Leader: No one is escaping the mire

Whispered conversations and knitted brows told the story at the Universities UK conference last week, as vice-chancellors tried to get a handle on how the admissions process was playing out, and how large a fall they might be facing in student numbers. But when the details were made public, they were even worse than feared.

The Universities and Colleges Admissions Service revealed that, as of 13 September, 54,000 fewer students had accepted university places in England than had at the same time last year.

The response from the government was that last year "thousands of students found a place between now and the start of term". Maybe so, but not 54,000, surely? Students are already arriving on many campuses this week.

The sums at stake are huge. The disappearance of 54,000 students would equate to lost income of more than £1 billion over three years.

Last time there was a drop in student numbers in England was in 2006-07, when top-up fees were introduced. The number of full-time students that year fell by 2 per cent.

The dip proved to be temporary - but as Sir Peter Scott, professor of higher education at the Institute of Education, pointed out in a timely analysis this month, that was against a backdrop of demographic growth and increasing public investment.

Neither applies today, although young people looking for alternatives to higher education in the high-fee era may find that few exist as the recession persists.

While fees must be a factor in the numbers crunch (applications fell by more than 7 per cent year on year), there are other reasons, too.

Fewer students deferred last year because doing so would have moved them to the £9,000 fee regime, while an increasing number may do so this year, to take advantage of the deregulation of university places above ABB at A level, below this year's AAB threshold.

The irony is that the elite universities that the government intended to support through the introduction of AAB are in desperate need of those students now.

For this first year, at least, the government's aim to support the most selective universities has demonstrably failed, and not because students do not want to attend our most celebrated institutions but because the new system has prevented those universities from taking many of them.

The uncertainty over domestic student numbers comes on top of the grave concerns about overseas student recruitment in light of the visa crackdown and the crisis engulfing London Metropolitan University.

Reflecting on the potential implications of this double whammy, one academic said: "I think this is what it must have felt like to be a banker the day that Lehman Brothers went bust...[Many] held with the basic assumption that the 'elite' would survive this. There is no squeezed middle, there is only a world of pain outside Oxbridge and a few others."

The government must think very hard about how to mitigate the impact of this.

One danger is that the Treasury seizes on a potential decline in student numbers as a way to save money by regarding this reduction as permanent and not allowing numbers to grow again significantly next year. It is essential that this is resisted and that the coalition avoids the departmental factionalism that has coloured its handling of the immigration issue.

john.gill@tsleducation.com.