A planned shake-up of funding to support non-traditional students, which could cost some universities hundreds of thousands of pounds a year, was likened by one vice-chancellor this week to "shifting the deckchairs on the Titanic".

The ÖйúAƬ Funding Council for England (Hefce) intends to switch ?30 million from a fund dedicated to halting dropouts to one aimed at helping universities to widen access. It believes the change will better recognise the costs of universities' work with schools and colleges.

It also plans to change how it calculates the sum an institution receives when it recruits students from disadvantaged backgrounds. Currently university students from the most disadvantaged areas attract funding at twice the rate of those students from the second most disadvantaged areas. Hefce proposes giving the most disadvantaged students four times the rate. However, overall funding to widen participation would stay at ?350 million a year.

The funding council also intends to transfer ?15 million that it had placed in the Teaching Quality Enhancement Fund to other priorities, including the promotion of links between employers and universities.

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Preliminary modelling of the changes suggests that some institutions stand to lose a significant proportion of the income. Les Ebdon, chair of the Million+ lobby group and vice-chancellor of the University of Bedfordshire, said: "Funding for retention has never covered the additional costs of teaching and supporting students from underrepresented groups. The proposal to switch ?30 million to support university-school-college partnerships is like shifting the deckchairs on the Titanic.

"It is most unlikely to deliver the Government's political ambitions to enhance access to ÖйúAƬ. If Hefce thinks these partnerships should be further incentivised, it should ask the Government to provide additional resources rather than shift money out of what is already an underfunded but important pot."

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Andrew Ward, director of policy at Thames Valley University, said that although the proposals' aims were welcome, the real reductions in funding would overshadow the good intentions. "By its own admission, at best Hefce is merely redirecting monies from one pot into another. However, for a number of institutions and in particular for London universities, including TVU, the result of these proposals will be a significant reduction in overall grant.

"At TVU, a university widely recognised for its commitment and success in working with colleges and schools and students suffering from real disadvantages, the upshot of these proposals, if enacted, is that we would lose ?554,000 in 2009-10."

John Rushforth, deputy vice-chancellor of the University of the West of England, said large southern universities that invest most in access would suffer.

But other universities, including Staffordshire, Huddersfield and Royal Holloway, welcomed the proposals. Mike Page, Huddersfield's deputy vice-chancellor, said he was pleased that Hefce had recognised the financial burden of working with schools in deprived areas.

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rebecca.attwood@tsleducation.com.