In an open letter to coalition ministers, the University Alliance group of “business-engaged” institutions suggests allocating the 20,000 cut-price places that are being made available in 2012-13 more evenly so that they are not only open to those with average fees of £7,500 or below.

Instead, the group asks the government to consider either tapering the redistribution of places according to fee level or retaining some contestable places for universities charging above £7,500.

In the letter to David Willetts, the universities and science minister, and Vince Cable, the business secretary, Janet Beer, chair of University Alliance and vice-chancellor of Oxford Brookes University, says the current plans would cause a “false divide” in the market.

“We have serious concerns about rolling forward core and margin in its current form," she writes.

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“Having carefully analysed these proposals, we believe that these mechanisms are in danger of restricting rather than expanding diversity and choice across the sector as well as having a detrimental impact on social mobility.”

Professor Beer says that while a small number of universities would be able to continue charging high fees, most mainstream universities are being forced under £7,500.

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“There are many legitimate market positions between £9,000 and £7,500 and we believe that it is in the interests of students and the UK economy that some institutions are allowed to operate in this space,” she writes.

In the first Alliance proposal, the 20,000 places would be carved up and distributed in a more “gradual” way to those charging different fee levels.

The second idea suggests making a certain percentage of numbers available for redistribution above £7,500 and a certain percentage available below £7,500.

The letter also reiterates an Alliance view that funding chiefs should consider lowering the AAB A-level threshold – above which there is no limit on student places – in one “radical reduction” in 2014-15.

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simon.baker@tsleducation.com