The government was warned a year ago by the Universities and Colleges Admissions Service that the AAB system and other changes to student numbers would create problems in admissions, it has emerged, as concern mounts over a dramatic shortfall in the number of undergraduates entering higher education this year.

Meanwhile, the Universities UK president, Eric Thomas, is said to have caused disquiet among some vice-chancellors who believe he has used worries over admissions to call for the complete deregulation of student numbers.

On 14 September, Ucas took the unprecedented step of publishing a detailed update on the latest in-year acceptances data.

The figures show a 14 per cent fall in the number of UK and European Union students taking up places in institutions in England for 2012-13 entry compared with the same point last year (down by 54,200).

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The loss of the income from these students could cost the sector about ?1.3 billion over three years.

The Ucas data also show that 79,200 students achieved AAB grades or higher in A-level and equivalent qualifications: the predicted total was 85,000.

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That leaves several of the most selective universities facing significant student shortfalls under the AAB system, introduced by the government in the hope of allowing such institutions to expand.

Responses to the government consultation on last year's higher education White Paper, obtained by Times Higher Education under the Freedom of Information Act, show Ucas' warnings about AAB.

Referring to number control changes unveiled in the White Paper, which included the AAB and the core-and-margin systems, Ucas said: "Uncertainty resulting from these proposals and the timetable for making decisions on numbers of places will make it more difficult for some institutions to manage their undergraduate student numbers effectively."

On the AAB system, Ucas said it was "particularly concerned" about factors including "the proposed qualifications equivalence methodology" and "the potential impact...on older learners and those from disadvantaged backgrounds".

It added: "The timetable for introducing the student number control arrangements for year of entry 2012 could pose challenges for learners, institutions and Ucas."

The shortfalls at some highly selective universities are likely to embarrass the government.

Susan Acland-Hood, who is responsible for education in the Number 10 Policy Unit, attended last week's UUK conference at Keele University and is said to have spoken to a number of vice-chancellors about the shortfalls.

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The conference heard Professor Thomas, the University of Bristol's vice-chancellor, give a speech in which he warned that the situation "will probably not stabilise until there is complete deregulation of student numbers. That, however, is going to require some imaginative thinking about how student support is financed."

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Lower threshold

It is thought that other vice-chancellors may use concerns over admissions to press the government to lower the threshold for unlimited recruitment to BBB, rather than the planned ABB, in 2013-14.

Professor Thomas' other comments may also reignite the debate about the private financing of student loans, which has previously been advocated as a way to abolish the student numbers cap.

In March 2011, before becoming UUK president, Professor Thomas wrote to David Willetts, the universities and science minister, drawing attention to a scheme in which uncapped tuition fees would be paid by private investors in return for a proportion of graduates' salaries.

But Steve West, chair of the University Alliance and vice-chancellor of the University of the West of England, warned against further deregulation of student numbers.

"You don't start introducing more change and shifts of policy until you know the impact of the previous set," he said.

Asked whether the coalition could have sought to cut student numbers to save money, Professor West said: "I don't think a government that believes in a knowledge-based economy and recognises the economy is challenged in the UK would deliberately set out to reduce the numbers of students going into universities."

Bahram Bekhradnia, director of the Higher Education Policy Institute, said it was "ironic" that universities that initially welcomed AAB "are now going to find that they too will face serious and unexpected problems".

But while the impact on the most selective universities was unexpected, "what is not unexpected is that...policies [such as AAB] have given rise to huge uncertainty and confusion. That was entirely predictable," he added.

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While it is "politically very embarrassing", the fall in student numbers will benefit the government by reducing expenditure on the new student loans system, Mr Bekhradnia argued.

john.morgan@tsleducation.com.