Ten thousand extra university places will be created if the Tories win power, it was announced yesterday.

Record numbers of students started university this autumn but thousands of teenagers were left disappointed in the intense competition for courses, and the battle for a place is expected to be even worse next year as the recession deepens.

The Conservatives would fund more places by introducing an early repayment bonus for graduates repaying their student loans.

This cash boost would fund the extra 10,000 places in higher education. David Willetts, Shadow Universities Secretary, said: “This summer has seen a crisis in university places.

“The Government’s failure to create a fair and affordable system means that thousands of young people with good exam results have been unable to get the education they need.

“With one in six young people not in work, education or training, it is vital that we prevent a similar crisis next year. Our plan to give graduates a discount for repaying loans ahead of schedule will give thousands more young people the opportunity to go to university, rather than staying on the dole.” The new scheme would cost an estimated £100 million a year, as each student place costs about £10,000.

Graduates would be given a 10 per cent discount for early repayments over £500, and for up-front repayment of their loans. This, the Tories claim, would provide additional short-term income to recycle into the higher education system. They estimate it would raise at least £300 million in additional voluntary repayments.

Reaction to the proposals was positive. Wes Streeting, president of the National Union of Students, said: “We welcome the Conservatives’ creative solution to a serious short-term problem.

“This year saw unprecedented demand for a limited number of places, meaning significant numbers of well qualified applicants lost out.

“Given that demand is set to increase further still next year, the commitment to providing additional fully funded places is incredibly important.” But he warned: “We would be concerned if this approach set a precedent whereby those from more affluent backgrounds enjoyed preferential repayment conditions on loan debt. Given that those from the poorest backgrounds are most likely to lose out without an urgent expansion of places, this is an acceptable short-term fix.”

Universities UK, which represents vice-chancellors, said the plans were encouraging. Prof Steve Smith, its president said: “It is only by investing in properly funded university places for our students that we can produce graduates with the necessary higher level skills that are so essential for the UK’s short term recovery and longer term prosperity.”

The 1994 Group, which represents research-intensive universities, said the proposals were bold and creative. Prof Paul Wellings, its chairman, said: “The Conservative Party has rightly recognised that any expansion must be fully-funded.”

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