It is argued that, basically, academics engage in three activities: teaching, research and scholarship, and that the activity of scholarship must be recognised and separately funded. The concept of scholarship is derived from its historical roots, according to which it supports both teaching and research, but is extended to support all activities in which academics engage. This makes it possible to develop an expanding system of higher education in which all academic activities are appropriately recognised and rewarded and which can operate with significantly lower unit costs than has been the case in the past. However, the need to provide funding for scholarship puts a lower bound to acceptable unit costs.