Thousands of students seeking a university place could be denied a course and left on the dole unless the government scraps a controversial funding cap.

Thousands of students seeking a university place could be denied a course and left on the dole unless the government scraps a controversial cap on places.

Phil Willis, chairman of the Commons education select committee, wants ministers to lift a cap on places in England to help cope with soaring demand and to prevent thousands of would-be graduates being left on the scrap heap.

Applications are up by 9pc this year - about 40,000 people - and the latest figures from the admissions service UCAS suggest that by the end of the summer 600,000 people may have applied for a university place in England.

The University of East Anglia has seen an 11.3pc increase in applications for courses, while Norwich City College is also facing a funding cap to add to the headache of the collapsed college rebuilding programme and central government tightening the purse strings in the wake of the recession.

Earlier this year the Learning and Skills Council botched its national sixth form funding allocations and then tried to reduce its provisional settlements to schools, putting at risk hundreds of A-level courses in Norfolk and Suffolk until the chancellor, Alistair Darling, pledged money to pay for courses in his budget.

Charles Clarke, Norwich South MP and former education secretary, whose constituency includes the UEA, said he felt the cap should not have been put in place the way it was.

"At this time it's very important to maximise the chances for people to get higher education experience provided they have the qualifications to do so," he said. "It would be better not to have a cap and to ensure that every potential student can fulfil their ambitions."

Daniel Cox, leader of Norfolk County Council, said part of the problem had been made worse by the government's "false promise" of getting 50pc of all youngsters a university place.

Mr Cox left school at 16 to work at Somerfield and has since completed a degree and MBA, partly funded with the help of his employer, as he worked his way up the career ladder.

"Further and higher education is important, but there should be broader recognition that there are more ways of learning a skill than just focussing on university," he said. "University is one of many options for young people to develop their skills - the on-the-job training approach should not be overlooked.

Mr Willis has written to the business secretary, Lord Mandelson, urging him to provide extra funding for the system.

"Lifting the cap is absolutely essential," he said. "Otherwise we are going to see more students in dole queues rather than lecture halls."

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