The vice-chancellor of the University of Wolverhampton, Caroline Gipps, has come out fighting after calls for her to take responsibility for a "serious mistake" in the institution's student data returns.
The Higher Education Funding Council for England has accused Wolverhampton of misreporting data on student completion, which it used to calculate the university's funding. It has threatened to claw back up to £3.5 million it says it overpaid between 2007 and 2009 and to cut the university's recurrent grant by £2 million a year.
A similar problem, on a much larger scale, has left London Metropolitan University in financial crisis.
A Wolverhampton spokesman responded to the threat of a clawback by insisting that the university's data were accurate. "The university correctly recorded and reported the number of students enrolled and the modules they took," he said. "The problem was a misinterpretation of Hefce's arcane definition of 'completion' for funding purposes."
Professor Gipps said a policy of allowing full-time students registered on an eight-module-per-year course to progress if they had completed six modules had fallen foul of Hefce's definition of completion.
"It wasn't until Hefce began the audit in June last year that we began to understand their definition," she said. "Every new university with a modular course structure has had, or is having, a similar problem."
London Met is repaying £36.5 million after Hefce ruled that it had a 30 per cent non-completion rate, rather than the rate of about 2 per cent that it reported. However, Professor Gipps said there was "no comparison" between their situations.
"London Met was claiming for students that didn't exist, in the sense that they had enrolled but were not active students. Our data are completely clean," she said.
Wolverhampton told staff in August that it was planning to cut 250 jobs in a bid to reduce an £8 million deficit.
The University and College Union issued a statement last week demanding that Professor Gipps "take public responsibility for a serious mistake" in the completion data.
Executive pay at the university has increased and performance bonuses were paid "even as those in charge seemed to be losing their grip", the union claimed.
The UCU has also criticised managers for failing to take other cost-saving measures before implementing the redundancy programme.
The university spokesman said the Hefce clawback was not the major contributing factor to the deficit. The implementation of a three-year pay deal, a move to a single pay spine, loss of funding for students taking second degrees and efficiency savings required by the Government had all had a greater impact, he said.
He added that the redundancy programme was a "last resort", following a recruitment freeze and a 5 per cent cut in non-pay budgets.
On the question of executive pay, he said: "Performance-related pay (PRP) is a contractual entitlement. The governing body deemed it appropriate to approve PRP last year. The vice-chancellor has refused a pay rise for this year, and no decision has been made on PRP for 2009-10."