Page last updated at 13:53 GMT, Thursday, 18 March 2010

Universities facing 'first budget cuts in years'

By Angela Harrison
BBC News education reporter

Record numbers are applying to university

Three quarters of England's universities are facing real-term budget cuts this year - for the first time since Labour came to power.

University funding body Hefce has told institutions how much they will get next year from a fund of £7.3bn - a cut of £573m from this year's budget.

Unions are warning of job losses and of thousands missing out on places.

The government says the figures "do not show a system in crisis" and that the sector needs to tighten its belt.

After years of rising investment, the government announced just before Christmas that universities would be getting less in the next academic year because of the pressure on public sector finances.

This is part of a special series on the BBC News website looking at the challenges facing higher education in the UK. Later this week: Can you afford not to go to university?

The total being allocated for 2010-11 (£7.3bn) is a 0.9% increase in cash terms on this year, but in real terms (when inflation is taken into account) it amounts to a cut of 1.1%.

The body which handles university funding in England for the government, Hefce, has now told individual universities what they will receive for the year from September.

Among the winners, Hefce suggests, are institutions with the highest quality of research.

Research grants for Oxford, Cambridge, University College London and Imperial have grown in the past five years.

But when inflation is taken into account, as well as amounts given for teaching (the largest chunk of the total allocation for England), Cambridge this year will see a real terms cut of 1.9% and Oxford of 1%.

This is partly explained by Hefce's decision to reduce amounts allocated for historic old buildings.

The body has also been shifting money towards institutions offering Stem (science, engineering technology and maths) subjects, in line with government priorities.

Sally Hunt, of the University and College Union explains what the cuts will mean

Other leading universities, including Leeds, Birmingham, Bristol, and Manchester will have real-term cuts of between 1.3% and 3.2%.

One of the biggest winners is Worcester, a new university, which got the biggest increase in cash terms (13%) because of its rising student numbers.

Among the biggest losers was London Business School which saw a reduction in funding in cash terms of nearly 12% (14% when inflation is taken into account). Reading faces a 7.7% cut in cash terms.

After many years of increases, the higher education sector is facing a period of funding pressure.

This coincides with record numbers of young people wanting to go to university.

There has been a year-on-year rise of 23% in people applying to British universities and Hefce predicts the funding changes this year will translate into about 6,000 fewer places in England's universities this September.

With a government-imposed cap on the number of university places, institutions which take more students than they are meant to will face fines.

Graphic showing winners and losers in funding

Universities in Wales will find out about their future funding on Tuesday. In Northern Ireland, cuts in capital spending have already been announced.

In Scotland, universities were recently told they would receive an extra £40 million for next year, but academics fear cuts will follow the next budget.

Sally Hunt, general secretary of the University and College Union (UCU), warns thousands of jobs will go and education will suffer.

Like everyone in the current financial climate, institutions have to do their fair share of belt tightening but these figures do not show a university system in crisis
David Lammy, Universities Minister

"After years of rightly encouraging people to go to university, the government is abandoning a generation who, instead of benefiting from education, will find themselves on the dole alongside sacked teaching staff," she said.

"The consequences of the cuts will be building projects on hold, class sizes growing where jobs are lost, thousands of students denied access to university and staff following them to the dole queue.

But Universities Minister David Lammy said higher education funding had risen by 25% in real terms since 1997.

"Like everyone in the current financial climate, institutions have to do their fair share of belt tightening but these figures do not show a university system in crisis," he said.

"We now call on all institutions to focus on delivering excellent services to students and our research base, and to manage their costs efficiently, including maintaining discipline on pay."

'Summer of chaos'

The National Union of Students is warning of a "summer of chaos" as the cuts are combined with a clamour for places.

The union's president Wes Streeting called on the government to rule out further cuts: "We are now seeing the real impact of cuts spelled out for universities and students," he said.

" Short term cuts will cause long term damage to students and universities."

Shadow universities minister David Willetts said: "Now we know that next year the government is cutting the cash at half of all England's universities. They are the victims of Labour's mismanagement of public finances."

Liberal Democrat Shadow Universities Secretary, Stephen Williams said: "Universities and young people are bearing the brunt of Labour's economic failure.

"There is a real fear that these cuts are preparing the ground for tuition fees to be raised. It would be totally unfair for young people, the innocent victims of the financial crisis, to be punished in this way."

Graphic showing hefce funding over time

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