Universities could be forced to cut fees within two years in a fight to avoid losing students, a new report has found.

Proposed fee systems could also lead to an “arms race” for high achieving students, with people from disadvantaged backgrounds likely to lose out, the report from the Higher Education Policy Institute (HEPI) said.

The findings are part of the think tank’s analysis of the Higher Education White Paper, looking at the long-term impact of the Government’s proposals.

The report was published as thousands of students collected their A-level results this week.

It said most universities would be obliged – if not immediately, then within a year or two – to reduce fees to £7,500 or they would quickly become “unviable”, losing eight per cent or more of their students every year.

HEPI said plans to reduce student number allocations for universities charging more than £6,000, but allow them to take unlimited numbers of “high achieving” AAB students, could bring “unwelcome” consequences for the Government, universities, and students.

It said fee cuts by some universities to avoid losing students could lead to a “polarised sector”, with some charging the top fee of £9,000 and the majority charging £7,500 or less.

“Students in the former will pay more – but they will have a better experience, with much more resources devoted to them,” HEPI said.

“However, even institutions in the £9,000 category will not have a comfortable time, as they will need to provide increasingly generous financial inducements to AAB+ students in order to avoid losing them to other universities that offer such inducements.”

Meanwhile schools and colleges across the region were hoping for another record-breaking year for A-levels results as students hoped they had gained enough to get into university.

Among the city schools celebrating a successful A-level year was Holyhead School in Handsworth, where all of the 23 pupils sitting their exams notched up a 100 per cent pass rate.

Head teacher Martin Bayliss said he hoped the news would “give the local community a lift” following violence which marred the city this month.

He added the results were especially poignant as Shahzad Ali, who was killed alongside brother Abdul Musavir and friend Haroon Jahan when they were struck by a car in Winson Green as they protected their community from looters, was a former pupil at Holyhead School.