The government is poised to postpone the bulk of its higher education expansion until the end of the decade, giving priority to raising academic pay and putting more money into university teaching.
The move would endanger the target of 50 per cent participation by 2010. Higher education minister Margaret Hodge has indicated that the expansion burden will fall mainly on new universities, while the leading research institutions may be all but excused.
Department for Education and Skills officials have hinted to vice-chancellors that there is likely to be little or no cash for significant expansion in the spending review settlement for 2003-06. The majority of the extra money to be announced with the higher education strategy document next month will be earmarked for teaching infrastructure, including staff pay and possibly student support.
Universities will still receive cash to fund some extra students between 2003 and 2006 as part of the new annual bidding round, but the extra places funded under this process would not be sufficient to hit the government's target of 50 per cent of 18 to 30-year-olds in higher education by 2010.
The government estimated it would take an extra 400,000 students by 2010 to hit the target. Based on current student numbers, this implies a growth rate of at least 4 per cent in each of the seven years left until 2010.
Up to last year, the Higher Education Funding Council for England calculated that universities had underrecruited by nearly 22,000 against targets since 1994.
Ministers expect much of the expansion to occur towards the end of the decade because they are relying on steadily improving GCSE performance, which will take time to impact on higher education. But many in higher education assumed that growth towards the target would be spread more evenly.
One vice-chancellor said: "My university has ambitious growth plans and I expected growth up to 2006. I contacted people within the education department for clarification and no one gave me any confidence that there is to be growth in the next three years."
A spokeswoman for the vice-chancellors' lobby group Universities UK said:
"If the current participation rate is to be maintained, there needs to be some growth because the age cohort is expanding."
There will be roughly 645,000 more people aged 18 to 30 by 2010 compared with 1999 when the 50 per cent target was set. The government's expansion calculations use 1999-2000 as the base year.
Higher education minister Margaret Hodge said last week that little of the growth would take place in the top research universities and that a significant share of the extra students would be studying below degree level on foundation degree courses and diplomas. Speaking at a conference in London, she said: "I cannot see many of the Russell Group wanting to massively expand their numbers. What I want to see is far more sub-degrees being offered."
Ms Hodge said she was interested in a two-plus-two model for foundation degrees, where students would study for two years for a foundation degree, most likely in further education colleges or new universities, followed by two years at university to gain an honours degree. The original foundation model envisaged two years plus one year to get an honours degree.
The strategy document is also expected to contain plans to improve the leadership, management and governance of universities. At a second conference Ms Hodge said: "Governance and leadership are vital. If we need to put more money into higher education, we must ensure that it is effectively used. Higher education is a huge business getting its resources from an increasing range of sources and having to be accountable to them. That complexity is leading to problems. Over a third of institutions are in financial difficulties and that requires strong leadership."
However, vice-chancellors objected to the criticism of their management. At the conference, Adrian Smith, principal of Queen Mary, University of London, accused the government of failing to point to specific areas where universities were failing.
* Postcodes will no longer be used to identify which underrepresented students attract a funding premium. The Higher Education Funding Council for England is planning to take into account the previous educational attainment and the age of the students. The change will come into effect next year.