Universities to lose out as public funding slashed

The vast majority of England's universities will see their public funding slashed next year, it was announced today.

Oxford and Cambridge are among those losing out this year, as institutions are hit with the biggest cuts since the 1990s.

It will fuel concerns that students could face larger class sizes and a drop in the quality of education in future, as well as fewer places available, particularly if further cuts are imposed.

According to figures announced by the Higher Education Funding Council for England (Hefce), more than half of England's 130 universities have received cuts in cash terms for 2010/11.

But taking into account inflation at around 2%, 99 universities are facing a real terms cut, two will see their funding remain static, while just 29 will see an increase.

Last month Hefce announced that there would be an overall 1.6% real terms reduction (£215 million) in teaching funding for universities in 2010/11, while research budgets would remain the same as last year.

The cut in teaching grants means universities will be receiving less money per student, and it has also been revealed that there are around 6,000 fewer student places available this year.

Hefce chief executive Sir Alan Langlands said universities facing large reductions will be given so-called "moderation funding" to help them adjust to the lower budgets.

He said: "I think these are very modest reductions and it is quite likely that universities will be able to cope with this without in any way undermining the student experience."

Among the biggest losers this year was London Business School which has seen a reduction in funding in cash terms of 11.9% - in real terms 9.9%.

This was mainly due to more research funding going to science subjects, Hefce suggested.

One of the biggest winners was Worcester University, which has seen its public grant grow by 13.3% in cash terms - 11.3% in real terms.

Hefce said this was mainly due to the large growth in student numbers at the institution.

Oxford and Cambridge have been hit hard by the removal of funding for old and historic buildings, which has caused their budget cuts.

Oxford's grant has decreased in real terms by 1%.

A spokeswoman said the underfunding of teaching remained a significant problem.

Cambridge's funding has dropped by around 1.9%. A spokeswoman said the decision to remove the targeted allocation funding for old and historic buildings and cut funding for teaching by 5.69% was deeply disappointing.

Many universities have lost out due to a shift in the allocation of research funding, so that more goes to institutions with the highest-quality research.

This year, the top five research institutions received about a third (33%) of the money.

Business Secretary Lord Mandelson originally announced plans for swingeing funding cuts to universities last year, and the sector is expecting budgets to be slashed by a further £600 million from 2012.

It comes at a times of intense pressure on universities places, fuelled by workers returning to education due to the recession.

This year record numbers have already applied for courses starting in September and there are fears that hundreds of thousands could miss out.

Sally Hunt, general secretary of the University and College Union (UCU), said: "We believe the cuts could lead to thousands of jobs being lost and the staff who survive the cull left with more students to teach and less time to spend with them."

In total, universities will receive £7.3 billion of funding this year.

Professor Steve Smith, President of vice-chancellors' umbrella group Universities UK, said it "recognises the pressures imposed by the current economic climate, and notes that in the majority of cases these decreases have been 1% or less".

Professor Les Ebdon, chairman of the university think tank million+ and Vice-Chancellor of the University of Bedfordshire, said the cut in capital funding for teaching will cause long-term problems.

Shadow universities minister David Willetts said the universities affected were "victims of Labour's mismanagement of public finances".

Universities minister David Lammy said the figures "do not show a university system in crisis".