Watchdogs will be funding the QAA

The cost of setting up a new Quality Assurance Agency for higher education will have to be met out of existing quality watchdog budgets, it emerged this week.

Up to Pounds 1 million may have to be found by the Higher Education Quality Council and the quality assessment divisions of funding councils, consultants involved in launching the agency have said.

Senior officials of the agency, who met this week to consider the transfer of assets from the HEQC and funding councils, say the money will be needed to relocate staff and pay off those who do not transfer to the new body.

It will also cover managers' salaries, including chief executive, John Randall's Pounds 60,000 a year plus benefits.

The news has angered HEQC staff, who have been told they will move from their offices in London and Birmingham to "somewhere north of Bristol".

There are also fears that the decision to draw on HEQC and funding council reserves could weaken or delay work on standards, quality audit and assessment.

But Peter Milton, acting director of quality assessment for the Higher Education Funding Council for England, said there was "no way that institutions could be asked to find the money", even though he doubted that setting-up costs would be as high as had been originally estimated.

The agency heard this week that it had gained charitable status so it is in a legal position to receive HEQC resources, but has yet to meet Transfer of Undertaking Protection of Employment rules to secure the transfer of staff.

A standards and quality group of the Committee of Vice Chancellors and Principals was told last month by Brian Fender, HEFCE chief executive, that the agency needed to produce a business plan to justify the expenditure it wished to make.

A report on the meetings says Professor Fender suggested "it needed to be recognised that the budget might need to be larger in the initial stages than in the longer term steady state".