By Lucy Phillips
20 December 2010
Next year’s teaching grant for universities in England will be cut by 6%, the government announced today.
In the annual letter to the Higher Education Funding Council for England ministers said the teaching grant for 2011/12 would be cut from £4.9bn to £4.6bn.
The following year, when the new system of university financing is brought in, the grant is estimated to be cut to £3.8bn, but is expected to be offset by higher student tuition fees.
The total cash settlement for universities, taking into account both teaching and research grants, student loans and the Higher Education Innovation Fund, changes from £9.2bn this financial year to £8.9bn next year. In 2012/13, universities will receive a total cash settlement of £9.1bn.
Universities minister David Willetts said it was a ‘very solid cash settlement’ in the current fiscal climate. He expected universities to be able to ‘handle’ next year’s reduction through efficiency savings alone.
‘This is a good basis on which universities can look forward to a secure and successful future,’ he added.
Willetts also said the ‘moderate recovery’ in total funding for 2012/13 ‘explained the logic of our reforms’. These have prompted a series of high-profile student protests.
The changes to higher education funding will see tuition fees rise from £3,290 a year to up to £9,000 with all the money paid upfront to universities through student loans.
‘There are lots of uncertainties in this but we see it generating a modest increase in funding for universities. It makes the case for our reforms. In tough times universities will be able to enjoy an increase in their cash income provided they are able to attract students,’ Willetts said.
The government’s figures for 2012/13 are based on universities charging average fees of £7,500 a year.
Universities UK, which represents vice-chancellors, said it was 'disappointed' with next year's grant cut, which amounted to a real terms reduction of 8%.
UUK president Steve Smith claimed ministers had reneged on previous assurances that transition arrangements to the new funding system would be ‘smoothed’.
He added: ‘It will be difficult for the sector to deal with and could do damage before the income from fees comes in. This could result in loss of capacity in some parts of the sector, at a time when we need more graduates with higher skills.’
The Hefce grant letter also reveals that the 10,000 extra university places created for this year by the previous government to satisfy increased demand will be retained for 2011/12 but not after that.
Willetts dismissed the reduction as minimal. ‘By then we are past the demographic bulge,’ he said, adding that eventually the government wanted ‘a system that is liberated and does not involve the detail and control over numbers that we have at the moment’.
The Universities and College Union attacked the letter as ‘a Christmas kick in the teeth for the sector’, encompassing cuts to funding and student places and an attack on the pay and conditions of university staff.
UCU general secretary Sally Hunt said: ‘The government seems to think that the sector will be able to deliver more for less and students will be happy to pay three times the price. That is absolute madness.’
Hefce described the settlement as ‘challenging’ – for universities, colleges, students and graduates.
The funding council will write to universities with their individual grant allocations on March 16.
