SWOT opportunities: A growing focus on the regions, exemplified in Spain and now Scotland, offers new opportunities to UK universities. Paul Heywood hopes they will be able to exploit them.

It has become a familiar (if lazy) cliche that, for all the talk of a "third way", new Labour in power has offered continuity rather than change from preceding Conservative administrations. While this may be true in some areas of policy, the new government has, in fact, initiated some of the most significant and far-reaching changes in British constitutional history. The introduction of asymmetrical devolution for Scotland and Wales will alter irrevocably the relationship between the component parts of the state. Not only will Scotland enjoy genuine legislative power through the election of a Scottish parliament in 1999, but it is also likely as a result to develop much closer and more direct ties with the European Union, increasingly the dominant force in regional policy throughout its member states. The EU nexus may in turn prove crucial in providing the stimulus not just for Wales to demand that its legislative powers be upgraded to match those of Scotland, but also for regions in England to seek their own assemblies.

If such a scenario seems far-fetched, the example of Spain, the closest European parallel in terms of asymmetrical devolution, may be instructive. In the aftermath of the highly centralised Franco dictatorship, devolution was granted initially to Catalonia and the Basque country in 1979, followed by Galicia in 1981. Thereafter, there occurred an outbreak of autonomy fever, ultimately resulting in the creation of 17 autonomous communities. The Catalans and Basques still enjoy greater powers than other regions, but today Spain's autonomous communities are an established tier of government. Each has its own president and unicameral parliament, and each has established an office in Brussels.

The regional dimension is now firmly on the British policy agenda. With the EU-sponsored emphasis on subsidiarity, as well as initiatives such as the establishment of regional development agencies, it is likely to provide an increasingly important context within which the higher education sector will have to organise and plan. What will this changing environment mean for universities and how will they best be able to take advantage of the new opportunities it may offer? Universities are already closely integrated into regional economies: they are often major employers, key centres of inward investment, partners with commercial firms, agencies and with government departments in regional and local initiatives. Universities with medical schools also play a vital role in meeting regional healthcare needs. They are at the heart of the "knowledge economy", providing not just education, training and vital services, but also acting as agents of economic growth in an era when traditional factors of production are being replaced by the need for a new skills mix.

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Take, for example, my employer, the University of Nottingham. With some 5,000 employees and 14,000 full-time students, the university contributes substantially to the prosperity of the region. It is a major provider not just of healthcare services through its medical school, but also of cultural and social activities. Through collaboration with the Department for Education and Employment, the European Regional Development Fund, the European Social Fund, as well as local councils, development agencies and training and enterprise councils, the university's regional strategy has resulted in a series of funded projects on issues related to lifelong learning, technology, competitiveness and employability.

So will regional initiatives become the primary focus of universities? Some may see this as a likely development, especially if the introduction of fees, as well as efforts to widen access through part-time study and lifelong learning, encourages increasing numbers of students to attend local universities. In practice a rather more complex picture is likely to emerge. What such developments will, in fact, encourage is a more explicit recognition of growing diversity within the sector. How universities respond to regional developments will be conditioned by their location within the wider context provided by an increasingly competitive national and international environment.

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Scotland provides a good example of how the interplay between these different levels can be exploited. Significant differences already exist between the contexts in which universities operate in Scotland and England. The creation of a separate funding council for Scotland has led to some clear policy divergences with its English counterpart in areas such as funding for refurbishing research laboratories, transitional costs of Internet access, and the setting up of an Arts and Humanities Research Board. Indeed, the example of Catalonia, where nationalism has been reflected in extensive research on various aspects of the region's distinctive identity, could prompt fears that Scotland's higher education agenda will become wrapped in an increasingly parochial kilt. Certainly, the Scottish parliament is likely to take a keen interest in the activities of the Scottish Higher Education Funding Council, if not actively to seek to influence its decisions. But the dangers of potential parochialism should not be overplayed: for all the strength of nationalist feeling in Catalonia, Barcelona's two major universities are decidedly international.

As Sir Graeme Davies, principal of the University of Glasgow (historically the most distinctively "Scottish" of universities), has pointed out, the regional dimension may positively promote collaborative ventures and an outward-looking focus. It can also facilitate rapid responses to new opportunities. Sir Graeme offers the example of Project Alba, which involves Scottish Enterprise in partnership with the universities of Glasgow, Edinburgh, Heriot-Watt and Strathclyde helping to create the world's first institute specialising in System Level Integration. Crucial to the success of the project was the ability to move at great speed when it became clear that the United States-based Cadence Design Systems was looking to establish an outlet to develop its work on semi-conductor design technology. From initial approach to launch at the end of 1997 took just six months. The ability of the four universities to work closely with Scottish Enterprise was a major factor in attracting Cadence, and highlights a potential advantage of focusing resources regionally.

Sir Stewart Sutherland, principal of Edinburgh University, cautions that while trends towards regionalism are very important, Scotland is rather more than a region. As he points out, however, the creation of the Scottish parliament will make Scotland a major empirical focus of research into asymmetrical devolution. The work of Edinburgh University's unit for the study of government in Scotland, originally set up in 1975, has been given a major boost. Similarly, there will be a growing need for social science research into the impact of asymmetrical devolution on such issues as health and education policy and science and technology.

Most important, though, devolution for Scotland and Wales, together with the growing importance of the regional dimension in the organisation of government and allocation of resources, will force all universities to think carefully about their role and function. Such a process, especially when linked to the issue of differential fees, which are widely seen as inevitable, will further underline the diversity between institutions. In an increasingly competitive environment, not all universities will be able to operate effectively at regional, national and international levels. Indeed, it is no longer credible to sustain the notion that all British universities are engaged in a basically similar enterprise, pushing back the frontiers of knowledge through cutting-edge research and educating students to a nationally recognised and validated standard.

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Certainly, all our universities will have to be closely attentive to the regional context in which they are located. For many, principally the new universities, this is likely to provide an outstanding opportunity to develop further existing links with local communities, commerce and industry. This may be especially true of those universities in regions that already have a clear sense of identity, such as Lancashire and the northeast of England. Collaboration on research and teaching between neighbouring institutions is also likely to increase. Similarly, greater devolution of political and financial resources to the regional level could facilitate closer association between universities and decentralised national institutions or research council laboratories, along the lines of Norwich Research Park, which promotes research and teaching links between the University of East Anglia, the John Innes Centre, the Sainsbury Laboratory, the Institute of Food Research, MAFF CSL Food Science Laboratory and the British Sugar Technical Centre.

But only a relatively small number of institutions will be able to focus primary attention on the international environment. British universities will thus become increasingly differentiated, perhaps mirroring in macrocosm the diversity of function and specialisation that has characterised the organisation of higher education in California since the 1960s. There, the elite campuses of the University of California offer world-class research and teaching facilities, whereas California State University concentrates primarily on undergraduate teaching, and the state's many community colleges provide low-cost and locally-focused access to higher education. The divide in Britain is likely to become clearly defined between those universities that are primarily oriented towards promoting their international role and those that are more focused on meeting national or regional demands.

Such functional differentiation is bound to create some tensions between institutions, but the development of strong regional resource centres would not only help them define their purpose more precisely but could also play a key role in providing targeted financial support. Moreover, diversity will increasingly take place not only between universities, but also within them: choices will have to be made about core functions, particularly in those institutions where there are pockets of world-class excellence. It might be argued that such a development would simply accelerate trends already evident through the operation of successive research assessment exercises and the establishment of the Russell Group. To an extent this is true, but there is no logical reason why all universities should seek to mirror each other in terms of mission and purpose.

Institutions such as Oxbridge or the leading London colleges, are able to operate in an international context that sets them apart. For other universities, however, the international dimension is becoming an increasingly important focus. For instance, Universitas 21, established in March 1997 as "an international association of major research-intensive universities", links Birmingham, Edinburgh, Glasgow, and Nottingham with institutions in Australia, Canada, China, New Zealand, Singapore and the US.

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For the majority of universities, however, the regional context in which they function is likely to become an ever more important point of reference. Asymmetric devolution to Scotland and Wales may thus ultimately turn out to have a far wider impact on the higher education sector than might initially be supposed. The Spanish experience suggests that genuine political and administrative devolution could act as a significant boost for those universities outside the "golden triangle": in Spain, the support of autonomous communities has helped universities in places such as Valencia and Seville to develop their own areas of specialisation and increasingly to move out of the shadow of Madrid and Barcelona. As already signalled by developments in Scotland, a growing regional focus may also offer exciting new opportunities for universities in Britain. Whether they will be able to exploit such opportunities will depend on how they face up to serious questions about their very role and purpose.

Paul Heywood is professor of politics at the University of Nottingham.

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