The group, which calls itself the G5, warns that without more money to support its high-quality teaching, its members will turn away British undergraduates and focus instead on overseas and postgraduate students, whose fees cover most of the full cost of their courses.
The G5, made up of the universities of Oxford and Cambridge, Imperial College London, University College London and the London School of Economics, distances its member institutions from the 19-strong Russell Group of top universities to which they still belong.
The new group has been meeting in secret for a few months. Few vice-chancellors know of its existence as a fully fledged grouping. Michael Sterling, vice-chancellor of Birmingham University and chairman of the Russell Group, said: "It's always better to have larger pressure groups, provided there's a coherence."
The G5's goal is to secure extra state cash above the £3,000 student top-up fees likely from 2006 to cover the full costs of home and European Union undergraduates on their courses.
Charles Clarke, the education secretary, has confirmed that the Higher Education Funding Council for England will review teaching costs with a view to basing this on the full economic costs. In a letter to Anne Campbell, Labour MP for Cambridge, he said: "[The review] will ensure that the national interest is maintained in the funding of all subjects by ensuring that the actual costs of all types of provision are fully reflected in the funding method for teaching."
Speaking to The THES this week, Mr Clarke promised to press for a real-terms rise in state funding for higher education in the spending review that will cover 2004-05 to 2006-07, when top-up fees are due to be introduced.
"I can't put a figure on it because we are still entering our bid and starting the process," he said. "We do not see the fee income, which we hope will be generated, being replaced by holes in Exchequer funding."
The G5 group will make a case for special treatment for its members.
Sir Richard Sykes, rector of Imperial, said: "Imperial does not have any cheap courses. We will press the government to recognise this or lift the [£3,000] cap [on fees]. If they say our courses are too high quality and too expensive, we will not reduce our quality. We will have to look at expanding the number of postgraduates and overseas undergraduates we take."
Malcolm Grant, provost of University College London, said: "It would be surprising if the research-intensive universities now found a business case for expanding the number of home students or even for maintaining them."
