Les Ebdon, head of the University of Bedfordshire, said that the proposal ¨C which has been mooted by David Willetts, the universities and science minister ¨C reminded him of the flawed system imposed on the UK¡¯s polytechnics in the late 1980s.

Giving evidence today alongside six sector leaders to the Business, Innovation and Skills Committee¡¯s inquiry into the future of ÖйúAƬ, Professor Ebdon said: ¡°There is some history on this concept. The Polytechnics and Colleges Funding Council did that and sadly I am old enough to remember.

¡°Exactly what it did was to drive down the unit of resource very rapidly indeed because you had to bid to get your money back. That drove class sizes up and contact hours down ¨C the very things [Mr Willetts] says he most wants to see improved.¡±

Professor Ebdon, who is also chair of the Million+ group of new universities, was responding to comments made by Colin Riordan, vice-chancellor of the University of Essex, who said that the idea was preferable to the alternatives (such as teaching and research cuts) if the government had to claw back money due to the cost of student loans.

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¡°It would allow universities choice about whether to engage in that or not, or¡­restrict their numbers while others take up the slack,¡± said Professor Riordan, who represented Universities UK at the hearing.

Meanwhile, Michael Arthur, vice-chancellor of the University of Leeds and chair of the Russell Group of large research-intensive universities, said he was already concerned about the effects of the government¡¯s recent announcement of changes to post-study work arrangements for international students.

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He said there was a danger that practical aspects of the changes ¨C including the ¡°tall order¡± of graduates having to find jobs within weeks of their visas running out ¨C would make many prospective students carefully consider competitor countries such as Australia and Canada instead.

¡°Although it looked good at first, I already know that my international office has some concerns about the practicalities of making it work,¡± Professor Arthur said.

simon.baker@tsleducation.com