The university for life: Britain prepares to join the fast lane

Britain must smash through its ceiling on higher education expansion to bring in more school leavers and encourage adults to return to learning if the nation is to keep up with its economic competitors, a landmark report is expected to say next week.

The National Committee of Inquiry into Higher Education, chaired by Sir Ron Dearing, will make clear that the United Kingdom, where a third of young people at present go on to university, cannot afford to lag behind pace-setting countries such as Japan, which will soon boast one in two in every two school-leavers in higher education.

The cap on numbers imposed by the last government in 1994 because of funding constraints must be removed, the committee will say. It will not put a figure on the scale of expansion, proposing that growth should be demand-led rather than planned.

Ministers are likely to endorse the proposal, which runs counter to the last government's recommendation that there was no need for further expansion. However, the report will acknowledge that the crisis in present university funding will mean students will have to bear more of the burden of costs to permit growth.

Concern over proposals to introduce tuition fees escalated yesterday as it emerged that the Dearing report will also leave the way open for the government to bring in means testing on student loans, which are at present available to all undergraduates to help pay living costs.

The committee is concerned that the third of undergraduates who at present do not take up the zero-interest loans would rush to do so if fees were introduced, turning the loans into a state-backed subsidy for the middle classes.

That could push the cost of loans to the Treasury up to over pounds 2bn a year, potentially jeopardising maintenance grants for the poorest students or loans for those who really need them.

The Government might choose to reserve the money available for those on low incomes, who must be attracted to higher education if the committee's recommendation of expansion is to be fulfilled.

Another option open to ministers would be the abolition of the pounds 2,500 maintenance grant, including the notional parental contribution to living costs, leaving all students to borrow to cover the full cost themselves.

It is understood that Sir Ron's committee has left enough flexibility on funding within its report to allow ministers scope to adopt their favoured approach. There are four options on funding, each offering a different permutation of maintenance and tuition payments.

The committee has recommended to ministers a system which would see all full-time students contributing a quarter of the cost of the average degree - pounds 1,000-plus a year at current rates - payable after graduation through long-term loans.

The committee believes tuition fees, which will be introduced from September 1999 if the government approves them, can be justified because research shows graduates benefit financially from their degree.

The current rate of return of around 10 per cent on earnings would not change dramatically even if the numbers of students expanded, according to the report. It cites evidence from Australia, which has a tuition fees scheme similar to the one being proposed, to show that fees have no significant effect on participation rates.

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