A bidding process for low-price student places has been scrapped for the 2013-14 academic year, in a further indication that a key part of the government's attempt to foster competition in the sector has been scaled back.

For 2012-13, 20,000 places have been distributed among universities and colleges that have successfully argued that they could demonstrate demand and deliver quality courses for an average tuition fee of less than ?7,500 a year.

For the following year, however, this "margin" of places will be reduced to 5,000, and as a result the Higher Education Funding Council for England has decided that it would be too bureaucratic to make institutions bid for a share of such a small pool.

Instead, the places will be distributed according to a "formula-driven, pro rata allocation" based on an institution's core student allocation for 2013-14, according to a document released by Hefce on 26 July.

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Bahram Bekhradnia, director of the Higher Education Policy Institute, said that the decision removed "any suggestion" that the allocation was on the basis of quality.

Instead, the process had become "a way of getting places into (low tuition fee) universities and colleges", he said.

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However, he said it was "not at all surprising" that there would not be a similar bidding process for a much smaller margin in 2013-14 because of the "huge bureaucratic burden" it placed on the sector.

The first bidding process for 2012-13 required institutions to write just over 1,500 words outlining demand for extra places, quality standards and any risks to their plans. After bids were assessed, final allocations were made on a pro rata basis.

For 2013-14, Hefce says that instead of a bidding process, it will use "currently available data to ensure these institutions continue to meet our threshold demand and quality criteria".

This means that institutions where the Quality Assurance Agency has flagged up concerns will not be eligible for places.

Universities or colleges that under-recruit this autumn by 5 per cent of their core allocation or 25 places, whichever is greater, could also be denied margin places next year because this would demonstrate that demand was weak.

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"There are too few numbers to justify the burden on institutions or Hefce of a bidding process," the document explains.

The coalition's higher education White Paper, released in June 2011, said that the margin of lower-cost places, created by removing student numbers from each institution's core allocation, would be redistributed on the basis of "good quality with value for money".

A spokesman for the University Alliance group of institutions welcomed the simplification of the margin process.

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However, he added: "The system is only a year old and is already creaking with complexity."

The Hefce document also says that out of the 5,000 margin places, 1,500 will go to institutions charging between ?7,500 and ?8,250 a year in average tuition fees.

This clarifies a government instruction in April that a "sizeable minority" would be allocated to this higher price band.

Meanwhile, 400 places will go to institutions not currently in receipt of Hefce funding for full-time undergraduate places. However, counter to the policy for the rest of the margin, institutions will have to bid for these places.

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david.matthews@tsleducation.com.