Up to Pounds 1 billion would be needed in further and higher education to realise Tony Blair’s vision of getting an extra 500,000 people into university and college by 2002, it emerged this week.

College employers’ leaders were delighted at Mr Blair’s announcement of an expansion in student numbers made at the Labour conference. However, they warned that income from higher education tuition fees would fall short of that needed to hit the Prime Minister’s recruitment target.

Colleges would have to attract an estimated 400,000 more people into FE - at a cost of around Pounds 500 million at today’s prices.

Estimates suggest up to 100,000 people will swell numbers in higher education - to meet Education Secretary David Blunkett’s aim of a 35 per cent participation rate within five years. Meeting that target would cost around Pounds 500m.

Mr Blair said: “If we reform, I am going to pledge to you that by the end of this parliament we will have put resources saved through reform into frontline provision in universities and further education; but first Pounds 165 million is already in next year’s budgets.

“And we will lift the cap on student numbers and set a target for an extra 500,000 people into higher and further education by the year 2002.”

But critics warned that fees income could leave a huge funding gap. Ministers have not yet revealed the potential yield of their policy of means testing university tuition fees while replacing maintenance grants with loans.

But a similar scheme outlined in Sir Ron Dearing’s report on HE suggested it would fall well short of the funding needed to meet Mr Blair’s target, bringing in just Pounds 50m in the eighth year, on current accounting rules. A change in the way national accounts are prepared would transform the situation, however, and bring in Pounds 1.1bn within three years, easily covering Labour’s plans.

Roger Ward, Association of Colleges chief executive, said: “Tony Blair is going to have to put an awful lot of money Blunkett’s way to cope with this growth by the year 2002. We have to start planning now because the money has to work its way through.”

The Government has already started lifting the cap on higher education, announcing a Pounds 4m package to provide 1,000 extra Higher National Diploma and Higher National Certificate places as part of the Pounds 165m injection for universities next year.

But, speaking to the Commons Education Select Commitee last week, economist Dr Nick Barr warned the money would do little to meet the funding gap in universities, a claim denied by Mr Blunkett.

Lifting the cap on higher education places and increasing opportunities in FE were key parts both of the Dearing Report on higher education and the Kennedy report on widening participation in FE.

Sir Ron Dearing advocated lifting the cap on degree and sub-degree places, pressing for expansion to be focused on higher education provision in FE colleges.

Helena Kennedy, now Baroness Kennedy, argued strongly for a shift of resources towards greatly increasing help for education’s have-nots in FE colleges.

Her arguments were carefully played down to avoid a clash with the HE lobby. But they were interpreted as a call for revenue from undergraduate fees to be channelled into FE.

That interpretation was confirmed last week when Mr Blunkett refused to ring-fence fees income for universities, instead promising that cash would pay for lifelong learning in FE and HE, an argument hinted at by Mr Blair in his conference speech this week.