being delayed elsewhere in Europe.
It is also unresolved in Wales, where this week the Assembly voted narrowly to oppose the introduction of fees.
But the consensus view among these higher education leaders seemed to be that top-up fees would not be enough to solve the problems of funding and international competitiveness.
The pressure to lift the cap on the £3,000 variable fee limit has already begun.
