Page last updated at 17:17 GMT, Monday, 21 September 2009 18:17 UK

Charge students more, say bosses

By Sean Coughlan
BBC News education reporter

'It might change my decision to study'

University students in the UK should pay more for their loans and accept higher tuition fees as "inevitable", says a report from business leaders.

The Confederation of British Industry says the extra money needed to fund universities should come from savings in the student support system.

It also calls for more sponsorship and bursaries from businesses.

The National Union of Students attacked the report as "gross hypocrisy" from the "fat cats at the CBI".

In England, the government is set to launch a major review of the funding of higher education and student fees.

Higher education minister for England, David Lammy, said the government still wanted 50% of young people to go to university.

"We should continue to widen access, not only because it's socially just, but also because our future economy will depend on having more people with higher level skills," he said.

The CBI says the aim for at least half of young people to get a degree should be abandoned.

The report from its higher education task force looks at the options for funding universities.

Tough choices

The CBI says that higher education is vital to the economic future and it rejects options such as slashing teaching budgets and cutting student numbers.

"Instead, we say that savings should come from the student support system," said the CBI's director general, Richard Lambert.

Richard Lambert, CBI director general: "The area we should look for savings in is student support"

This would mean reducing the subsidy on student loans, more means-testing of support and the hiking of tuition fees above the current levels of £3,225 per year in England and Northern Ireland and £1,285 in Wales.

In Scotland, there are no tuition fees.

The report also says universities should focus more on economically valuable subjects such as science, technology, engineering, maths and languages.

And it calls for the dropping of the ambition for 50% of young people to go to university.

The blueprint for bridging the gap in funding has outraged student leaders.

"At a time of economic crisis, when many hard-working families are struggling to support their offspring through university, I am astonished that the CBI should be making such offensive recommendations," said NUS president, Wes Streeting.

Divided opinions

The call for students to carry more of the financial burden marks a growing divide in opinions over how universities should be funded.

It is also the latest suggestion that attention should be shifted from the headline figure for tuition fees to the wider long-term cost of subsidised student support.

The 1994 Group of research universities has strongly welcomed the CBI's suggestions, saying that, without increased funding, higher education faces a "valley of death" of severe cutbacks.

The CBI acknowledges that education is important but wants students to pay more for it, making higher education unavailable to the majority
Raven Morpheus, Braintree

These universities also back calls for higher fees and cutting the subsidy on student loans.

"The fees cap needs to be high enough to bring in sufficient funding and enhance competition to further drive up quality," said the 1994 Group's executive director, Paul Marshall.

"In addition, a sensible interest rate should be introduced on student loans, set at the current government cost of borrowing, to rectify the huge subsidy that the government currently pays."

The Russell Group, representing a group of prestigious universities, was also enthusiastic about the proposals.

"The CBI is right to call for an exploration of new sources of funding and to say that the priority is to maintain quality rather than expand numbers," said the Russell Group's director general, Wendy Piatt.

International survey

How the UK's financial support for students compares
The CBI argues that while UK higher education funding is below the OECD average, the portion of that funding spent on student financial support is well above average

But the Million+ group of new universities opposes dropping the target of 50% of young people getting university places, saying it was "the wrong approach in a recession which has already caused one million young people to be unemployed".

The Association of Teachers and Lecturers attacked the proposals as "arrogant and elitist".

"The CBI should be arguing to maintain higher education funding in real terms, just as they argued for huge injections of cash to support failing businesses," said the ATL's Martin Freedman.

The need for extra funding for higher education was highlighted by an international report from the OECD last report which called for more university places as a way out of driving economic growth.

It showed that public and private spending on higher education in the UK is 1.3% of GDP - below the OECD average of 1.5%.

The Conservatives' university spokesman, David Willetts, said the proposals were "a good opportunity to bring this whole issue back to life".

The government is set to launch a review of the long-term funding of higher education later this autumn, but the final decision on raising tuition fees is unlikely to be made until after the general election.

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