Resource reallocation in higher education in Britain
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During recent years the Higher Education (HE) sector in Britain has come under government pressure to reduce the scale of its operations and change the nature of its product. Much of the justification for this change has been provided by "new right" economists [1] who have concluded, on economic grounds, firstly that state supply of HE should be limited to investment in human capital and secondly that additional state finance is justified only to the extent of the value of the external benefits bestowed upon society. It is the purpose of this article to review the conventional economic assessment of HE and examine the policy implications of the economists' analysis. In particular it is suggested that resource redirection within HE is difficult because of the bureaucratic properties of educational institutions. The article concludes that what is required is a methodology to evaluate quality of output and a uniform method of calculating course costs within and between institutions. 1983 Elsevier Science Publishers B.V.