British, French and German universities will be overtaken by those in China and India within a decade unless they improve quality and access, the European Commissioner for Education said last night.

Jan Figel told The Times that Europe’s top universities would no longer dominate world rankings unless they modernised and received more funding.

The concern, echoed by vice-chancellors and employers, is not only that British universities will lose students to more attractive institutions abroad, but that business will follow them with jobs and investment.

Britain is the second most popular destination for overseas students, second to America, with Cambridge and Oxford the only European universities in the Top Ten of both the Times Higher and the Shanghai Jiao Tong indices of university world rankings.

Europe has 200 universities in the top 500, but the United States has 37 in the top 50.

“If you look at the Shanghai index, we are the strongest continent in terms of numbers and potential but we are also shifting into a secondary position in terms of quality and attractiveness,” Mr Figel’, 47, told The Times.

“If we don’t act we will see an uptake or overtake by Chinese or Indian universities. Indian technology is seen as the third best in the world. China itself decided it wants several top universities by 2015.”

Although China and India have a tiny number of universities in the Times Higher top 100, including Beijing, Tsinghua and the Indian Institutes of Technology, and none in the Shanghai top 100 index, Mr Figel’ believes that Europe’s supremacy in tertiary education is in imminent danger of being lost to Southeast Asia as well as the US, particularly in science.

Drummond Bone, the president of Universities UK, the umbrella group of vice-chancellors, believes that European universities must work together to create the critical mass to attract students and investment.

He said that the danger of falling down the league tables was that Europe could fall into a downward economic spiral. “Overseas students don’t come to the UK or Europe, our students are attracted elsewhere and then if you’ve got the students going elsewhere the businesses go elsewhere.”

LogicaCMG is a British company that specialises in high-tech software systems. It supports a third of the world’s satellites and employs 40,000 people worldwide, including 2,500 in India. Martin Read, the group’s chief executive, says that Britain cannot compete on numbers with China and India.

British universities maintain high standards and teach students to think for themselves, but he is concerned about the lack of home-grown science, technology and maths graduates.

“If we’re not getting sufficient numbers of high-quality graduates, we have a problem, because we don’t have a framework for business to work in,” he said. “Businesses will start to relocate if they can’t find them in their own country.”

Not only is Europe failing to produce enough engineering, maths and technology graduates to fill the jobs, but innovation is so weak, that more than 400,000 European engineers now work in the US.

Mr Figel’ said: “We have ideas – the world wide web was British, as was the CD-Rom, and the MP3 player was German. But all three were finalised and distributed around the world by the United States.”

The answer, he suggests, is to attract more EU students with better quality degrees, to invest more in universities and to make EU degrees more easily transferred between countries, as proposed under the Bologna Process on schedule for 2010.

Europe spends about 1.1 per cent of GDP on higher education compared with the United States, which spends 2.7 per cent of GDP. China and India spend about 0.5 per cent and 0.37 per cent of GDP, respectively. But China is aiming to raise its investment to 4 per cent GDP in the coming years.

How they are ranked

Shanghai Jiao Tong University world rankings

Universities are ranked by several indicators of academic or research performance, including alumni and staff winning Nobel prizes and Fields Medals, highly cited researchers, articles published in Nature and Science, articles indexed in major publications and the per capita academic performance of an institution

Times Higher-QS World University Rankings

Universities are measured against a combination of peer review of more than 1,300 academics worldwide, and the amount of cited research produced by faculty members, the ratio of faculty to student numbers, their success in attracting foreign students and internationally renowned academics

East and West

Tsinghua University

— Top-ranking university in mainland China, at 151= in the world, according to Shanghai Jiao Tong unversity index; 62= in the Times Higher world rankings

— Founded in 1911 as a government school preparing students for study in the US; the first undergraduates were enrolled in 1925

— 32,000 full-time students, including 13,700 undergraduates, 13,400 Master’s students and 5,000 studying for PhDs

— 2,857 faculty professors, 47 research institutes, 29 research centres, 13 national laboratories accounting for 10 per cent of all national laboratories in China and 27 postdoctoral research stations. The library has a collection of 3.5 million volumes. 30,000 computers are connected to the campus

Cambridge University

— Top-ranking European and British university, 2nd in the Shanghai Jiao Tong world ranking index; 3rd in the Times Higher world ranking index

— Origins date back to as early as 1200, when the town had at least one reputable school. By 1226, the scholars had formed a body, represented by a Chancellor, and were regularly studying

— 14,605 full-time home and European students, as well as 3,198 overseas students in 2004-5

— 8,570 staff, including 2,703 academic staff and 2,457 contract researchers

— Fees range from £3,000 a year for home or EU students and £21,417 for overseas students. Income was £525.5 million last year, of which fees amounted to 11 per cent

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