Universities will still require government funding to fill the shortfall

The Higher Education Funding Council for England's five-year forecast predicts universities' surpluses will rise to �427m by 2008-09.

A predicted rise of 11% in student numbers by 2009 will also contribute to the increase, their report says.

But universities say they will still require significant government funding.

Extra needed

Universities' surpluses are predicted to dip to �41m for 2005-06, according to Hefce, but should then rise steadily as a result of higher income from variable tuition fees, which will be introduced from September.

Institutions will be able to charge fees of up to �3,000 per year, but those charging the full amount must offer students from the lowest-income households a bursary of at least �300.

Hefce says many universities will use the additional resources from higher fees to fund improvements in infrastructure.

Higher education institutions are still predicting a rise in income generated by overseas students - however, Hefce warns that the growth in overseas recruitment is slowing down.

It predicts that universities' reliance on income from funding bodies should decrease to 34% over the next five years - but university leaders say they will still require billions of pounds of taxpayers' money even after the increased income from fees.

Universities UK said institutions would need more than �8bn public funding between 2005 and 2008, including �3.7bn for capital investment in infrastructure.

It said cuts in real funding over 20 years and low salaries for academics, as well as the expectation that universities would continue to accept more students each year, meant it would need the extra money.