Staff in the philosophy department at Middlesex University were told last week that they were being shut down. You won’t have read about it in the papers. The numbers are small – just six full-time faculty, a hundred or so students – and it would be easy to imagine that this was the sort of trimming that every university will have to undertake as they respond to Peter Mandelson’s announcement, in December, that cuts of £950 million will be made to the university budget over the next three years. Easy to imagine, too, that the departments forced to close will be those that aren’t doing so well: they will have falling student numbers or mediocre research ratings, perhaps a poor track record attracting grants.

Philosophy, though, is the highest-rated research subject at Middlesex; in the most recent research assessment exercise in 2008, the department was ranked 13th out of 41 institutions in the UK, ahead of Warwick, Sussex, Glasgow, Durham and York, and first among the post-1992 universities. Undergraduate applications are healthy; its MA programme is the biggest in the country. Explaining why, despite all these things, philosophy had to go, Ed Esche, dean of the school of arts and humanities, told staff that reputation made no ‘measurable’ contribution to the university: it couldn't be allowed to interfere with their calculations. What, then, does matter?

Government funds the teaching of students according to how expensive their courses are to run. Subjects are banded: those in band A, clinical training in medicine and the like, are allocated the most money; bands B and C contain an array of vocational courses and Stem (science, technology, engineering and maths) subjects; subjects in band D are the cheapest to run, and include most of the arts and humanities. Last year the government put a cap on recruitment; universities face stiff fines if they increase their student numbers this September. A possibility presents itself: any university wishing to increase its revenue without increasing its numbers can recruit fewer students in band D and make up the numbers in higher bands.

In practice, for the post-1992 universities, that will mean boosting their numbers in band C vocational courses and, if they’re lucky, Stem subjects for which the government has, for the moment, made a little extra money available. Close down philosophy; recruit more students in business studies. Run the band C courses more efficiently, which is to say more cheaply, and you’ll make more money still.

Meanwhile, Middlesex will, for the next few years, get to keep the research money that philosophy was awarded after the last assessment exercise. It has announced, too, that no decision has yet been made as to whether it will close the Centre for Research in Modern European Philosophy, which runs the research and postgraduate programmes. Of course it won’t have any staff, and it won’t be teaching any students, but if the administrators discover that the centre is tied into lucrative collaborative arrangements with other institutions, they will leave it open – with the doors locked, presumably, and the answering machine on.

Measurable or not, it seems unlikely to be true that reputation has no financial value: who is to say how the long-term credibility of Middlesex as a research institution will be affected by the abolition of its most prestigious department? But as a statement of the short-termism encouraged by New Labour’s reorganisation of higher education funding, it makes perfect sense. Not all universities will pursue the same logic. Some, as a contributor to the Leiter Report’s discussion of the situation at Middlesex writes, will 'hold their nerve, respect academic values, keep good departments ticking over’, in the knowledge that things can change in this, as in any other sector of the market. (The same contributor points out that after 1989 many universities shut down their Russian departments, which ‘already looked short sighted 15 years later when Russia was the third biggest growing economy’.)

In a future dictated by this logic, the humanities will shrink, but they will shrink more in the new universities than in the old. The former polytechnics will revert to that status in all but name; they will focus their efforts on delivering vocational courses to children from lower-income backgrounds. (There are many, in government as in higher education itself, who never believed that philosophy had any place in these institutions to begin with.) The arts and humanities will become the preserve of the Russell Group of the UK's 20 most powerful universities, whose income will derive less and less from public funding – a prospect they welcome not least because it will allow them to teach and research whatever they like without having to worry about government interference – as they are allowed, over the next ten years, to increase their fees to whatever level the market can support. The number of students they take from poorer backgrounds will decline; the number of them studying arts and humanities degrees will diminish accordingly.

Such a future is not a cause of concern to the present government – and won't be, I imagine, to the next – but one they seem to wish for and actively encourage. The fact that the higher education cuts were announced six months before the election when, during the campaign, it has proved almost impossible to get the parties to tell us what cuts they would make in any other area, indicates how intensely relaxed the government is about taking the knife to the universities, and to the arts and humanities in particular. Mandelson, under whose supervision the universities have been disappeared into the vaporous conjunction of business, innovation and skills, showed some relish in defending the cuts: ‘Universities are not ivory towers.’ he said in January. ‘They are not remote islands in the regions they are located; they have got to work and join up with businesses and private enterprises.’

It isn’t clear what part the arts and humanities have to play in this vision, just as it wasn’t clear, from the proposals put forward last year by the Higher Education Funding Council for England for the future government funding of research, how work in the arts and humanities would satisfy the requirement that it make a demonstrable social and economic ‘impact’. That story wasn’t reported in the newspapers either, though it signalled a revolution in the way the purpose of research in these fields is conceived. The reaction in the academic community was overwhelmingly negative, and Hefce – unable, it turned out, to explain how they would assess the ‘impact' of work in fields such as philosophy, classics and English literature – has now delayed the next research assessment for another three years.

‘Impact’ will return, however. The failure to specify the criteria by which it would be judged was a matter of feckless bureaucracy. The decision to introduce the idea in the first place was not. Mandelson’s tough talk about the cuts is one thing, and not unexpected in a time of financial crisis. ‘Impact’ is another. It is as pure a manifestation of ideology as we have seen from New Labour. Nothing, not the courses that universities run, not even the thoughts in academics’ heads, will be regarded as viable, still less deserving of public money, unless it can demonstrate its ability to thrive in a market. Let the rich pay for their children’s idle studies if they wish, let universities and charities fund scholarships in whichever subjects they like: the humanities are a luxury the rest of us can’t afford. Middlesex University will not be the only ones to have got the message.

You can sign a petition against the closure of philosophy at Middlesex University here.