Angry university vice-chancellors last night threatened to cut the number of university places next September unless the Government reverses spending cuts announced in the Budget.
At a stormy meeting in London, they refused to hear a speech by Education Minister Eric Forth which was to have been read by a senior civil servant because Mr Forth is ill.
They tore up the proposed agenda and several threatened to start charging students fees to make up the shortfall in funding caused by the cuts. They also agreed to back the introduction of a new type of student loans scheme under which students would have to repay money for their tuition fees. At present students borrow money from the Government for their living costs but tuition fees are funded by the taxpayer.
The meeting of the Committee of Vice-Chancellors and Principals issued a statement saying that the Budget cuts of 31 per cent for building and equipment funds in one year were "catastrophic".
Gillian Shephard, the Secretary of State for Education, secured a better deal than last year for schools in the Budget at the expense of higher and further education. Ministers were anxious to stop a vigorous campaign against cuts by parents and governors.
Universities and colleges have been told that from next September they will have to raise a substantial proportion of money for buildings from private sources as part of the Treasury's Private Finance Initiative. Professor Gareth Roberts, the committee's chairman, accused the Government of cowardice in refusing to consider a graduate contribution to tuition fees. "Now we have no option. Either we get more money to teach our students or we must reduce their numbers."
The committee refused to hear Tony Clarke, deputy secretary at the Department for Education and Employment, and sent him away with this message for Mrs Shephard: "We are very concerned and upset over the severity of the Chancellor's statement, which we believe will have a catastrophic effect on universities in 1996/7.
"The Private Finance Scheme that is not well established, and which has limited applicability, cannot possibly provide the essential resources we need for our buildings and equipment. Even those things it could support cannot work when universities are not given the income stream needed to support the PFI initiatives." Universities receive a fixed sum for each student. Any reduction in student numbers would have to be agreed with the Higher Education Funding Council, the quango that allocates funds to universities.
A council spokesman said its board would be meeting next week to consider its response to the Budget. Vice-chancellors will meet again next month to discuss cutting student numbers.
The Department for Education and Employment said: "It has been a tight public spending settlement all round. Within higher education, capital funding has been reduced but current funding has been maintained. The higher education sector has been vigorous in pursuing partnerships with the private sector. So far some pounds 1.6 billion has been provided under the Private Finance Initiative.
No university is likely to go it alone and charge students fees but the committee's agreement to back loans for fees after years of indecision is significant. A Bill to privatise the student loans scheme is going through Parliament but it does not involve loans for fees.
The vice-chancellors' preferred scheme differs from the Government's because there would be no time limit for loan repayment and because repayments would vary according to income.
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