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Vice chancellors, who signed up to the tax-driven Qualifying Indexed Securities scheme, this week demanded a five-year exemption to tax changes announced in the November budget. They calculate that the one-year exemption which they won earlier this year actually leaves them Pounds 2.25 million worse off. Failing that, they have asked to pull out of the exemption, writes Simon Targett.

The QIS scheme allows organisations to borrow cheaply over 25 years and offset the interest payments against tax. The scheme was stopped because money raised via QISs was leaving the country rather than being invested here.

Universities warn that if they do not get a long-term exemption - on which a decision must be made before the end of next week - the Treasury's action will cost them hundreds of thousands of pounds in refinancing schemes and will lead to higher student rents.

Twelve universities were affected, and they asked for an exemption. But the Government gave them only one year. Maxwell Irvine, vice chancellor of Aberdeen, said "this was the worst of all worlds" because while universities were insured for an adverse change, they were not insured for a future adverse change.

Manchester University was not affected by this clause, but the following were among those affected by the exemption: Aberdeen by Pounds 150,000; University College London by Pounds 250,000; and Bristol by Pounds 300,000. Ian Crawford, Bristol University's finance director, said: "Whether this was a Committee of Vice Chancellors and Principals lobby that went wrong or a bankers' lobby that went right, who knows?" Rents are likely to shoot up because most the QIS schemes were used for building student accommodation.