The coalition government¡¯s abolition of student number controls could lead to a ¡°substantial decline¡± in funding per student, as well as increased recruitment of European Union students and a bonanza for for-profit colleges.

The Higher Education Policy Institute outlines these possible outcomes in a pamphlet, A Guide to the Removal of Student Number Controls, written by the organisation¡¯s director Nick Hillman, former adviser to David Willetts in his time as universities and science minister.

Mr Hillman notes that there were ¡°practical, economic and political reasons behind the announcement¡±, made last December. But he also says that ¡°the policy was put together rapidly, with little attention to precedents at home or abroad that might have served as a useful guide. It remains fuzzy.¡±

And he says the abolition of the cap ¡°is not inevitable¡±, as Labour ¡°have criticised the policy and wish to retain some control over the provision of new places¡±.

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George Osborne, the chancellor, originally said the lifting of number controls ¨C costing ?5.5 billion over the next five years, according to MPs on the Business, Innovation and Skills Committee ¨C would be paid for by the sale of pre-2012 student loans. But Vince Cable, the business secretary, has since said that the Liberal Democrats would not allow the sale of student loans to proceed.

And senior civil servants have told MPs that the abolition of the cap does not rely on the loan sale.

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Mr Hillman notes that the continuing climate of austerity already challenges existing higher education spending, adding that ¡°while the coalition has said the extra places will be fully funded, precedent suggests future politicians may not regard this as a binding commitment¡±.

He adds: ¡°The end result could be a substantial decline in the unit of resource (the amount available for each student¡¯s education), changes to student loans to recoup more of the costs or even the reimposition of number controls in some form.¡±

Mr Hillman also says that ¡°there will be clearer incentives for institutions to recruit EU students¡± when number controls are removed, including ¡°increasing income¡± and ¡°mitigating the effect of demographic change¡± given the declining population of 18-year-olds in the UK.

As the Student Loans Company already faces major difficulties forcing EU students to repay their loans once they have graduated and returned home, ¡°the challenges in collecting loan repayments from people outside the UK will become even more significant¡±, says Mr Hillman.

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He adds: ¡°Ministers also appear not to have joined up their commitment to remove student number controls with their tough rhetoric on immigration.¡±

On for-profits, Mr Hillman notes their growth in the US and says: ¡°International experience¡­suggests those institutions with the potential to grow most rapidly could be in the non-traditional sector, particularly for-profit institutions.¡±

He continues: ¡°So the next government will face the same challenge that the current one has flunked: how to implement a proportionate, clear and equitable regulatory regime encompassing different sorts of providers.¡±

john.morgan@tesglobal.com