'University' is an elastic term," says Leslie Wagner, who was vice-chancellor of Leeds Metropolitan University from 1994 to 2003, "used by some to include and some to exclude."

Today, the great diversity of Britain's university sector reflects varied histories and public policies that pull in several directions. Les Ebdon, vice-chancellor and chief executive at the University of Bedfordshire, sees "a variety of universities placed along a single spectrum", even though "in different universities, different aspects of the traditional role of the university will be emphasised".

Some of this variety, suggests Ebdon, has been a feature of the system for well over a century. "There are two major origins of universities in this country," he says. "One may be called the monastic origin - and obviously Oxford and Cambridge are typical examples. They tend to emphasise the pursuit of knowledge and research for its own sake. The second stream of universities derives from the Victorian technical institutes, whose raison d'¨ºtre was very much about training the workforce to meet the challenges of industrialisation. The modern university tends to be a blend of both of these traditions."

The choice at Bedfordshire has been to focus priorities through a vision of a world where all are able to benefit from "transformational educational experiences", and a mission to "create a vibrant, multicultural learning community enabling people to transform their lives by participating in excellent, innovative education, scholarship and research". But Ebdon seems happy for others to contribute to Britain's "world-class university system" by pursuing quite different options.

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Does diversity mean de facto division into largely self-contained groups or just a spectrum where one institution fades into the next even if the extremes are distinct? And, even more crucial, is such diversity desirable, a messy compromise or perhaps even a betrayal of old ideals? Is there still any agreement about the essential meaning of the word "university"?

To borrow Wagner's terminology, "includers" seem content with loose definitions because, after all, we know pretty much what we mean by university. "Excluders" prefer to go back to first principles, tradition and history to clarify what a university is and, more important, what it is not or should not be. Change may be inevitable, say the excluders, but it always needs to be guided by clearly articulated fundamental values. And if we don't retain such a compass there is a danger that we will sleepwalk our way into losing something essential.

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Harold Silver, visiting professor in higher education at the University of Plymouth and the author of Tradition and Higher Education, cites the example of student residence. Cardinal Newman's The Idea of a University (1854), probably the most ambitious attempt in English to think through all the big issues, famously put much stress on this. Bringing together in one place for three of four years a group of (young, elite, male) students, he boldly suggested, was more central to a university education than any professors or examinations.

Yet in the 1970s and 1980s, Silver argues, "universities abandoned the traditions of student residence, which used to supplement what went on in the classroom. Students might have tutorials in residence, the wardens were often academics, and there were many arrangements for students to meet. At the time, in other words, residence was seen as part of a liberal education. With increasing numbers, all that changed, and universities just looked for accommodation wherever they could find it: blocks of student flats, seaside landladies' boarding houses, and so on.

"Yet this fundamental change took place without discussion. There was no thought of how halls and hostels could provide something educational like the old system of residence. It may have been inevitable, but when a university takes major decisions that mean abandoning a significant part of its past, I think it should be discussed openly rather than just take place by default or get delegated to a subcommittee."

Today, Silver fears that some of these fundamental debates are not taking place. "Vice-chancellors are now at home in the corridors of power; they are good at getting finance and can talk to business, which is all to the good. But leaders also need to make the nature and style of their institutions public and understood." Poor leadership, he says, can mean that issues at the heart of the nature and future of our universities never get properly thrashed out.

"It can all remain very simplistic and polarised. Universities either celebrate the fact that they are more entrepreneurial or are condemned for being more entrepreneurial, but there isn't enough proper debate about how far the idea of entrepreneurship can coexist with the traditional idea of a university," Silver says.

Many of these issues came to the fore at the time of the 1992 reforms, when many of the former polytechnics acquired university status. Some have argued, on or off the record, that this meant a dilution or "dumbing down" of the university "brand". Others believe it watered down a valuable but distinct polytechnic tradition. Those who actually drove though the changes tend to describe it in much more concrete practical terms.

When asked about what it meant for Coventry Polytechnic to become a university, Michael Goldstein, the institution's vice-chancellor from 1992 to 2004, said firmly: "We didn't 'become a university' - we changed one word of our name. The name change made a huge difference to potential students and some employers, although there were also worries that we would lose our strong vocational emphasis. In reality, it was a less significant change than when we came out of local authority control in 1989."

Peter Knight, who retired this year from the post of vice-chancellor of the University of Central England (now Birmingham City University), rejects "the abject nonsense produced by the Quality Assurance Agency" and defines higher education in highly pragmatic terms based on entry standards. It consists, he suggests, of courses that are "difficult, stimulating, challenging and exciting" for students aged 18 and older arriving with two A levels. End of story.

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&#8220The truth is that Oxford is a very beautiful city in which it is convenient to segregate a certain number of the young of the nation while they are growing up”

Evelyn Waugh

This also underlies his view of what happened to Birmingham Polytechnic in 1992. "We had been universities in all but name. There were some small cosmetic changes of nomenclature that I set out on one side of a sheet of A4: we're a university, we have university titles (vice-chancellors instead of directors and so on). We didn't start teaching philosophy or drinking sherry in the senior common room.

"Others may have got angst-ridden over titles. We changed a few names, gave ourselves a few airs and graces, which made everybody happy - students thought a university degree had higher value even if they were studying a subject that had previously been on offer only in a polytechnic," he adds.

Wagner, who was in charge when the Polytechnic of North London became what is now London Metropolitan University, says he "strongly believed in the polytechnic idea and that a distinct brand had something to be said for it. But since at least half the polys were in favour of becoming universities, the brand was weakened and I went along with them. The major innovations in the 1970s and 1980s came from the polytechnic sector - access, widening participation, emphasis on teaching and learning, broadening the curriculum, the focus on student experience. We were setting the agenda. Being a single sector has made it easier for such values to permeate all the way through. If we'd remained separate, it would have been too easy for the universities to leave things like those to the polys."

Goldstein goes further. The former polytechnics, he says, did much to revitalise the "old" university sector. They were committed to "the application of knowledge" - a phrase he prefers to terms such as "vocational skills", which are often used patronisingly or pejoratively. They introduced a range of once-controversial subjects that are now common across the board: computer sciences, business studies, health-related specialisms such as dietetics, midwifery and physiotherapy. And they raised the profile (and quality control) of teaching.

"We were broadening the definition and purpose of what a university did," Goldstein concludes, "and setting what is now the agenda for the whole sector. We had a very positive impact in getting universities to recognise their substantial regional and socioeconomic roles." In the longer term, he implies, what has occurred is to a large extent the "polytechnisation" of the university sector.

The 1992 reforms enlarged the size of the sector but were arguably (as Knight claims) only a reflection of reality, giving the university "badge" to institutions that had been universities in all but name. But what of the ever increasing wave of government initiatives that are transforming universities today - and perhaps altering traditional ideals beyond recognition?

Two of the key challenges are the "major priorities" set out in Secretary of State Ruth Kelly's letter of direction to the Higher Education Funding Council for England in January 2006: the provision of higher education "partly or wholly designed, funded and provided by employers" and "widening participation in higher education for people from low-income backgrounds, where in spite of the recent progress we have made we do not perform well enough".

To take the second issue first, widening participation has become, according to Sir David Watson, professor of higher education management at the Institute of Education, "the most troublesome item in talk about higher education; in the media, in politics and beyond".

While most people applaud the basic principle of broader access, the issue has given rise to moral panic (and endless articles about toffs at Oxbridge), in turn leading to "an almost pathetic search for the single-issue intervention that will improve the situation ... and a similarly dysfunctional search for scapegoats". As with other heated debates about "employability" and "dumbing down", argues Watson, the field "is so cluttered with non-commensurate, non-replicable research that anyone with a strongly held opinion can find a research study to back it up".

There are also, argues Watson, some pretty tough (and therefore stressful) issues for universities when they try to measure whether they are "performing well enough" in widening participation: who should be classed as "under-represented", the impact of schooling and parental expectations, the comparative scarcity of "conventionally qualified students from poorer backgrounds", and the "difficulties in working out how to help the disadvantaged without further advantaging the advantaged". And to what extent should we be increasing diversity of student intake within individual institutions as well as across the whole sector? Significant moral and financial pressures on universities to tackle the widening participation agenda are always likely to be dogged by the difficulties of defining success and failure.

There are also tensions and room for potential conflict between widening participation and the other roles universities are now rightly required to perform.

Sir Martin Harris has had a varied career as vice-chancellor of the University of Essex and later the University of Manchester. He is now chairman of the Universities Superannuation Scheme and director of the Office for Fair Access. He has enjoyed this diversity in his own life and sees the sector's "great increase in diversity as almost entirely beneficial".

"But when one views the sector as a whole," Harris says, "it has a number of duties and responsibilities. One is to help the broadest possible range of young people develop their talents. But we also need parts of the sector to be world class in aspirations and research. So what you need from a government funding regime is money for inclusive teaching and money for advanced world-class education. This requires a delicate balance between an egalitarianly funded teaching mechanism and a very selectively funded research mechanism. Under David Sainsbury as Minister for Science, this balance was always scrupulously maintained."

The business agenda raises even more fundamental issues. Some vice-chancellors, including Tim Wilson at the University of Hertfordshire, have unashamedly embraced the new ideal of the "business-facing university". Even at the time of the Dearing report in 1997, Wilson argues, universities were seen largely as places of research and advanced learning and so "on the fringes of educational policy. Now knowledge and talent define economic prosperity, so universities should be at the very core of economic policy - as Dearing saw. He foresaw more science parks, much more rapid exploitation of intellectual property and greater integration with business. We have moved a long way in the past ten years but not nearly far enough".

&#8220Everywhere I go, I'm asked if the universities stifle writers. My opinion is that they don't stifle enough of them”

Flannery O'Connor

What is now the University of Hertfordshire was set up largely to provide training to the de Havilland Aircraft Company, and it now focuses on the skills needs of the local creative industries. As Wilson said in a speech to Hefce's annual conference last year, he is utterly committed to "universities contributing to the economic health and prosperity of our communities" - universities that can "supply advanced-level skills to employers and support (them) in research, development and innovation", and take enthusiastically on board "not just the Leitch skills agenda, but the Lambert innovation agenda too". He wished, he said, that political leaders would recognise that "universities do not have to be research intensive to be catalysts of innovation within our business community".

Being truly "business facing", Wilson said, has a huge impact on the choice of subjects on offer, how they are taught and even the nature of the student experience. "If you want to 'read for a degree', don't come here. If you want to work as part of a team, acquire high-level skills and build a good career, do come here." Wilson makes a powerful advocate for one particular model of today's university. Others are worried by the impact on academic freedom when universities are so closely tied to enterprise and question whether businesses are really willing to increase the level of funding they put into higher education to the extent the Government seems to hope and expect. This is also an area where questions get raised about the fundamental purpose of the university.

For Goldstein, "a diverse sector causes tensions but also has great value in terms of more options and more choices. Diversity of need requires diversity of provision, which the sector has responded to".

Yet if many academics seem broadly happy with the diversity of today's sector, others are very unhappy indeed - and often present their critique in terms of ideals that, in terms of Ebdon's definitions of the types of university, could loosely be called "monastic".

Take, for example, Richard Gombrich, the distinguished Oxford Indologist and expert on Buddhism. In 2000, he delivered a lecture in Tokyo entitled British Higher Education Policy in the Past 20 Years". His basic position was summed up in its subtitle - the murder of a profession.

Recent policy, he argues, has been "an unmitigated catastrophe" the research assessment exercise is "a kind of sadistic party game" and "professional responsibility" for supervising research has been lost, adding that it is "government by make-believe" to pretend that doubling numbers can be combined with preserving standards.

Though "wholeheartedly supporting" the goal of widening participation, Gombrich notes that "universities can draw a small proportion of young people from the working class into the middle class, but nothing like enough to make a great impact on society". Besides, he continues, "the less the university they join is like a real university, the less it can do for its students".

Many recent government initiatives, in other words, are not merely bureaucratically burdensome or steps in the wrong direction but a betrayal of the essence (or soul) of the "real university".

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Gombrich's speech also sketches in his own ideal. "Institutions work best if they have clear goals and are designed to achieve those goals ... Universities are for truth: to promote its pursuit (curiosity) and encourage its use under all circumstances ... Truth can more than pay for its keep pragmatically. But it has more than pragmatic value."

Roger Brown, professor of higher education policy and co-director of the Centre for Research and Development in Higher Education at Liverpool Hope University (and former vice-chancellor of Southampton Solent University), takes a similar line. While accepting that "the idea of the university has changed enormously over time, the common thread is creating and preserving knowledge for its own sake. Once academics get interested in gaining money or prestige, by presenting television series or things like that, they lose their way".

Brown believes this ideal of the university is widely shared. "The University for Industry, the e-University and the NHS University didn't survive because they were seen as training institutions that had been given the label of university." He sees the label as applicable right across the spectrum, from vocational to liberal arts subjects. "Most medical schools don't distinguish between the training of doctors and the accumulation of knowledge, which is then shared with the academic community as a whole."

But Brown also views this ideal as under threat from public policy as well as corporate funding. "There has been a move away from the ideal over the past 20 years. Governments have gone from rightly seeing the economic importance of higher education to making it absolutely central," he observes.

Some might argue that Brown's notion of the university devoted to the disinterested pursuit of knowledge is close to the medieval concept of "communities of scholars" that former Education Secretary Charles Clarke said was, of itself, underserving of state support other than as an "adornment" to society. Brown says that that is precisely their value and rationale. "It is medieval communities of scholars or their modern equivalent," he says, "who decide how much of the knowledge generated is valuable and applicable. They are the policemen who assess the knowledge for the rest of society."

Lewis Elton of the Centre for Excellence in Enquiry-Based Learning at the University of Manchester has an even more specific model of how to reanimate the sector. "It is truly astonishing", he has written, how relevant the ideas of the Prussian Education Minister Wilhelm von Humboldt remain today. His memorandum establishing the University of Berlin in 1810 still forms, Elton says, "a blueprint for the best type of university for the 21st century".

&#8220A university is what a college becomes when the faculty loses interest in students”

John Ciardi

Humboldt was committed to the notion that teaching and research should be "carried out in the same institution and mostly by the same people" - in contrast to the system, still common in continental Europe, of research-only "academies". He also implicitly defined what higher education should consist of: universities should address "not yet completely solved problems, whether in teaching or research, while school is concerned essentially with agreed and accepted knowledge".

Even more challenging to current thinking, suggests Elton, is the second part of Humboldt's memorandum. This takes the paradoxical line that "the best way for universities to serve the community and the state could be through being left free from any interference from the state". Trying to streamline the "organised anarchy" of the university - through the QAA and the like - almost invariably leads to unfortunate unintended consequences. If there is any value in these arguments, much recent policymaking has been radically misconceived. "The top-down management from inside and the dirigiste pressures from government go totally against the spirit of the Humboldtian university and are, I contend, endangering the future of universities," Elton has written.

David Palfreyman, director of the Oxford Centre for Higher Education Policy Studies, is committed to the liberal ideals of the university based on critical thinking and reflection. The Chinese, he notes in a recent Oxcheps paper, have been taking a great interest in such ideals, since they are concerned that "they already produce an endless supply of technically qualified middle-management droids but not necessarily the free-thinking folk needed for the echelons of top leadership inside commercial organisations within a global economy". Sony, one of the mainstays of the Japanese economy, is now headed not by a Japanese nor by someone with an engineering background, but by a Briton with a liberal arts degree in modern history, Howard Stringer. Yet at the same time, Palfreyman notes, "the UK and US risk 'standardising' and 'homogenising' their school and higher education systems into submission".

His educational ideals also play themselves out in terms of student experience. "Is going to university just like school with a bit more sex, drugs and, if you're unlucky, violence thrown in?" Palfreyman asks. "If 'higher' means anything, it means liberal education, which means critical thinking, which means student contact with academics." As he notes, satisfaction surveys indicate that "students want communication. Seminars are too large - they ought to be (groups of) up to ten or 12 rather than 20 or 25, which cannot possibly function as practical forums for discussion. Students should be writing more and getting better feedback, not just a few squiggles months later."

Patrick Ainley, professor of training and education at the University of Greenwich, is equally worried about the state of Britain's higher education sector and would like to re-examine its core purpose - but from a radically different perspective. Although he admits the categories are not totally watertight or comprehensive, he sees a clear tripartite division between the large research-based universities in the Russell Group, the smaller research-led institutions that make up the 1994 Group and the teaching-led universities of Million+, which are largely competence-based and committed to widening access, while struggling with inadequate resources to do so.

The division is even more obvious, claims Ainley, when one looks at supply and demand. The first group can be highly selective, the second has to recruit students to live on its campuses, while the third consists mainly of former polytechnics that get much of their intake through clearing.

Ainley sees little connection between such de facto tripartism and the current needs of the employment market. And he has no time at all for "the 'antique' model".

"It is so academic, so class based, so tied to existing status hierarchies and riddled with racism and snobbery," says Ainley. "There is no counterprinciple to the notion of entitlement. I am opposed to the whole principle of English selectivity, which weeds out a majority at every stage who are then made to feel like failures."

On one issue, however, Ainley says he agrees with Gombrich. It would probably help policymaking, he says, if we were able to define more clearly what we mean by a university: "working from first principles, we need to have a collective idea of 'higherness' we can all subscribe to". But he hardly expects consensus to emerge any day soon.

Yet despite the huge variety of Britain's universities, and the many fiercely different attitudes to such variety, perhaps something significant still underlies them all.

Lord Dearing has suggested that, just as medieval communities were built around castles, "the castles of the future that will nourish communities economically and culturally are the universities".

Tim Wilson of the University of Hertfordshire has little time for traditional pieties and agrees that the definition of the university is "far less focused than even five or ten years ago" and he has adopted an unashamedly business-facing version of Dearing's vision. Yet he remains unequivocal that certain "fundamental axioms" are central to the mission of his and every university: "freedom of speech within the law, freedom of thought within society's ethical framework, and freedom to challenge accepted axioms".

Amid all the change, that is something, surely, that unites the whole sector and is worth fighting to preserve.