Four universities will lose more than ?1 million each in public funding this year and 15 others face smaller clawbacks after exceeding their limits on student places, it has emerged.

One of the institutions - London South Bank University - will be docked ?2.2 million from its annual grant after taking on almost 600 more students than its cap allowed, figures from the Higher Education Funding Council for England show.

Phil Cardew, pro vice-chancellor (academic) at London South Bank, said the university had experienced a "late surge" in accepted offers.

"We monitor applications carefully, but in 2010 we were not able to react swiftly enough," he said. "We have put in place new processes for 2011 that will ensure we are better able to meet these requirements in the future."

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In total, Hefce is clawing back ?8.1 million from 19 higher education institutions that overshot their numbers cap, which is imposed to limit the cost of the system to the taxpayer. In addition, 33 further education colleges will be docked a total of ?500,000.

Universities that take on too many new full-time undergraduates lose grant money at the rate of ?3,750 per "excess student" recruited.

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The money will be withheld from the affected universities' grant payments in the last four months of the current academic year, which ends on 31 July.

When the penalties are added to the cuts already unveiled, it is clear that some institutions face steep drops in teaching funding, particularly compared with the allocations originally announced in October 2010.

Penalty notices

In addition to London South Bank, other institutions suffering substantial clawbacks after taking on too many students include Middlesex University (?1.4 million), the University of Greenwich (?1.2 million), Manchester Metropolitan University (?1.1 million) and Teesside University (?900,000).

Teesside's grant had already been cut because the institution did not fill places that fell outside the full-time undergraduate cap.

Middlesex, meanwhile, was also docked more than ?500,000 for failing to make up for over-recruiting new entrants in 2009-10 by reducing places for 2010-11, bringing its total losses to almost ?2 million.

A Middlesex spokesman said its holdback was due to "managed over-recruitment to meet our Hefce contract, an increased take-up of places and the need to honour commitments to students joining us from partner colleges".

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The institution that was docked the most last year - De Montfort University, which was fined ?3.4 million for over-recruiting 913 students in 2009-10 - has lost a further ?1.1 million for failing to compensate adequately for the error in terms of this year's recruitment.

Information on over-recruitment was made available on Hefce's website at the same time as last month's grant announcements for 2010-11, but it was not publicised.

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Papers from the funding council's most recent board meeting note that "the media may take a particular interest" in the figures.

Either way you lose

Although the total amount of money cut - levied for a collective overshoot of more than 2,000 students - is about half last year's figure of ?15.7 million, it starkly illustrates the inability of universities to boost their income through expansion.

The case of Teesside shows that a university can be penalised for exceeding its full-time undergraduate cap while also losing money as a result of under-recruitment.

It is already dealing with a ?4.6 million loss of grant caused by its falling short of expectations in other areas of provision, including part-time teaching.

The rules on over-recruitment are set to be tightened even further when higher tuition fees are brought in from 2012, as the government strives to clamp down tightly on the cost to the Treasury of the new system and cut overall numbers by 10,000.

Minutes from a January meeting of Hefce's board, recently published online, note that "in the future, student number controls will need to be different to the current system that claws back from institutions ?3,750 for each student that they over-recruit - this is a lower figure than the possible income that institutions could gain from future fees".

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simon.baker@tsleducation.com.