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The sector has reacted with unease on a number of fronts to this week's White Paper on higher education. Senior figures have expressed fears that it could compromise quality through downward pressure on fees, and warned of the danger that new competition for top-achieving students could clash with universities' widening participation aims.

Others have argued that the proposals could result in the polarisation of the sector, and accused the government of constraining student choice in a bid to save money.

The long-awaited strategy document set out proposals to open up one in four student places to competition between institutions in 2012-13.

David Willetts, the universities and science minister, told Times Higher Education that the reforms would see "students choosing where the money goes".

Under the proposals, leading universities will be allowed to recruit as many undergraduate students as they wish, provided applicants have grades of AAB or better at A level.

In 2012-13, this is expected to equate to 65,000 places, with some institutions likely to lose students as others take on more.

The White Paper calls AAB a "starting point", adding that over this Parliament the government's "ambition" is to ensure that "the share of places liberated from numbers control altogether rises year on year".

Under a "core-margin" system, another 20,000 student places will be deducted from the overall quota and opened to bids from institutions charging lower fees.

Mr Willetts said the 20,000 spots would "go to further education colleges, new providers, (and) universities with average fees - post waivers - under ?7,500".

The Higher Education Funding Council for England would allocate places "on the basis of...quality, value for money (and) patterns of student demand", he said.

The president of Universities UK, Sir Steve Smith, said it would seek discussions with the government over plans to restrict "marginal" places to institutions charging undergraduate tuition fees of less than ?7,500.

That created "a danger of a race to the bottom", he said, warning the plan would "take numbers away from high-quality providers with a proven track record just because they are charging ?9,000".

But Sir Steve said UUK supported moves to give students "more mobility, more choice, more information", and believed movement of student numbers was "sensible".

Bahram Bekhradnia, director of the Higher Education Policy Institute, said it would be "an extraordinary development if numbers are really going to be taken away from perfectly good universities and given to others simply on the basis of their cheapness.

"The government is saying that quality as well as price will be taken into account, but there are really no effective, robust measures of high quality on which to base judgements. It is likely to be an exercise to reward cheapness."

However, Mr Bekhradnia described as "interesting" moves to encourage more private providers by allowing them to access public funding, while demanding the same standards of accountability required of publicly funded universities.

Through the "AAB system", the government aims to ensure that more high-achieving students reach their first-choice university, while the core-margin scheme seeks to lower the cost of the new tuition fee system by stepping up competition from cheaper providers.

Paul Wellings, chair of the 1994 Group of smaller research-intensive universities and vice-chancellor of Lancaster University, pointed to "tensions" between the creation of a market for students with AAB grades and widening participation goals.

A "substantial proportion of those (AAB) students come from independent schools and relatively affluent backgrounds", he said, adding that any drive to increase numbers could conflict with agreements struck between universities and the Office for Fair Access.

Narrow focus criticised

While Professor Wellings welcomed moves to "rethink the relationship between students and universities", he said the "appetite to have more and more undergraduates is really limited within the Russell Group and 1994 Group".

He added: "The thing I'm most concerned about is how we've moved from a White Paper on higher education to a White Paper on student numbers control for English undergraduates." He also noted the absence of firm proposals on internationalisation, postgraduates and research.

Sir Peter Scott, professor of higher education at the Institute of Education, said that the AAB plan "could lead to a further polarisation of the system".

But he agreed with Professor Wellings that it was unclear to what extent "top" universities would want to expand student numbers.

Sir Peter said that allocating 20,000 places to cheaper providers was "actually a constraint on student choice, because extra places will only be available in institutions that charge below the set level". He said it was "simply a measure to drive down fees - and may ultimately threaten academic quality".

Malcolm McVicar, vice-chancellor of the University of Central Lancashire, said the AAB plans "completely ignore students who have qualifications like BTECs, or mature students who often enter without A levels".

He said the system was "intended to advantage certain universities and not others".

On auctioning places to cheaper providers, Dr McVicar said: "The day a Cabinet minister sends his or her son or daughter to an FE college to do a degree, I will be very surprised."

Other key changes in the White Paper include revamping Hefce as a "consumer champion" for students, shifting the Quality Assurance Agency to a "risk-based" approach that lightens regulation for highly regarded institutions, and easing the demands for awarding the title of university.

Mr Willetts argued that the move to competition for places would bring major change. "You put those two together (AAB and 'core-margin' plans) and that adds up to 85,000 contestable places - dynamising the system," he said.

While some believe the AAB policy will have little effect because leading universities will be reluctant to expand, other observers predict it could herald the "rebranding" of the entire sector, creating a new elite.

Universities that recruit a relatively small portion of their students at AAB or above could face losing students to institutions with bigger reputations.

Sir Steve said: "The consequences are potentially far-reaching...especially for those institutions - I hate to use the phrase - in the squeezed middle, with not many AAB students and losing a lot in the 'core-margin' proposals."

john.morgan@tsleducation.com

Fast forward: winners and losers in the post-White Paper academy

The government's plans to make one in four student places "contestable" between competing institutions could have a dramatic impact. Here are some of the scenarios that could materialise if the key proposals on the AAB and "core-margin" systems have the effects the government desires.

University X, a selective research-intensive institution, mounts an aggressive expansion strategy by tempting the highest-achieving students away from its rivals, under the government's new policy for uncapped recruitment of students with A-level results of AAB or better. It believes its elite reputation and established high proportion of AAB students gives it the ability to attract hundreds of extra students from institutions with less stellar names. The university considers the risks of expansion, including pressure on student accommodation and higher staff-student ratios, but decides that the prospect of extra income and enhancement of its reputation outweigh the risks. It expands places on popular courses, offers merit-based scholarships, and is successful in tempting students from its rivals, becoming part of the sector's new super elite.

University Y, a research institution without a world-class reputation, becomes part of the "squeezed middle" and loses student numbers - both to elite rivals and to cheaper new providers. It was traditionally viewed as a good second choice for high-achieving students who miss out on their first-choice institution, but under the AAB system, University Y is outflanked by bigger-name rivals in the elite. Hundreds of students decide not to take up their offers at Y, as expansion of the elite allows them to get a place at their first-choice institution. Y ends up losing a chunk of its student cohort. At the same time, because University Y is charging tuition fees of ?9,000, it loses another chunk of its total places to provide the biddable "margin" of places - open only to providers charging fees of less than ?7,500.

Z College, a further education college, gobbles up extra places under the margin system, pleasing the funding council with its ability to provide degrees at a fee less than ?7,500, and having demonstrated high student demand for its popular courses in previous years.

In Summary: White Paper at a glance

? From 2012-13, universities may compete for one in four student places, or about 85,000 in total. About 65,000 will be for applicants with grades of AAB or better, and 20,000 will be made available to institutions with tuition fees of less than ?7,500. The proportion will rise over time.

? New legislation will allow students at any provider - publicly funded or private - to borrow the maximum annual undergraduate tuition fee of ?9,000 as long as the institution agrees to be subject to the same regulatory framework governing fair access, quality and student complaints.

? Rules governing degree-awarding powers and university title will enable for-profit companies, colleges and foreign providers to enter the market more easily.

? The government will aim to transform the Higher Education Funding Council for England into a "consumer regulator" with powers to withdraw access to student loans if institutions fail to meet quality, access or other standards.

? The Quality Assurance Agency will adopt risk-based institutional review, make it easier for students to trigger inspections, and cut red tape for universities with good track records.

? The Office for Fair Access may be afforded more flexible powers to impose fines if institutions fail to meet agreements on helping poorer students.

? Universities must publish data on contact hours, past student satisfaction and employment outcomes.

? Consultation to be held on how to allow graduates to repay loans early.

? Private companies to be given access to graduate employment outcomes (for example, to enable them to create league tables).

? The government will await the outcome of an ongoing review of post-qualification admissions before making any changes to the system.

? The government will consider whether to make student charters mandatory.