Vice chancellors are to oppose plans to fine universities up to Pounds 100,000 each if they miss deadlines for sending data to the Higher Education Funding Council for England. The penalty is being proposed to ensure individual institutions do not disrupt HEFCE's cash distribution process.

But several vice chancellors, including Peter Knight who is on HEFCE's audit committee, have complained that the emphasis on administration will be at the expense of education.

"They will get figures in on time because no one will want a Pounds 100,000 fine, but the price of that will be more money spent on administration and the figures will be less accurate," said Mr Knight, vice chancellor of the University of Central England. "I think it is an appalling way to do business."

"Getting the data in on time is easy to achieve if you are an 18-year-old full-time A-level institution, but if you have a diverse provision covering full-time and part-time, it can be far more difficult."

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A HEFCE spokesman said that only 156 out of 228 institutions had completed last year's Higher Education Students Early Statistics by the deadline they were given in December.

"Nearly a quarter were late which is a problem that does hold things up," he said. "You have got to have management systems in place and the universities with the best management systems find supplying our data is not a problem."

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He added: "Allocations for the whole sector depend upon every institution supplying their data on time and, if that is late, it holds up the whole process for everybody. Some of the formulae depend upon dividing up the cake between all involved so you cannot carry out the calculation unless you have all the data."

HEFCE said that the penalty would not be imposed lightly. "Ultimately we do need to have a penalty, so I do not think it is unreasonable. If you are going to have a penalty, it has got to be one with a bit of clout, otherwise why bother?"

The council is consulting institutions on various changes to the funding regime, including fining "the lower of 0.1 per cent or Pounds 100,000 of an institution's recurrent grant" if any of six deadlines are missed.

These include the notification of research activity on December 7, audited financial statements on December 31 and the mid-year financial return on March 20.

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