Decision time: 'cash or students'

By Sean Coughlan
BBC News education reporter

Universities say they cannot meet the demand for places

A university leader has said there is a stark choice between either increasing funding for higher education or accepting fewer students.

Paul Wellings, the incoming chair of the 1994 Group of research universities, says tuition fees in England should be increased.

He also proposes a higher rate of interest for student loans.

Professor Wellings says ministers must decide between "reducing volume or increasing funding".

"The government and higher education sector now face a clear choice: reduce student numbers or increase funding," says Professor Wellings, who is also vice-chancellor of Lancaster University.

Loan rates

This is the first group of universities to make such a robust commitment to wanting an increase in fees.

The 1994 Group representing 18 research-intensive universities in England and Scotland, such as Durham, Exeter, St Andrews and Goldsmiths, wants to see the fees in England raised to a sufficiently high level to allow competition between institutions.

"To maintain quality, the fees cap needs to be high enough to bring in sufficient funding and enhance competition to further drive up quality," Professor Wellings told a conference about university funding in London.

"In addition, a sensible interest rate should be introduced on student loans, set at the current government cost of borrowing, to rectify the huge subsidy that the government currently pays."

Professor Wellings said that the existing fees system was "never explained or communicated properly to users", so that this time it would be "essential to get the politics right and clearly communicate the benefits of the variable fees system".

His comments come ahead of the review of tuition fees in England - and in the run up to what could be a tough summer for young people trying to get a university place.

Universities have warned of a surge in applications this year from young people wanting to stay in education during a much tougher jobs market.

But they have complained they do not have the funding to meet the demand for places - and warned that many applicants are going to be turned away.

A spokeswoman for the Department for Business, Innovation and Skills, which now has responsibility for universities, said: "Investment in higher education is now at record levels - more than £7.5bn this year, an increase of 25% over the last decade, at a time when student numbers, including those from lower socio-economic groups, have continued to grow.

"The government made a commitment to Parliament that an independent review of fees would take place once the first cohort of students paying variable fees had finished their degrees. It would not be right to comment on fees in advance of this review."