The government is poised to announce whether it will extend the uncapped recruitment of students achieving the highest grades at A level after a delay driven by the Treasury's fears that the policy could lead to costly over-recruitment.

At an Inside Government conference on higher education provision held in London last week, William Locke, head of learning and teaching at the Higher Education Funding Council for England, said Hefce was waiting "desperately" for clarity on student number controls.

"The main issue is around the risk to the student support system and how costly it's going to be, so the Treasury has the key here," he told the conference. "It is likely to have to be referred to the Cabinet, or to the prime minister, to make a decision."

For 2012-13, universities may recruit as many students achieving AAB or equivalent qualifications as they wish, and the government has indicated that it will announce before the end of the month whether the threshold will be lowered to ABB in 2013-14.

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Originally expected to be included in January's grant letter to Hefce, the decision on AAB has been much delayed, along with a decision on whether to expand in 2013-14 the 20,000 "margin" of places deducted from institutions and allocated to universities with low average tuition fees and to further education colleges.

The delay - which leaves universities hamstrung in the midst of writing prospectuses and setting fees for 2013-14 - stems from a failure to reach agreement in talks between the Department for Business, Innovation and Skills, which is keen to push further on creating a market for places, and the Treasury, which is concerned about financial risk.

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The Treasury believes that it will be hard to predict the number of ABB applicants. The calculation must take into account grade inflation and the difficulty of gauging how many students may earn equivalent grades in examinations other than A levels.

Underestimating the number of high-achieving students could lead to a last-minute financial crisis of over-recruitment, according to the Treasury.

All AAB - or, if the threshold is lowered, ABB - places must be deducted from the cap on student numbers applied to the sector as a whole. If the number of these high-achieving students were to exceed expectations, it would lead to extra students in the system and to extra expenditure via publicly subsidised loans.

BIS officials are conscious that universities are in the midst of preparations for 2013, and they are keen to avoid a repeat of last year, when institutions had to set fees and write agreements on widening access before the government announced that 20,000 "margin" places would be made available to institutions charging less than ?7,500 in fees.

Institutions have until the end of May to submit their tuition fees and access plans to the Office for Fair Access.

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Gordon Mackenzie, deputy director of higher education strategy and funding at BIS, addressed the issue when he spoke at the Inside Government conference, The Future of Higher Education Provision: Improving Choice, Flexibility and Quality.

Asked whether universities could see a repeat of last year's problems, he said: "Well, I bloody hope not." He added that "we do understand the enormous frustration that this causes and that it is not a good way to carry on".

AAB group grows

Speaking at Hefce's annual conference, also held last week, David Willetts, the universities and science minister, said that the number of AAB or equivalent entrants for 2012-13, at 85,000, would be 20,000 higher than anticipated.

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This rise came about when Hefce's investigation of equivalencies uncovered a greater than expected number of students with AAB-equivalent results from non A-level examinations. According to the Universities and Colleges Admissions Service, lowering the threshold to ABB would increase the number of students in the eligible group by roughly a third, based on a sample of young English-domiciled applicants accepted by English institutions in 2011.

Last year's White Paper says AAB is a "starting point" and the threshold should be lowered over the course of the Parliament.

Mr Mackenzie also suggested that the government's higher education bill could be introduced next year.

"David Willetts has indicated elsewhere that the target date in all this...is 2014-15," he said. "An HE bill in the third session [which begins in May 2013] would still allow you to put in place the kind of underpinning regulatory changes that a bill requires."

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david.matthews@tsleducation.com.