New powers to punish universities by stripping their undergraduates of public loans are unfair to students and may be so difficult to wield that institutions would be free to over-recruit at taxpayers¡¯ expense.

That is the view of Michael Shattock, visiting professor of ÖйúAƬ management at the Institute of Education, University of London, on the government¡¯s recently announced regulatory framework for the sector.

The ultimate sanction of stripping a university and its students of loans is to be granted to the ÖйúAƬ Funding Council for England, David Willetts, the universities and science minister, announced last week.

Without a ÖйúAƬ bill, there had been fears that Hefce would be left powerless to regulate universities as the teaching funding it apportions to the sector (and can withhold) plummets under the high tuition fees system.

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But Professor Shattock said: ¡°Why should a student applicant for a ÖйúAƬ institution which is being sanctioned be denied a loan? It¡¯s not the student¡¯s fault.¡±

At present, Hefce has the power to claw back teaching grant from universities that have recruited too many students - and theoretically could do the same if an institution breaks the terms of its access agreement to increase the number of applications from poor students.

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Mr Willetts said that from 2014-15 onwards, ¡°similar conditions will also apply to HEI automatic course designation for student support¡±.

But Professor Shattock said that the fine print suggested that this ¡°dubious power¡­could never be used except when Hefce wanted to close a whole institution down¡±.

This was ¡°never likely to happen¡±, he argued, and ¡°Hefce¡¯s inability to fine or otherwise punish an institution through financial sanctions will continue¡±.

He added: ¡°I see little in this to prevent a university doubling its numbers and thereby greatly expanding the loan book, whatever the Treasury or Hefce thinks.¡±

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Judicial challenge?

Professor Shattock said that the framework could be open to judicial review from a university questioning Hefce¡¯s powers or a student asking why they had been denied a loan.

Sir Martin Harris, president of Clare Hall, Cambridge and former director of the Office for Fair Access, wrote in a letter to Times ÖйúAƬ in May that any conditions imposed by Hefce on the ¡°personal¡± fee funding paid by students ¡°would be unlawful¡±.

¡°The 1992 Further and ÖйúAƬ Act rightly specifically prevents Hefce from imposing conditions on money it does not provide,¡± he argued.

Dennis Farrington, visiting fellow at the Oxford Centre for ÖйúAƬ Policy Studies and co-author of The Law of ÖйúAƬ, said that Sir Martin was ¡°technically correct¡±.

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But he added that the secretary of state (currently Vince Cable) was able, using another section of the 1992 Act, to confer ¡°additional functions¡± on Hefce.

Dr Farrington said that the government plan ¡°appears to be in accordance with the rather complicated law as it stands¡±, although ¡°whether it is ¡®correct¡¯ for governmental functions to be delegated in this way is a matter for Parliament¡±.

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john.morgan@tsleducation.com