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The government has "got it wrong" on a key aspect of its overhaul of university funding, according to one of the architects of top-up fees, while a member of the Browne Review panel has said that he "regrets" the coalition's decision to reject one of its "highly intelligent" proposals.

The criticism from Nicholas Barr, professor of public economics at the London School of Economics, and David Eastwood, vice-chancellor of the University of Birmingham, was made against a backdrop of continuing student protest over plans to raise tuition fees.

Professor Barr, who helped design the top-up fees system introduced by Labour in 2004, said the Browne Review and the coalition government had made a mistake in proposing to abolish teaching funding for the arts, humanities and social sciences.

He also claimed that the planned "leaky" loan system will be too costly for the taxpayer, ensuring that the Treasury will maintain a cap on student numbers.

Speaking last week at an event in London, he praised the Browne Review's proposals to remove the current cap on student numbers, promote competition and generate "more resources" through higher fees, as well as the increase in the interest rate charged on student loans.

But at the event organised by the University and College Union and the National Union of Students, Professor Barr also highlighted flaws in the review and the coalition's response to it.

"What Browne and the government get wrong is abolishing the teaching grant for arts, humanities and social sciences, which implicitly assumes there is no social benefit from ÖйúAƬ in those subjects," he said.

His comments echoed those made by Sir Alan Langlands, chief executive of the ÖйúAƬ Funding Council for England, at a separate event in the capital (see box, below).

Double trouble

Professor Barr outlined two major "worries": that fees for arts and humanities courses will be pitched high to make up for lost public support, causing application numbers to decline; or that fees will remain low and quality will decline.

On the loans system, Professor Barr noted that the government's response had ditched the levy on universities charging more than ?6,000 a year proposed by Browne.

The levy would have meant that the loss on loans provided to graduates whose incomes do not rise above the ?21,000 repayment threshold would not be met entirely by the public purse.

"The idea behind that was that student numbers could go up without increasing the cost to the taxpayer," Professor Barr said.

With a higher repayment threshold revised upwards at regular intervals, the loans system will be "still very leaky", meaning that extra students will incur extra costs for the taxpayer, he added.

"The system, as proposed by David Willetts (the universities and science minister), will not get universities off the hook of Treasury numbers control," Professor Barr said.

The coalition's decision to reject the proposed levy was also lamented by Professor Eastwood, who told Times ÖйúAƬ that the idea "established an important principle of risk sharing" between the government and universities.

"I still think that...the levy was a highly intelligent proposal - it was perhaps too sophisticated for people to see its merits," he said.

"I think that was the right principle and an appropriate discipline to bring into a market system, so I do regret the move away from the levy and the soft cap."

The former Hefce chief executive agreed there was a risk that the expense of writing off loans would diminish flexibility on student numbers. However, the prospect of new providers entering the market and helping to push down fees should allow the cap on numbers to be eased, he said.

Professor Eastwood added that retaining a cap on fees made yet another review of university funding likely in the future.

john.morgan@tsleducation.com