Staff have ruled out top-up tuition fees as a funding solution for higher education, the Association of University Teachers summer council heard last week.

"Top-up fees were seen as the most socially and economically divisive of all the possible solutions to improving funding. There is this notion that the Government could not claw back this money, but this has not been legally tested and it was thought to be totally unrealistic," David Triesman, general secretary, said.

A report from eight staff groups suggested other sources of income should be explored such as employers' contribution, the non-payment of VAT by universities and the re-apportionment of intellectual property.

Policy should reflect the fact that the student body is no longer white, male and middle class.

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No one had costed potential revenue from other sources such as an employers' contribution because the calculation would require sophisticated accounting models, the report said. It was generally agreed any Government attempt to reduce spending in response to institutions raising money from other sources would be unacceptable.

Mr Triesman said: "The groups particularly picked on the current view that employers do not profit from graduates as extraordinary.

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"Smaller firms, in our view, would continue to employ graduates, especially those very firms aiming to become the leading edge companies of the future. They have an insatiable appetite for highly qualified staff," he added.

* Up to 1,000 delegates are expected to attend the National Union of Students' one-issue conference on funding.

Its extraordinary general meeting on Tuesday in Derby will debate changing NUS policy from backing full grants to proposing a funding scheme involving student contributions.

Feelings are said to be running high on both sides, with the prospect that the crucial decision could be made on a card vote of more than two million students.

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More than 100 motions and amendments have been received and the agenda was being prepared as The THES went to press.