Universities have welcomed a government U-turn allowing them to expand student numbers while expressing disappointment that the places will not be fully funded.

The Department for Business, Innovation and Skills (BIS) confirmed this week that it will allow universities to take on 10,000 additional full-time students in science, technology, engineering and maths (STEM) subjects this autumn.

However, while the Government will fund maintenance grants and loans to cover tuition fees, it will not provide universities with teaching grant for the extra numbers, saving it about ?50 million to ?55 million a year.

BIS said the funding for student support would cost ?280 million over three years and would come from existing budgets, making the move "fiscally neutral". This will include reducing the optional five-year holiday on student-loan repayments to two years.

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The move reverses the Government's decision last autumn to cut higher education expansion from 15,000 to 10,000 new places, after it identified a ?200 million hole in its student-support budget. It later emerged that only 3,000 of the 10,000 places would be full-time ones; the rest would go to part-timers and second cohorts to new or expanded courses. Universities were told that they faced stiff financial penalties for over-recruitment.

The government decision was heavily criticised as record numbers applied to university in the midst of the economic downturn.

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'The right thing'

Admissions officers said it was unclear how the extra places would be allocated or even whether universities would want them, given that they were only part-funded and universities were already financially stretched. However, Les Ebdon, vice-chancellor of the University of Bedfordshire and chair of the Million+ think-tank, which has campaigned for more places, said the Government had "done the right thing" by investing more in student support and allowing universities to recruit within the usual 5 per cent "tolerance" band.

"These are tough economic times, but it would be a travesty to turn away ... students that the Government has tried hard to encourage," Professor Ebdon said.

The Russell Group of research-intensive universities warned that any growth in numbers had to be funded in "a sustainable way" that would not undermine quality.

Wendy Piatt, the group's director- general, said: "Subjects such as engineering and science are particularly expensive to teach, and we know there is already a funding shortfall for teaching in the Russell Group."

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The National Union of Students said it was pleased that the Government had listened to its concerns, but added that thousands of people applying to study non-STEM subjects would miss out on places. It also called the decision to restrict the student-loan-repayment holiday "very short-sighted".

Meanwhile, a report commissioned by the Prime Minister that was published this week calls on universities to do more to admit students from poor backgrounds.

The report, written by a group of experts chaired by Alan Milburn, the former Health Secretary, reviews social mobility and entry routes into the key professions.

It questions whether widening participation funding is delivering "value for money" and proposes "no-fee degrees" for students who stay at home to study.

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Unleashing Aspirations also calls for more financial support for part-time students and for all universities to offer a representative to join the governing body of underperforming schools.

The report adds that the ³ÉÈËVRÊÓƵ Statistics Agency should collect data on the socioeconomic background of all university students at course level and publish the results.

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rebecca.attwood@tsleducation.com