Universities' efforts to strengthen their autonomy by reducing their reliance on state funding could be having the opposite effect.

A new analysis argues that while universities have significantly reduced their dependence on government grants, alternative sources of income from students and businesses come with "strings attached".

The study, by the University and College Union, adds that the shift has not necessarily resulted in less government interference either.

It comes after Sir Alan Langlands, chief executive of the ºÚÁϳԹÏÍø Funding Council for England, warned last week of serious cuts to public funding, which will further erode the academy's ability to rely on state cash.

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The UCU study shows that as a proportion of institutions' total income, the funding body grant fell from 41.6 per cent in 1995-96 to 36.4 per cent in 2007-08, while the proportion from fees rose from 23.4 per cent to 26.8 per cent.

The advent of top-up fees, particularly the higher fees paid by overseas students, are cited by the report as key factors in the decreasing reliance on funding council grants.

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The Russell Group of large research-intensive universities is shown to be the mission group least reliant on funding body cash, which accounted for 29.4 per cent of members' total income in 2007-08.

This compared with 46.8 per cent for the Million+ group of new universities.

Stephen Court, UCU senior research officer, said: "The desire to diversify is likely to lead to more pressure for an increase in top-up fees - but that too will bring more pressure from students as consumers.

"And greater reliance on business as a source of teaching and research funding could bring more constraints on the freedom to recruit students, teach, research and publish the results, given the goals of business and the importance of commercial confidentiality."

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Mr Court adds in the report that it is "unclear" whether decreasing the proportion of funding body income has given universities more autonomy from the Government, which expects institutions receiving public funding to comply with its policies, regardless of the level of the grant.

To be less tied to state policy, he says, "institutions will need to become wholly or almost financially independent, along the lines of the University of Buckingham".

The report, No strings attached? Funding body grant as a proportion of college and university income, says that across the UK, one in four institutions took less than one third of their income from funding body grants in 2007-08, compared with one in seven in 1995-96.

The proportion of income from research grants rose slightly from 14.5 per cent to 15.9 per cent over the same period.

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Sir Alan Langlands told Hefce's annual meeting in London last week that the "golden age" of rising budgets in higher education was over. He warned that universities in England were in danger of falling behind those in other countries because of lack of investment.

john.morgan@tsleducation.com.