University funds slashed by almost £1bn

Universities express alarm as budgets for teaching and research are cut back.

England's universities were told today they will have their budgets slashed by nearly £1bn over the next academic year.

The Higher Education Funding Council for England (Hefce), which funds universities on behalf of the government, said £940m would be stripped from universities' budgets for teaching, research, buildings and other areas, a 9.5% cut.

Universities said they were alarmed and feared they would be in for "a rough ride".

In a letter to vice-chancellors, the funding council said budgets would be cut to £6.5bn for the next academic year (2011-12). Hefce said it recognised finances were tight and that the settlement was challenging.

The teaching budget will be reduced by £180m to £4.3bn – a 4% cut in cash terms.

The research grant will be cut by £17.4m to £1.6bn – a 1.1% reduction. Future grants will be concentrated on departments with higher quality ratings for their work – mainly the bigger, more prestigious universities, the funding council said.

Funding for raising the proportion of students from the poorest homes at university will be frozen at £144m. There will be no increase in funds to help keep students on courses if they are at risk of dropping out.

Grants for capital projects, such as new buildings, have been cut by 58% in cash terms to £223m. Last academic year, universities received £532m for building works.

Universities were also told that they will have an in-year (2010-11) cut for the first time: they will now receive £190m less than they had planned for this academic year.

A one-off fund to create 20,000 extra university places is being stopped – a reduction of a further £255m.

The cuts come as universities face unprecedented demand for places. Last month, the universities and colleges admission service (Ucas) said nearly 600,000 university hopefuls – an all-time record – had applied for a place on a degree course beginning in 2011. Applications have risen by 5.1% compared with this time last year, and 583,501 candidates are chasing a place this autumn. Ucas said this was the highest number since it started collecting data in 1964.

Ministers have said that the government will continue to fund an extra 10,000 places in 2011, as they did last year, but this will be withdrawn by 2012.

Universities will continue to face fines if they exceed the cap on places in 2011-12, creating an incentive for universities to keep tight control of their numbers. The fine will be £3,750 for each student from the UK or the European Union recruited above their permitted limit.

Click here to read the full article...Sir Alan Langlands, Hefce's chief executive, said the funding council was trying to help universities make a "smooth transition" before they could charge higher fees in 2012. Universities will be able to charge up to £9,000 a year – almost triple the current level. Many institutions had anticipated the challenges ahead before they could increase their fees and "many have already taken difficult decisions to reduce their costs", he said.

He recognised the financial settlement was challenging and wanted to "minimise uncertainty in a difficult transitional year".

David Willetts, the universities minister, said he had asked for the teaching budget to be protected as far as possible.

"Higher education, like other areas of public spending, has had to take its share of savings," he said.

In December, MPs voted to raise fees from £3,375 this autumn to a maximum of £9,000 a year. Willetts said he expected this to bring an increase in income of 10% by 2014-15.

"It is essential that universities move quickly to prepare for the different environment in which they will operate in future years, striving to meet the aspirations of students for high quality teaching. As well as benefiting from investment in student support, the higher education sector will continue to benefit from sustained ring-fenced investment in science and research," he said.

Paul Marshall, director of the 1994 Group which represents small, research-intensive universities, said the cuts would mean "a rough ride for the UK economy".

"In his spending review statement last year, the chancellor referred to universities as the jewel in the UK's economic crown, but the sweeping funding cuts confirmed in today's letter show that universities will need to work harder than ever to make their contribution."

Gareth Thomas, Labour's shadow universities minister said: "This year is the first of a hugely difficult three years for universities as 80% of the university teaching funds are axed [over that period], with some universities set to lose all their public funding.

"The decision to cut so much from university teaching budgets, the massive cut to capital funding and then to load the cost on to the next generation of students by trebling tuition fees is unfair, unnecessary and unsustainable."

Universities are expected to receive their individual budgets next month.