The number of universities forced to hand back millions of pounds could double to nearly 50 next year under teaching cash reforms outlined by the Higher Education Funding Council for England.
The proposals unveiled this week have outraged vice-chancellors, who say the changes are damaging and pointless in the face of top-up fees. They could force some institutions to hand back a large part of their teaching grants while others will have to lever in more money or cut the number of student places.
The reforms, the result of changes to the funding tariff for subjects, mean that 47 institutions will find themselves exceeding Hefces limits on teaching funding for 2004-05 compared with just 20 institutions this year.
Hefce has produced a simulation of how its proposals are likely to affect institutions. It shows that around 30 universities and colleges will receive too much teaching cash, according to the rules. As a result, they could be asked to teach more students for the same money or to return the cash. Eight of the institutions each get more than £1 million more than Hefce believes they should.
Most of the institutions affected are new universities and include Hertfordshire, Coventry, Staffordshire, Thames Valley, De Montfort, Lincoln and Leeds Metropolitan - and Bradford University.
A further 17 institutions could need to shed students or lever in more cash as they are in effect underfunded per student. Many of these are old universities. They include Birmingham, Warwick, Leicester and Kent universities, plus several specialist institutions.
Universities are allowed some leeway by the funding council and can spend up to 5 per cent above or below the standard teaching resource. It is only when they fall outside this band as - according to the simulation - 47 institutions will next year that Hefce may expect action to be taken.
The proposals have angered many vice-chancellors, not simply because of the rise in the number of institutions affected but also because the reformed system would be in place for only two years until, as expected, top-up fees are introduced in 2006.
Hefce already plans to hold another review of teaching funding next year, which will include projections of top-up fee income.
Under the latest reforms, the University of Central England will see its teaching funding rise from 2.4 per cent above standard resource this year to just outside the tolerance band at 5.3 per cent next year. It could be asked to hand back grant money or recruit more students.
Vice-chancellor Peter Knight said: "Hefce has completely lost the plot and is showing no sign whatsoever of any strategic thinking. It is proposing a radical overhaul of teaching funding and is thinking of introducing a new system that will run for just 24 months until the government's new fees system is introduced."
Kent University will fare even worse, with its funding dropping from 4.8 per cent below standard resource to 7.1 per cent under.
Vice-chancellor David Melville said: "It is a ridiculous situation. There are two ways of dealing with it: Hefce can give us more money or it will have to take student numbers off us, which is unthinkable, given that we got 10 per cent of the total additional student numbers available for this year and that widening participation is one of our great strengths."
A spokeswoman for Universities UK said: "We need stability in the sector not difficult-to-manage further change, particularly in light of the significant recent year-on-year funding shifts, and also to facilitate institutions' preparation for differential fees."