Hefce chief sees more cuts ahead if loans forecast is out of kilter

Further "substantial cuts" in the teaching grant to universities may lie ahead if the tuition fees charged by English higher education institutions "cluster" around £9,000, the head of the funding council has warned.

Sir Alan Langlands said that if government assumptions underlying the cost of student loan subsidies to the taxpayer were incorrect, there was a risk of further clawbacks having to be made elsewhere owing to the "finite" sum available for higher education.

His statement of concern echoes the fears expressed by a range of experts that if the costs of student support spiral out of control, then the government will have no choice but to reduce existing budgets for teaching even further.

Speaking in London last week at a conference on leadership, Sir Alan, chief executive of the Higher Education Funding Council for England, said that the cost of student loans to the public purse presented "two big worries".

The first was the risk of student numbers getting "out of kilter" - a scenario that could lead to the kind of cuts seen when former business secretary Lord Mandelson reduced Hefce's funding before the 2010 general election.

"The second risk is the aggregate of all the fee levels. If everyone were to cluster at the very highest level, that would create almost immediate financial pressure," Sir Alan told the Leading Transformational Change conference.

He added that the government was making an assumption on the limit of the student loan book.

"If you are at risk of breaching that limit over time, it will clearly have a consequence for other areas of public investment," he said.

Sir Alan also revealed that he had "made himself unpopular" by being the first senior sector official to state publicly that direct public investment in higher education had to be revisited as soon as the UK's financial situation improved.

"There is going to be a midpoint in the spending review process and I fully intend to return to that issue if I possibly can," he said.

simon.baker@tsleducation.com.