Higher education funding chiefs have warned institutions they may be subjected to closer quality checks if they reduce tuition fees.
Universities or colleges found to be jeopardising quality by charging less than the statutory Pounds 1,025 fee next year could be fined, the Higher Education Funding Council for England has told vice- chancellors and principals.
HEFCE has issued its warning in a letter that spells out how the government intends to keep institutions in line by threatening financial penalties for over or undercharging. "The secretary of state has drawn a relationship between the level of funding and the quality of provision," said Bahram Bekhradnia, HEFCE director of policy.
"HEFCE recognises the link between funding and quality in its teaching funding method, which requires institutions to provide a minimum amount per student."
But sources keeping an eye on emerging government plans for a second wave of higher education expansion in FE colleges say it will be difficult to hold back differential fees for much longer.
Civil servants have put the possible introduction of a new two-year HND-level qualification, called the "associate degree", back on the agenda.
If this is offered by FE colleges as they are invited to bid for more funded HE places there will be "irresistible pressure" for colleges and universities to compete by cutting fees, some sources believe.
Vice-chancellors, who are examining the case for differential fees as part of a higher education review, are expected to stick to the prescribed charges next year.
But some say that in the face of growing market pressures it will not be long before charges are cut for some courses, paving the way for top-up fees for others.
Peter Knight, vice-chancellor of the University of Central England, said:
"The present situation is not stable, because it is too centrally determined and the market will soon start to evade that central determination. There seems little doubt that FE colleges will want to charge less, and they will get away with it because their sector is so hard to police," he said.