Derby University has shelved plans to launch 40 foundation degree courses amid claims that a chronic lack of money could sink the new qualification and the government's higher education expansion plans.
Vice-chancellor Roger Waterhouse said that the government's plans to expand higher education through foundation degrees were "fundamentally flawed" owing to lack of cash.
Derby's new foundation degrees are designed to meet the employers' skills needs in growth areas such as the computer games industry. But the university is unable to run them because there is not enough money available from the Higher Education Funding Council for England.
In an interview with The THES , Professor Waterhouse dismissed as "peanuts" a £20 million package to support 10,000 extra foundation degree places across the country next year, announced by ministers at a reception for captains of industry in October.
He said: "The government is trying to hang everything on foundation degrees -expansion, progression from further to higher education, widening participation and cost-effectiveness - and all this for not much new money.
That is why the policy is fundamentally flawed.
"From an individual university's point of view, there is no incentive so far to go for foundation degrees in any significant way. If a university such as Derby isn't going to go for it on a big scale, then who is?"
By next year, Derby will offer 12 foundation degrees and is bidding for funding to offer five more.
But Professor Waterhouse said that Derby resorted to displacing some of its honours degree places with foundation degree places to get courses running.
Another problem is an expectation that universities will offer foundation degrees in partnership with further education colleges. No university would want to "siphon off" what little resources they had for foundation degrees and give it to a partner further education college, he said.
Handing a lot of foundation degree places over to colleges was also a problem because it put universities at greater risk of falling outside Hefce's recruitment targets, either by attracting too many or not enough students.
Professor Waterhouse said: "The circle Hefce is trying to square is how to encourage more higher education in further education against a background where there is no particular motivation for most universities to work with further education."
Iain Macleod-Brudenell, Derby's head of foundation degrees, said there was also unfair geographical distribution of funded foundation degree places, with the Southeast getting the lion's share.
He said: "It makes us feel very frustrated. If the government wants its expansion target to be met, it needs to fund the numbers and ensure they are fairly distributed across the country."
Professor Waterhouse said there was no question that Derby supported the idea that foundation degrees could meet the higher-level vocational qualifications needs of new growth industries that did not have a professional association.
After two years of reorganisation and staff cuts, the university is now in good financial shape and recruiting well, and so it is not relying on foundation degrees to dig itself out of a recruitment or funding crisis, he said.
Degrees at the cutting edge
Derby University is to offer the country's first degree in hairdressing in response to student and industry demands for graduate-level salon skills.
The university wants to start an honours course incorporating degree-level management and technical skills.
It is expected that many of the 20 students on hairdressing foundation degree courses will choose to take the honours top-up option when they complete their qualifications in two years.
Former hair-dressing salon manager Sarah Fletcher (pictured right) could be among the first to sign up for a hairdressing degree.
Ms Fletcher, who left school and went straight into work without considering adding to her GCSE qualifications, is studying for the foundation degree in hairdressing and salon management.
She said: "I would be very interested in going on to do a degree.I didn't get a chance to do it when I left school, but now I am really keen to learn more and to be able to work at the highest level so we can compete with the top salons."
Ms Fletcher is continuing to work at Sally Montague Hairgroup in Derby while studying for her foundation degree.
Paula Batters, Derby's programme leader for beauty, hairdressing and spa, said the technical and managerial skills students on the course were gaining were highly valued by the industry.