The archbishop of Canterbury has called on churches to open their doors to rough sleepers and criticised funding cuts that have left councils struggling to meet needs.

Justin Welby also called for tuition fees to be scrapped, saying the cost of university education should be covered through taxation.

Interviewed by students at Canterbury Christ Church University, Welby said: “Councils have suffered such cuts in their spending capacity that they are really struggling to meet a whole range of needs. We’ve shown in the past we can do more, but they’ve got to be resourced to do it.”

Churches should accommodate rough sleepers, he said. “There’s a nationwide scheme … where churches get together in groups of seven, and each church will take one night a week. It’s one of the major contributions the churches make in this country: food banks, night shelters, debt counselling, those are the three great social engagement areas.”

People living on the streets needed more than a place to sleep, he said. “You need to be able to cook for them. You need to be able to make sure they’re comfortable, and warm, and safe. You’ve got to meet the need in a way that gives dignity to the people you are meeting the need for, and gives them security.”

Only 5% of Church of England churches provided a night shelter for rough sleepers in 2017, according to a report from the C of E’s church urban fund, although more support was provided in other ways, such as through donations and volunteering.

Of all C of E churches, 19% run a food bank and 8% run a debt advice service, the report said.

Welby told the students that university tuition costs should be paid for by taxation rather than student fees, and that the 6% interest charged on student loans was unfair.

He said: “People like me who didn’t pay tuition fees ... came away from university feeling like the country had given them something and they owed it. If you’ve paid for it, you’ve bought it, it’s yours – why should you care about anyone else?”

The 6% interest rate on student loans was “a commercial rate of interest, and much higher than they borrow at, so they’re making a significant profit on lending it out”. Instead, interest should be pegged to the rate of inflation, he said.