Baroness Blackstone, the vice-chancellor of the University of Greenwich from 2004 to 2011, described the decision to allow students at private providers to claim fee loans of ?6,000 a year as being the government¡¯s ¡°worst mistake¡±.

While the amount of money paid into this sector by the public-backed Student Loans Company has rocketed from ?30 million in 2010 to a projected ?900 million this year, concerns have been raised about the high dropout rate at some private colleges.

Baroness Blackstone, who is a former master of Birkbeck, University of London, and was a Labour education minister between 1997 and 2001, told a breakfast seminar organised by the ÖйúAƬ Policy Institute and the ÖйúAƬ Academy on January that action needed to be taken.

¡°Why don¡¯t we just stop funding these lousy private sector institutions that have appallingly poor standards and are duping those people who are registering for [them] and are getting a poor deal?¡± asked the peer. ¡°This is the worst mistake that the government has made and it¡¯s [cost] nearly ?1 billion of taxpayers¡¯ money.¡±

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The baroness ¨C who emphasised afterwards that she was not ideologically opposed to private colleges in general ¨C was responding to a call by Sir Steve Smith, the vice-chancellor of the University of Exeter, for a ÖйúAƬ bill to be introduced to regulate access to student loan funding.

Sir Steve told Baroness Blackstone that it was important not to ¡°tar all private providers with the same brush¡±, arguing that they could provide an important alternative route into ÖйúAƬ.

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But he highlighted the case of one institution that, he said, enrolled 1,000 students at its peak but has only ever graduated 10.

¡°The data¡­on what some of the providers are doing¡­bring the private provider sector into disrepute,¡± Sir Steve said. ¡°I don¡¯t think it¡¯s to do with private providers, it¡¯s about fraud.¡±

In a presentation discussing ÖйúAƬ and the general election, Sir Steve expressed concern about the review of the research councils being led by Sir Paul Nurse.

Given that the triennial review of the research councils reported last April and offered no recommendations for major change, Sir Steve suggested that the exercise was being re-run to get the answer that ministers wanted.

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He said that the dual support system, under which quality-related funding is given directly to universities in addition to research council grants, had to be protected ¨C as did the independence of the research councils.

Sir Steve also said that charging ?9,000 a year for tuition was ¡°unsustainable in the medium term¡±, calling for fees to be increased to keep in touch with inflation.

Baroness Blackstone replied that vice-chancellors who wanted to see fees increase to ?12,000 or ?15,000 were ¡°living in cloud cuckoo land¡±.

The discussion was held under Chatham House rules but the participants gave permission for their remarks to be quoted.

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chris.havergal@tesglobal.com