Figures released by the Higher Education Statistics Agency show fees and contracts accounted for 32.6 per cent of university income in 2010-11, up from 30.9 per cent in the previous year.

Income from home and European Union students¡¯ course fees was ?5.4 billion, or 19.6 per cent of the total income for UK institutions, while non-EU students¡¯ fees totalled ?2.9 billion in 2010-11, accounting for 10.7 per cent of overall income.

Funding body grants meanwhile fell by 1.8 per cent between 2009-10 and 2010-11 to make up 32.2 per cent of overall income.

It means the balance between tuition fee and contract income, and funding body grants, passed a tipping point even before the higher fees regime begins next year.

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Meanwhile, the proportion of university expenditure spent on staff has fallen to its lowest level since records began being collected by Hesa 17 years ago.

Staff costs were 56.2 per cent of total UK higher education institutions¡¯ spending in 2010-11, down from 56.6 per cent in the previous year and 57.7 per cent in 1994-95.

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University and College Union general secretary Sally Hunt said: ¡°Our higher education system will see huge changes this year and ministers who have done so much to talk up students as consumers need to look at where resources are going.

¡°Student numbers have increased in recent years, yet the proportion being spent on staff costs has been driven down.¡±

Overall spending by universities in 2010-11 was up by 1.5 per cent ¨C with staff costs up by just 0.7 per cent in cash terms. Other operating expenses were up by 3.1 per cent. Total income meanwhile rose by 2.8 per cent in the 2010-11 academic year.

simon.baker@tsleducation.com