Shabby campuses point to years of neglect of higher education by government and the need for massive investment and substantial reform, according to a report published today by the National Commission on Education.

The Way Ahead, the final report of the four-year review of education and training by the NCE, says that the infrastructure of many universities - their physical plant, scientific and communications equipment, libraries, laboratories and lecture rooms - has been "overstretched by successful expansion unaccompanied by new resources". It adds: "There is a general shabbiness about many campuses which gives a poor impression to staff and students alike of the value accorded to their activities."

But the NCE adds that the cost to the public of each United Kingdom student at university is already higher than in the United States, Japan, Germany and France, and 50 per cent higher than the average found in Organisation for Economic Co-operation and Development countries. It recommends an overhaul of the funding arrangements for students, and suggests that students should make an annual fixed rate contribution to course fees - possibly 20 per cent - but could defer payment and make it later through the tax or national insurance system. Lord Walton of Detchant, chairman of the commission, said it would be "like a mortgage".

It also recommends a more generous maintenance allowance, repayable through the same system, run by a student support agency funded by investment from private financial institutions. A new system would waive fees for basic or foundation learning post-18, and reduce FE course fees for young people up to the age of 24.

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Christopher Johnson, NCE commissioner and specialist adviser to the Commons Treasury committee, said: "Students might not like this, but we're saying that anybody taking a degree will have the capacity to service the loan over their lifetime and their parents' income is irrelevant."

This blueprint for the future could save up to Pounds 3 billion each year. The NCE says that as well as improving campuses, money should be pumped into academic salaries. Salaries at the "old " universities rose by only 12 per cent between 1983-93 while those of non-manual workers rose by 36 per cent. The NCE calls for "a new deal for the pay and terms and conditions of higher education staff".

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The NCE holds that in future: * all university teachers should have a teaching qualification; * there should be a single robust regulatory framework to safeguard quality; * comprehensive national credit accumulation and transfer arrangements are needed; * universities should have a leadership role in developing regional learning networks; * university research capability must be strongly supported.

Learning to Succeed: The Way Ahead, NCE, 344-354 Gray's Inn Road London WC1X 8BP, Pounds 2.50.