The British government is counting private tuition fee contributions by undergraduates and their parents as part of the public investment in higher education.
Student leaders campaigning against fees are demanding an explanation from the Department for Education and Employment for its inclusion of private tuition fees in public funding plans for 2001-04.
Education secretary David Blunkett announced last Thursday that higher education would receive an extra £978 million over the next three years. There will be £412 million more in 2001-02 - of which £295 million was announced in the first comprehensive spending review in 1998 - followed by £268 million more in 2002-03 and £298 million in 2003-04.
Higher education's total budget will increase from just over £5.4 billion this year to nearly £6.4 billion in 2003-04, a real-terms rise of 10 per cent. The total budgets include student tuition fees, capital and increased science spending. But the DFEE's figures show that student and parental contributions to tuition fees amount to more than £400 million in 2001-02 alone. Between 2001 and 2004 total private fee contributions will top £1.2 billion. This money is counted in the government's figure for total spending.
Institutions will receive all of the fees. But since 1998, when undergraduate fees were introduced, the government has reduced the public contribution by the same amount that institutions receive from those fees. Student leaders say the government's increases in higher education funding are being offset by private contributions from students and that the government should come clean about this.
Since tuition fees were introduced in 1998, students and parents have contributed more than £720 million. Over the same period, annual increases in the higher education budget have totalled £941 million.
Owain James, president of the National Union of Students, said: "Students and their parents have a right to know where their increased contributions are going. We need to see clarity in terms of who is funding what. What we do know is that student debt has risen by £1.5 billion since 1997.
"The government has the money to abolish up-front fees. If that is good enough for Scotland, it is good enough for the rest of the UK."
Peter Knight, vice-chancellor of the University of Central England, said:
"It is outrageous. It is like the government announcing money for roads and taking credit for how much the public has spent buying cars."
Universities have been told to recruit an extra 78,000 students between 2001 and 2004. Expansion will be fully funded, according to Mr Blunkett, and so is likely to swallow the bulk of the extra £978 million. In 2001-02 there will be enough money to increase funding per student by about 1 per cent in real terms, the first such increase in more than a decade. The unit of funding is likely to remain level between 2002 and 2004.
The £978 billion includes £50 million for 2001-02 to aid staff recruitment and retention. In 2002-03 this will increase to £110 million, and in 2003-04 to £170 million. But some vice-chancellors have described the sums as "jam-jar money", which must be bid for separately.
Opposition politicians are concerned that the education department is applying controversial cumulative accounting by presenting the three-year increase for staffing and management as a £330 million increase.
This method of accounting was criticised by the Treasury select committee in July 1998 for being insufficiently transparent because it does not accurately represent the annual increases, but rather the cumulative increase from a chosen base-line year.
Shadow education secretary Theresa May said: "I think it is time for the government to be honest about higher education funding. First, to say how much is actually being contributed by parents and students, and second, to stop adding sums cumulatively to make investment sound more impressive."
Lecturing unions hope that the additional annual sums will be used to improve pay for all academics. But Mr Blunkett made it clear last week that this cash is for staffing and management issues "on top of any pay increase that universities may negotiate". The additional cash could, therefore, be used to fund structural change rather than pay packets.
A spokeswoman for the DFEE said: "When the new tuition fee arrangements were introduced ministers pledged that student contributions to tuition fees would be reinvested in higher education and this has been done.
"From next year, with the change in the level of the contribution threshold, about 50 per cent of students will not pay fees at all."