SURREY UNIVERSITY wants to abandon state funding and go private. It hopes to become the first British university to declare independence from the Government by establishing an American-style endowment and relying on its own income.

The move could prompt other universities to consider opting out of state control, particularly if vice-chancellors are disappointed by a government White Paper on future funding of higher education due for publication this month.

Members of the Russell Group of 19 leading universities have already held informal talks on the possibility of becoming private institutions on the American model, relying on higher student fees and income from endowments.

Patrick Dowling, Surrey’s Vice-Chancellor, said that the university viewed government policy as one of the biggest risk factors in its development. “It could reach the stage where we feel strongly enough (to become independent). I would like to be able to keep our options open,” he said. “It is not easy going private overnight. But if we were given a major sum or endowment we would be one of the first ones to say: Let’s have a go.”

Surrey suffered budget problems in the 1980s as a result of cuts in government funding. Since then it has worked to reduce its dependence on the taxpayer. The annual grant from the Higher Education Funding Council for England (HEFCE) accounted for 25 per cent of its income in 2001, compared with 28 per cent in 1999.

Surrey received £29 million of its £116 million income from HEFCE in 2000-01. The rest was earned from academic fees, support grants, research contracts and income from ten subsidiary companies. It was the first UK university to set up its own science research park, which now earns £4 million a year in rents.

A university spokeswoman said that Surrey would need an endowment of £750 million to allow it to break free from state funding completely. “It is not something that would happen overnight but we have been working towards this for some time. We are looking at becoming less dependent on the whims of government policy and making our future go the way we want it to.”

Professor Dowling told The Times Higher Education Supplement that he did not believe that Surrey’s 5,000 undergraduates should pay higher tuition fees to bridge the gap between public and private funding because this could deter students.

But leading members of the Russell Group have said that they may be forced to declare independence if the White Paper fails to end funding problems in higher education by permitting steep increases in fees. Half of universities are now in the red.

One senior member said: “It has been a subject of discussion informally among members. There is a mood afoot to try to seek less dependence on state funds. If the White Paper turns out to be a complete damp squib then I think people will be concerned.”

The Russell Group comprises Oxford, Cambridge, Nottingham, Sheffield, Imperial College, London, University College London, Leeds, Warwick, London School of Economics, Liverpool, Bristol, Cardiff, Edinburgh, Glasgow, Newcastle, Southampton, Birmingham, King’s College London and Manchester.

Charles Clarke, the Secretary of State for Education, will publish the Government’s plans later this month for funding universities over the next decade. He is widely expected to permit increased fees, though students are likely to be asked to pay them once they graduate rather than before they start their courses.

There would be little to prevent a university declaring independence from the public sector, though none has tried because of the sums involved.

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