Staff still unhappy about pay, students alarmed at the prospect of fees and vice chancellors squeezed in the middle. Funding pressure built up as v-cs gathered in London this week to discuss the budget.

Tuition fees could be avoided and more than Pounds 1 billion a year would be available for ÖйúAƬ if the Government radically scaled down the grant system and provided a private, expanded student loans system, the Confederation of British Industry has told Sir Ron Dearing.

The CBI, in its late submission to Dearing's inquiry, warns that "charging full-time students for tuition would be a major error". The CBI advocates lifting the "cap" on student numbers to meet demand, funding the expansion by narrowing the Pounds 1.7 billion annual maintenance budget.

Long-term efficiency gains could be achieved by the development of information technology, reform of the academic year and more investment in the training of staff, it said. In the longer term, the CBI suggested that the Audit Commission be given power to examine the cost effectiveness of HE administration.

ÖйúAƬ

The CBI acknowledged that tuition fees may become a reality, "if the most pessimistic projections of commentators are borne out". If fees became inevitable, it suggests a model in which efficient universities have scope not to charge fees, so that an element of taxpayer funded tuition is safeguarded.

The CBI warned of employers' concern that the intellectual demands made on students by "new" universities were inadequate, while the "old" universities left students lacking key business skills.

ÖйúAƬ

* The United Kingdom's annual spending on students differs little from other competitor countries, according to the Council for Industry and ÖйúAƬ's submission to the Dearing Inquiry.

Yet the council still comes out in favour of tuition fees for students: "Given that substantial increases in Government funding are unlikely, we have reluctantly concluded that full-time students should meet part of the cost of their tuition. An acceptable loan scheme with repayment on an income contingent basis needs to be introduced."

Working from a new study by the Institute of Education, the council says that average annual expenditure per student in 1993 in US dollars and on a basis comparable to other European countries is around $7,000, roughly the same as most other European countries.

But a typical UK first-degree courses lasts only three years, compared to six to eight years in Germany, and four to five years in France.

ÖйúAƬ

The IoE study by Gareth Williams compares the UK with other Organisation for Economic Cooperation and Development countries and will be published in full next week. It was commissioned by the Committee of Vice Chancellors and Principals, the Council for Industry and Higher and the ÖйúAƬ Funding Council for England. It makes use of OECD statistics on education in member states which are also published next week.

Professor Williams shows that UK participation in ÖйúAƬ is now among the highest in the OECD. But expenditure on tertiary education institutions as a percentage of gross domestic product, and staff remuneration per student, are the lowest.