Students should be made to pay thousands of pounds more for degrees to offset the inevitable decline in government spending on universities, according to plans put forward by business leaders today.
The Confederation of British Industry said students should bear the brunt of a proposed funding overhaul to deal with a growing crisis in university finance. Under the plans, they face a triple blow of increased loan interest, fewer grants and higher tuition fees. One figure mooted is for annual tuition fees to rise to £5,000.
Labour's flagship target – to get 50% of 18 to 30-year-olds into higher education – should be suspended as an emergency measure to stop the ballooning costs to the taxpayer and protect the quality of higher education under fierce competition from other countries, the CBI said.
Student leaders slammed the plans as "offensive" to students and a retrograde step that would make universities the preserve of the elite once more. But the proposals received cautious backing from influential vice-chancellors.
The plans were drawn up by a higher education taskforce convened by the CBI ahead of a major government review of university funding due to begin this autumn, but not reporting until after the general election. Labour and Conservatives have in effect suspended their tuition fee policies pending the outcome of the review, while the Liberal Democrats said this weekend they would drop their opposition to fees, conceding that it would be impossible to finance universities without some form of student contribution.
The report suggests that businesses should pay more towards students' degrees and expect to offer golden handshakes to those who do science and engineering subjects.
The CBI's report says that:
Maintenance grants should be restricted. Students should pay higher commercial rates of interest on loans, saving up to £1.4bn a year.
The government has "little choice but to plan to raise student contributions". Evidence is cited from vice-chancellors which suggested fees of up to £5,000 a year would not put students off applying.
All savings must be ringfenced for universities. And the system could change as soon as next year for new students.
Universities should make efficiency savings and consider mergers or working with the private sector to cut costs. They should also overhaul their curriculum to include skills for work training.
Richard Lambert, the director general of the CBI, said: "The economic downturn makes cuts to public funding for higher education inevitable, so new sources of funding have to be found … we say that savings should come from the student support system.
"The UK's student support is on a par with some of the most generous in the world, and the priority must be to preserve quality as well as assisting those unable to pay to ensure that higher education remains open to all."
Wes Streeting, president of the National Union of Students, said: "I am astonished that the CBI should be making such offensive recommendations. When the fat cats at the CBI recommend that we abandon targets for widening participation from poorer students, they are talking about restricting the opportunities of other people's children rather than their own. This is gross hypocrisy."
But leading universities revealed that they were considering similar measures to the CBI's. Wendy Piatt, director general of the Russell Group of 20 leading universities, said it had been drawing up plans to solve the university "funding crisis" – including an increase in tuition fees.