Vice-chancellors have urged Lord Mandelson not to undermine the unit of resource by expanding student numbers without extra funding. The warning follows a proposal put to the First Secretary that, if pursued, could see an extra 10,000 unfunded places thrown into the mix.
Universities UK is in discussions with the Government about how to accommodate record numbers of university applicants for 2009-10.
Earlier this year John Denham, as Universities Secretary, instructed the Higher Education Funding Council for England to "bear down on over-recruitment". Hefce later told universities that they could face penalties of up to £10,000 per student if they recruited more full-time undergraduates than in 2008-09.
The limit was imposed as the Government sought to cope with a miscalculation of the bill for higher education. It has left vice-chancellors walking a tightrope between under-recruitment, which would entitle Hefce to claw back cash, and over-recruitment.
UUK has confirmed that one of the suggestions put to Lord Mandelson is that universities should be allowed to recruit up to 5 per cent more students - the proportion permitted in the Hefce "tolerance band" - without penalty.
Although the tolerance band remains in place, the ban on institutions recruiting more full-time undergraduates than last year has in effect superseded it.
If the rules are relaxed to allow the additional 5 per cent to include undergraduate numbers, it could add about 10,000 unfunded places.
Wendy Piatt, director-general of the Russell Group of research-led universities, said it was "essential" that the unit of resource be maintained, while John Craven, chairman of the Universities Alliance, said he "would not expect to see a major expansion in intake unless there was additional funding for student support".
However, Les Ebdon, vice-chancellor of the University of Bedfordshire and chairman of the Million+ group of post-92 universities, said recruitment within Hefce's tolerance band was "certainly one means of making a real difference".
He also suggested that Lord Mandelson could consider a "two-year project involving a mix of specially funded provision including full-time, part-time and the expansion of foundation degrees" to meet demand for university places that is outstripping supply.
Meanwhile, another proposal understood to have been mooted by the former Department for Innovation, Universities and Skills to reduce its student support costs and balance its books is for students who live at home to be exempted from tuition fees.
One vice-chancellor, who asked not to be named, said he could "see some logic in the idea, particularly if it was linked to funding by credit, which Hefce is talking about, where students gain degrees over four or five years".
The proposal is believed to have been discussed in connection with the forthcoming higher education framework, which was written by Mr Denham and is now being reviewed by Lord Mandelson.
Other proposals include tuition fee banding, which would organise universities into tiers, with those at the top allowed to charge high or unlimited fees in return for receiving less state funding for teaching, or none at all.
The framework is due to be published this month. However, publication may be delayed until the autumn to allow Lord Mandelson to put his own stamp on Mr Denham's work.
The Conservatives accused the Government of “sleepwalking into a crisis” today as figures showed a rise of 10 per cent in applications to university.
Data released by the Universities and Colleges Admissions Service (UCAS) revealed that 592,312 people have applied to start courses in the autumn, up from 540,108 this time last year.
David Willetts, the shadow secretary of state for universities and skills, said: “Today we have the hard evidence to show that tens of thousands of people who hoped to go on to higher education this year face a brick wall.
“Young people are becoming the biggest victims of this recession. The number of young people not in education, employment or training is already at record levels and now we are on course to have a record number of young people refused a university place.”
The rise in mature applicants has continued, with an increase of more than 18.8 per cent in applicants over the age of 25.
Breaking with the previous trend, applications from men (10.7 per cent) have risen more than those from women (8.9 per cent).
There were larger than average increases in those hoping to study journalism, nursing, aerospace engineering, mechanical engineering and hospitality, leisure, tourism and transport.
Diana Warwick, chief executive of Universities UK, said: “These application figures show unprecedented levels of interest in higher education courses, which we welcome. Applicants are making informed choices and thinking carefully about the value of higher education, particularly in the current economic climate.
“Due to the increased pressure on places this year, competition is likely to be more intense. It is anticipated that the clearing process for this summer could be briefer and tighter than on previous occasions.
“But we would also emphasise that those applicants who have already received an offer and achieve their grades will have a place and that there will remain many institutional opportunities across various subject areas - although applicants may need to be more adaptable in their choices. This emphasises the need for everyone involved to provide as much advice and guidance as possible to applicants this summer.”
The Million+ group of new universities and the National Union of Students reiterated their calls for more student places.
Wes Streeting, president of the National Union of Students said: “Unless there is an urgent expansion of places, universities will be unable to meet this demand. We are therefore calling on the Government to take immediate action to increase student numbers for the coming year.
“Applicants of all ages are clearly making the correct assessment that it is better to invest now in their education and training. We understand the current pressures on public finances, but the Government must also make the right long-term decisions. It is surely better to bear the cost of increasing opportunities in education and training now than to shoulder the burden of long-term unemployment later.”
Les Ebdon, chair of Million+, said the figures suggested that over 35,000 well-qualified students would not secure places this year.
“The key to unlocking additional student places in 2009 and 2010 is funding for student support,” said Professor Ebdon.
“If the Government could find £93 million per year more in student support, many universities would be able to offer these students places. It is in the national interest for universities and the Government to work together to resolve this crisis.
“The figures confirm that the applicants are the very students that have been at the heart of the drive to uplift aspirations with record applications from mature students, those from lower-socio economic backgrounds, black males and young white men.
“Government should act now before universities that would welcome these additional students have to start turning qualified students away at clearing and the potential for universities to create further social mobility in the UK is wasted.”
Sir Martin Harris, director of fair access, warned that it would be important to make sure those from poorer backgrounds did not suffer as a result of the heightened pressure on places.
“The significant upward trend is encouraging in so far as it indicates that students continue to have faith in the benefits that higher education can offer,” Sir Martin said.
“However, it will be very important to ensure that applications from lower income families and other under-represented groups are not disproportionately affected by the increased demand for places this autumn.”