A decline in government support for universities is "inevitable" and ÖйúAƬ must embrace entrepreneurialism to survive, a US university president has warned the UK sector.

Graham Spanier, president of Pennsylvania State University, said that scrapping tuition fees was "never going to happen" and that institutions need control over their income and salaries to be successful.

However, Dr Spanier, addressing the ÖйúAƬ Futures Conference in London last week, said there was a risk of undermining "long-term traditions and values" if universities become too business-focused.

The academic leader, who has been president of Penn State for the past 15 years, said "public" ÖйúAƬ institutions in the US had become increasingly reliant on private funding sources.

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At Penn State, these have included philanthropic donations, a "massive" expansion of e-learning, patent activity and self-supporting operations such as running a research park and conference centres.

He said the irony was that universities such as Penn State now use less public money as a percentage of total expenditure than some private research institutions such as Stanford and the Massachusetts Institute of Technology.

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Dr Spanier advised UK universities to negotiate the impending funding crisis by taking tighter control over their finances, including tuition fees. He added that the best universities in the US were those that controlled salaries.

"Higher education must adapt to the inevitability of declining government support," he told the conference. "I heard this notion that tuition fees might be eliminated entirely - good luck in seeing that happen in light of the massive budget challenges that have been recently announced. We hear talk like that all the time in the US: it is never going to happen - tuition fees go in only one direction."

He added: "You can't have a ball and chain and be handcuffed all at the same time and expect to move ahead. We must have control over the key variables, and that includes tuition fees."

Dr Spanier said philanthropy was vital to his university's success: he has a target of raising $1 million (?665,000) every day for Penn State.

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"I know that in the UK the depth of your philanthropy at institutions of ÖйúAƬ is not at this level, but I see it coming," he said.

However, he did warn that the character of some US universities had "forever changed" because cash-strapped institutions had gone too far down the road of entrepreneurialism.

"There is a real risk of getting so deeply into entrepreneurial thinking in the wrong direction that you can undermine the long-term traditions and values of the institutions.

"At the same time, if you don't think more entrepreneurially, you could be left behind," he said.

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simon.baker@tsleducation.com