My idea would encourage innovatation and a more enterprising approach to the higher education market in UK universities, which would be more focused on meeting the broad but varied demand for access to higher education. It would also encourage universities to operate in a leaner and nimbler way and be more clien-focused. It would also reward successful universities, which would not have artificial limits placed on recruitment, and highlight the weaker ones, which pick up students who would rather go to the other category of university.
Universities are businesses, too, and many are doing their best to be innovative and enterprising. But many also suffer from risk-averse tendencies that derive from excessive focus on the Quality Assurance for Higher Education watchdog. For instance, the "QAA" has a set of benchmarks for individual subjects at undergraduate and taught postgraduate level. These allow one generation of selected academics to set the direction for a period of time. The benchmarks were originally intended to represent guidance at a time when a government was keen to demonstrate to taxpayers that universities were giving value for money, but these benchmarks have increasingly been held up as gospel, even though they are not appropriate in a fast-changing and highly competitive global higher education market. The QAA's influence goes even deeper, right down to the very procedures (often highly bureaucratic) used to approve new degree courses, collaborative partnerships etc.
Universities are also hamstrung by contracts with the Higher Education Funding Councils that impose limits on successful recruiters when it comes to full-time Home/EU students.
Competition and a free market have produced high standards at American universities, and many universities in the UK have significantly reduced their dependence on the public purse. So I propose scrapping the Quality Assurance Agency for Higher Education and letting the universities off the leash to prove in their individual ways that they have what the market wants.