UNIVERSITIES have called on ministers to scrap controversial financial penalties to ensure no Scottish student misses out on higher education this summer.

Under current rules, institutions north of the Border face fines if they over-recruit students, but growing demand for places has put the policy under the spotlight.

Figures published last week show the number of Scots applying to university has increased by 3% to a record level of 41,080 - moving above the 40,000 mark for the first time.

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Opposition politicians have also warned the Scottish Government's policy of giving universities specific targets to recruit more pupils from deprived areas could displace other socio-economic groups - unless more places are made available.

Alastair Sim, director of Universities Scotland, which represents university principals, said: "Scottish applicants to Scottish universities have increased for the third year in a row, which goes to show what a high demand there is for higher education from amongst our own population, but it does mean increased competition for places come the summer.

"There has been a very modest expansion of places available for the autumn which will help, but it might be useful to think about relaxing the penalties for over-recruitment between now and the summer so that talented Scots can benefit from the place at the university they have worked hard for."

Mary Senior, Scotland official for the UCU union, which represents academics and support staff, said any extra places should be fully funded.

She said: "Everybody involved in education should back measures that increase opportunities for students and we don't want universities to be conservative when recruiting because they fear financial penalties.

"However, we need to ensure that extra places are properly funded to maintain the high standards for which we are rightly admired."

Gordon Maloney, president of NUS Scotland, also called for the funding of extra places rather than the removal of fines.

He said: "It's great we've seen yet another year of increased demand, and the necessity now lies in ensuring that these applications become entrants.

"It's welcome Universities Scotland are joining the call to increase entrants, and their proposal deserves attention, but we know Scotland still has some way to go in boosting students from the poorest backgrounds, and that should be our overriding priority."

A Scottish Government ­spokeswoman said: "We are working with Universities Scotland to provide greater opportunities for Scottish students.

"We have increased funding to Scottish universities by 15% over the spending review period while the UK Government is cutting funding for England's universities by over 40% in the same period.

"We funded an extra 3500 places this year which helped to ensure more Scottish students started first year at our universities. We are also planning to fund a further 3300 places next year."

The penalties, enforced by the Scottish Funding Council, have been put in place to ensure universities do not recruit too many - or too few - students from Scotland.

The fines enforce a "cap" on places funded by the taxpayer, which has been put in place to ensure that the flow of students into universities is affordable and to prevent a glut of graduates entering the workforce.