If you listened to ministers, you’d think that there’s a crisis of “wokeness” on campus. Every young person is apparently simultaneously an overvulnerable snowflake terrified of opinions and a yowling fighter in the culture wars. But although there might well be a problem with the diversity and range of ideas in the academy, choosing to focus on it amounts to pointing at a fire in a wastepaper bin while the buildings burn down. The real problems are the result of government abandoning all management of the university world.

There used to be a cap on individual universities’ student numbers. Each of them got a figure imposed from the centre, and each received an appropriate level of funding. So far, so good. Every institution had a certain number of places, and they worked out what A-level offers they could make, based on those numbers, combined with past experience of how students would fare compared to predicted grades. Those universities at the “top” asked for As, in the “middle” Bs, and so on.

But when George Osborne abolished that system in 2015/16, allowing every institution to take as many students as it liked, any sense of stability began to crumble. Many huge universities, with strong brands and big names, went on a recruitment drive that has threatened to gut everyone else. Arts and humanities courses, cheap to teach and easy to expand, have become noticeably bloated. Some have become impossible to manage: quality has inevitably suffered.

That is causing an even bigger structural problem: the hollowing out of the university hierarchy. Although some less well known and smaller universities can chug on with relatively low numbers of students, or do quite well by recruiting local students who don’t want to pay to live away from the parental home, others cannot. A new “squeezed middle” has emerged, unable to fill seminar rooms and lecture theatres, and tempted to get out of arts, humanities and some social science markets altogether.

Lots of departments, in lots of universities, are going to close if this monopolising continues. If we’re not careful, in the end there will only be 30 or so departments teaching subjects such as English literature. Universities that have never been very good at widening their recruitment to non-traditional demographics will have driven everyone else out of the field. The consequences for access and social mobility will be dire.

A call for help from universities might not seem like a priority, given the economic crisis, and there are many apparently far more urgent issues for a government constrained by a dismal fiscal outlook. But universities are at the heart of many regional economies across the UK, supporting jobs, high-end investment and research where otherwise there might be even more vertiginous decline. They help the UK attract investment while earning billions from overseas students. And, setting the economics aside, universities offer a great many other benefits and opportunities: a chance for students to meet and understand others; to discover themselves; to follow their own ideas and talents; to try out new concepts; to succeed and fail; in short, to take part in what the educational theorist Gert Biesta calls “the beautiful risk of education”.

What can be done? Fortunately, there are some immediate answers. The past year saw the “squeezed middle” do a little better, as some big names began to decide they simply couldn’t cope with increasing numbers so quickly. A new numbers cap for each university could be brought back to steady the ship, though that might have to await a new government. Demographics might also come to universities’ rescue. The birthrate boomed between 2002 and 2012. This will bring some relief: there will simply be more students to go around.

But that baby bulge could also be used as a jumping-off point for a new wave of innovation that meets the needs of the early 21st century. If we really wanted, we could rejuvenate the sector’s sense of purpose with a new raft of institutes of higher learning. These could deliver university life and teaching to every town in the country, bringing together universities, further education colleges, the public and third sectors in a joint effort that could energise them all.

The government is already making moves in this direction, with several “institutes of technology” established in England since 2019, and more on the way. But these are inadequate to the task of continued and inevitable expansion, focusing as they do on the cramped, outdated vision of a “skilled workforce” as defined by employers.

Instead, institutes of higher learning could offer courses that break down the barriers between the arts and sciences, technology and the humanities, maths and theatre – just as those barriers are becoming irrelevant in the modern economy. Students of all ages could walk on to campus and take part in activities put on by all the different providers involved, in all disciplines: art and design across a walkway from chemistry labs, recording studios sharing new, tree-lined piazzas with engineering workshops.

Opposition is to be expected. Policymakers often think that “university life” should look like their own and that of their children: going away to a campus for weeks on end and cramming a narrow range of knowledge in order to succeed in exams. Academics can be sensitive when defending their disciplinary turf, and like a herd of cats when asked to work together. All may resist the arrival of disruptive, hard-to-track and challenging upstarts. These are, after all, some of the reasons universities have stayed so familiar and recognisable for so many decades.

But learning that can be easily accessed at any age, that makes connections rather than cutting off each subject from others, and that is physically available everywhere is urgently needed. Such ideas may help to smooth our path towards learning in every decade of our lives, would chime with young people’s mixing of online and offline sources of learning, and allow us to meet the challenges of demand and demographics without turning some of our core cities into places where students, and students alone, dominate everything.

It is an ambitious idea that would be hard to deliver, but every wave of university change or expansion has attracted naysayers. If the government wants to avoid a long, painful dimming of our universities’ economic success and reputation then there really may be no alternative.

• Glen O’Hara is professor of modern and contemporary history at Oxford Brookes University.

Further reading

Speaking of Universities by Stefan Collini (£16.99, Verso, 2017)

The Good University: What Universities Actually Do and Why It’s Time for Radical Change by Raewyn Connell (£70, Zed, 2019)

Redbrick: A Social and Architectural History of Britain’s Civic Universities by William Whyte (£107.50, Oxford, 2015)