Capital spending: Capital funding for new buildings, refurbishment and equipment will be cut by 30 per cent in the next year and by 50 per cent in the next three years. The money doesn't necessarily flow back to the institutions at all," he says.UNIVERSITY OF 'MILLHAMPTON': How the cuts will biteFunding per student: Millhampton's government grant, currently pounds 3,500 per student, will fall by pounds 96 to pounds 3,404 in the next year. Despite fears that it might put off students from poorer backgrounds, this does not seem to have happened.But there is still controversy, of course, over the extent to which the universities themselves have benefited.Simon Marginson, a senior lecturer at the Centre for the Study of Higher Education at Melbourne University, believes the Australian government has been able to use the scheme to cut its own spending."It is really just a charge which reduces the total cost of higher education to the government. Based on a system already in place in Australia, this scheme would allow students to repay a portion of their fees once they had graduated and were earning the national average wage. In Australia, their repayments go into a trust fund which is obliged to feed them back into the higher education system (see article below).Both main political parties in Britain have examined this system, though to date neither has taken the electorally risky step of giving it public support.In Australia, there is widespread agreement that the Higher Education Contributions Scheme, introduced in 1989, has had a positive effect. The participants will almost all back a CVCP campaign to persuade ministers to introduce loans for university fees.This suggestion has been gathering support for several years, and even the National Union of Students is looking at it with increasing interest.

The majority of vice- chancellors, however, are opposed to opening up the higher education market in this way.Tomorrow's meeting will bring agreement on one thing, though. Each university would charge whatever it could get away with, so the most prestigious - and richest - institutions would benefit the most. Rumour has it that if neither the CVCP nor the Government can stem the effects of the cuts, some of the elite universities known as the Russell group might break ranks and introduce such charges. Others will be uncomfortable with the second because it could lead to financial penalties being imposed by the government funding bodies which oversee the inspections.Meanwhile, some vice-chancellors will argue for straightforward "top- up fees", which students would pay before starting each year of their courses. First, it wants members to consider imposing a pounds 300 levy on all new full- time undergraduates in 1997 if ministers do not back down before then. Second, it suggests that staff might be withdrawn from participation in outside work, which in effect would mean a boycott of the Government's teaching quality inspections.Some will reject the first option on the grounds that it could discriminate against the most impoverished among an already cash-starved student body. Each and every one has a slightly different perspective on the problem, and there is every chance that no clear programme of action will emerge from tomorrow's summit.The CVCP executive, which consists of the vice-chancellors of Sheffield, Manchester, Middlesex, Southampton and Plymouth, has put forward two options.

I don't think those people have done much teaching in recent years - even the Open University emphasises the importance of personal contact."But while the universities' individual reactions to the cuts have been heard loud and clear, the presentation of a co-ordinated response could be more problematic. Staff salaries make up more than 80 per cent of a university's budget, so the bill is bound to have to be cut back through early retirements and voluntary redundancies "The arithmetic is clear. Unless we can find other sources of income, there will be less staff in the university sector in three years' time, " Mr Wagner says. Students may have to pay for items that were covered in the past: lecture notes, field trips, photocopying, he said.David Triesman, general secretary of the Association of University Teachers, agrees with him. He puts the figure for staff reductions at between 6 and 10 per cent.The result, he says, will be that students receive a poorer quality of teaching. Naturally, no university will admit this because of the "Ratner syndrome", he adds: "Once Ratner said what he thought about his products, his company fell through the floor."But fewer lecturers would inevitably mean lower standards, he says.

"I know people who say new technologies can replace teachers and that there will be a lot more self-directed learning. For example, Leeds Metropolitan University has just completed a refurbishment programme on one of its two campuses, but work on the second might be jeopardised by the capital spending cuts.Leslie Wagner, LMU vice-chancellor, believes the logical national outcome of the cuts is that with 10 per cent less money in the system there will be fewer staff in three or four years' time. Even the Committee of Vice-Chancellors and Principals (CVCP) has run up against the problem in its attempts to publicise its members' plights: one university held a senate meeting to discuss its response, and decided that silence was the best policy.However, some universities are prepared to acknowledge that they, like everyone else, have a problem. In a competitive market, no one can afford to admit that their standards might be about to drop. But now, with a freeze on student numbers, they will start to feel the chill.It is hard to say exactly what will happen to Britain's universities because their leaders, while vocal in the extreme on the general effects of the cuts, tend to clam up when asked for specifics. While the likes of Oxford and Cambridge might attract generous donations, less lofty institutions would not.

In any case, they added, who would sponsor the test tubes and marker pens on which much capital funding was spent?The vice-chancellors do seem to have a point. While student numbers were shooting up - from one in five of the age group a decade ago to almost one in three today - they could cope with ministers' "efficiency gains" because the new recruits brought in extra cash. The amount of cash they spent on each student had already fallen by a massive 28 per cent since 1989, they said, and they could take no more. As for ministers' assertions that their Private Finance Initiative would make up the shortfall by bringing in cash from industry, they were pure fiction.