Budget 2009: Universities braced for funding cuts

Academics fear lack of investment and wasteful bidding processes as Dius is asked to make savings of £1.9bn

Universities are bracing themselves for cuts in funding as a result of today's budget.

The Department of Innovation, Universities and Skills (Dius) is expected to save £1.9bn, including £400m in 2010-11, mainly through making the research councils, universities and colleges "more efficient".

A promise to increase the science budget by 6% appears to protect those areas of research but universities are worried that the savings will lead to a reduction in their overall funding, particularly for teaching, and for widening participation to low-income families and ethnic minorities.

Research councils have already made savings of £118m through improving their administration and doing more programmes jointly. They are expected to save a further £106m from their science and research budget in 2010-11, which should be reinvested "to support key areas of economic potential". This is on top of an original savings target of £243m.

A total of £50m will be saved through improved procurement and better university estates management.

A further £400m will be saved through a "renewed efficiency drive" in further and higher education, using benchmarking data – alluding to new methods of judging research quality that will rely on how much research papers are cited.

Universities will also have to bid against one another for new programmes and services – "contestability" in the jargon – raising fears that they will waste resources on unsuccessful bids. This reverses a trend towards more block grants and less bidding which the government had been pursuing in an effort to cut bureaucracy.

Prof Les Ebdon, vice-chancellor of Bedfordshire University and chair of Million+ which represents the new universities, said: "The government's long-term strategy of promoting aspirations is about to unravel because the chancellor has not provided funding for the thousands of additional students who are applying to university to improve their life chances post-recession.

"It is disappointing that the government thinks introducing contestability into university funding is an efficient way of achieving the cuts that are being imposed. Effectively, universities will have to bid for small jam-jars of money which are currently part of their funding council grant. This will be more expensive and administratively inefficient, and is unlikely to improve the student experience."

Universities fear that what the Treasury calls "reduced expenditure through lower than previously expected rates of inflation and the strategic reprioritisation and re-phasing of programmes" will mean cuts that would damage the sector and economic recovery.

Paul Wellings, chair-elect of the 1994 group and the vice-chancellor of Lancaster University, said: "If this cut in the Dius budget leads to a reduction in the unit of resource for teaching or research, it will be destabilising for the sector and damaging to the country's chances of economic recovery. Cutting higher education funding during a recession is completely the opposite of what the country needs.

"To give the British economy the best chance of coming strongly out of the global economic downturn, the UK needs urgently to invest in new ideas from world-leading research, more support for the commercialisation of ideas, and a larger proportion of the workforce qualified to the highest level. Any potential cut will cause major challenges in terms of what universities are now able to deliver."

Rick Trainor, president of Universities UK representing all university heads, expressed disappointment that there had been no rethink on the current restriction on student places in higher education.

The additional £400m cuts identified by the Treasury as efficiency savings for Dius would be very challenging for the sector, he said.

"This budget's commitment to improving the UK's skills base during the current downturn is welcome. Universities will play a key role in delivering on areas such as green technology, creative industries and life sciences, identified as priorities by the chancellor in his statement. Maintaining the existing commitment to increasing the science budget by 6% is also welcome."

Building projects will be brought forward with an increase of £200m. The Higher Education Funding Council for England (Hefce) has announced 97 projects so far, including £3.5m for a new centre for optometry at Manchester University; £11m for a new building at Oxford University to house the department for earth sciences; and £5.4m to improve the teaching rooms and the IT facilities at Kings College London.

Nick Dusic, director of the Campaign for Science and Engineering, said the chancellor had "weakened the UK's innovative potential in the future by meddling with the science budget".

He said: "The chancellor has undermined the independence of the research councils by making them re-allocate £106m of research funding towards areas with predicted economic potential.

"There needs to be an urgent review of this decision as it completely destroys the idea the research councils operate at arm's length from government.

"Rather than boosting investment in the research base, like our international competitors, the government has moved money around."