Institutions count cost of exceeding student cap

English universities have exceeded their numbers cap by thousands of students this year as applicants flocked to avoid higher tuition fees, and large fines are expected, with London Metropolitan University alone facing a hit of up to £6 million.

Over-recruitment for 2011-12 is as high as 25,000 across the sector, some believe. That would represent a huge rise on last year, when universities exceeded their cap by just 2,150 places.

Malcolm Gillies, vice-chancellor of London Met, said the fine levied against his university by the Higher Education Funding Council for England would be between £5 million and £6 million. Although London Met had appealed and cited "substantial mitigation", it had nevertheless made a £5.1 million provision for the fine in its accounts, Professor Gillies added.

Such a penalty would be more than double the size of the largest fine levied for over-recruitment last year, when London South Bank University faced a £2.2 million charge.

Times Higher Education reported in October that some universities might have deliberately over-recruited in 2011-12, expecting to compensate by under-recruiting in 2012-13 under the higher fees regime and thus avoid incurring continued fines.

London Met - which still owes Hefce £25 million over a separate, previous failure to report student numbers correctly - said its over-recruitment was accidental. Exceeding the cap was the result of recruitment being left open too long.

In that time, Professor Gillies had been away and his deputy was in charge. Noting that recruitment was a "delegated function", Professor Gillies said: "Yes, it's true I was away on my annual leave for a lot of this period, but I take responsibility for this - as I take responsibility for everything I do at London Met."

He pointed out that the over-recruitment meant access to university for students who might otherwise have been shut out.

Ministers mean business

In their grant letter to Hefce this month, Vince Cable, the business secretary, and David Willetts, the universities and science minister, said their department's budget faces "significant and increasing pressures. Over-recruitment of students in 2011-12 has contributed to these by creating unanticipated pressure on student support costs."

Hefce said it would not detail other fines, or the sector's total, until it publishes its response to the government's grant letter on 22 March.

Student numbers are capped to control the cost of student loans and other support, which are subsidised by the taxpayer. Fines are levied at a rate of £3,800 per full-time undergraduate or student pursuing a postgraduate certificate in education recruited above the permitted level in 2011-12.

Private providers - which are not subject to the cap - are allowed unlimited recruitment of taxpayer-backed students on courses specifically designated by Mr Cable.

London Met, whose cap this year was 4,900, over-recruited by 1,550 students. It is thought that the best the university can hope for from its appeal is a reduction of the fine to £4 million.

Professor Gillies said universities that recruit heavily in clearing would be fined most because "they are the ones that have had to make very rushed offers at the last minute".

He said there was "no question that I'm aware of anywhere that this was deliberate...How a university would gain from doing this, I don't understand."

But he added of the final financial balance between the fine, fees from the extra students, and the costs of teaching those students: "The result of this is something we are still waiting to see."

Tsunami of late applications

London Met had been hit by a "veritable tsunami of late applications as people tried to get in for the last education at a low price", Professor Gillies said, while the rate at which it converted offers into acceptances shot up from 57 per cent to 77 per cent this year despite closing off admissions earlier than in previous years.

Professor Gillies said there was no connection between the university's learning of the Hefce fine and its announcement of plans for 200 job losses among academics, which followed shortly afterwards.

'Untenable'

Martin Hall, vice-chancellor of the University of Salford, said the system of caps and fines was "rapidly becoming untenable".

Referring to suggestions that Hefce might next year raise over-recruitment fines to £10,000 per student under the higher fees regime, he said such a move would cause difficulties for universities, which would find it hard to judge their conversion rates between offers and acceptances under the new system.

Professor Hall called for "some smart solutions to expand capacity within the envelope of affordability set by the Treasury", which "could mean business funding, foundation funding, different forms of co-funding" rather than Student Loans Company funding. Partnerships "between a group of universities and a group of businesses to provide access to courses" might merit consideration, he added.

john.morgan@tsleducation.com.