A surfeit of centrally planned initiatives threatens to cut the cash available for teaching and minimise pay increases for staff, vice-chancellors warned this week.
Pay rises for staff in new universities are particularly at risk as the English funding council separates institutions specialising in access from the research elite next year.
The funding council insists that resources for teaching will be maintained overall - including a fourfold increase for underrepresented students. But the access cash is explicitly for supporting students rather than rewarding staff and will, in effect, transfer teaching funds from universities with poor access records to those that excel at extending in this area.
Meanwhile, research funding will rocket. The research-led universities that will receive this windfall are free to spend it on boosting pay.
Mike Driscoll, vice-chancellor of Middlesex University and incoming chairman of the Coalition of Modern Universities, said: "It is deeply disappointing. What this means for universities that are not research intensive is there is no money to address basic pay. All the rhetoric of rewarding teaching does not stack up. This is deeply divisive."
The situation is predicted to worsen. Universities UK calculated that despite last week's announcement of a 26 per cent increase in funds for teaching and learning over the three years, almost all the money would be swallowed up by special initiatives. It warned that this would leave no money for across-the-board pay rises and amounted to a real-terms cut in funding for students - and the cut would hit hardest just as universities introduce top-up fees.
UUK compiled preliminary figures for the teaching grant up to 2005-06. The picture will be clearer when the Higher Education Funding Council for England sends out its grant allocations in March.
The figures show that once special initiatives, such as centres of excellence, strategic-fund development, foundation degrees and workforce development, are excluded real-terms funding per student will:
- rise by 0.1 per cent in 2003-04
- fall by 1.2 per cent in 2004-05
- fall by 0.6 per cent in 2005-06.
John Tarrant, vice-chancellor of Huddersfield University and chair of the UUK finance group, attended a meeting with higher education minister Margaret Hodge last week. He said: "We told the minister that we are very disappointed that it is not a very generous settlement at all for teaching.
And all the money for pay is clearly earmarked to be highly differentiated and locally determined. There is no money for a general pay increase."
Ms Hodge argued that the UUK figures were pessimistic and that Department for Education and Skills' calculations of real-terms funding per student - based on the entire Hefce grant - would go up 3 per cent in 2003-04, 1 per cent in 2004-05 and 3 per cent in 2005-06. The UUK calculations were based on only the core teaching grant.
Peter Knight, vice-chancellor of the University of Central England, said:
"There is no new money for core teaching costs and that means very little chance indeed of anything for pay, which takes up more than 60 per cent of teaching costs. The various special initiatives such as centres of teaching excellence are a waste of public funds as they will not educate a single extra student."
The trade unions were putting on a brave face. Malcolm Keight, assistant general secretary of the Association of University Teachers, said the vice-chancellors were being deliberately and "overly pessimistic" with the figures. "We do not accept that fundamental reform of the pay and employment conditions of lecturers could not be afforded in this settlement," he said.
The Hefce board meeting last week said it "welcomed the increased resources but noted that most of the extra funding would be required to deliver additional activities and contribute to increased employers' costs".
• Hefce is embroiled in a battle with ministers over research funding.
Education secretary Charles Clarke favours concentrating it on the strongest departments. He wants the funding council to identify 5* departments with a critical mass of researchers and give them more money.
The funding council has other ideas. Last week Hefce decided to set aside "significant amounts" of cash for emerging research departments at its board meeting. Chief executive Sir Howard Newby had previously promised that extra research cash would go first to fully fund those units rated grade 5 in the 2001 research assessment exercise, followed by those rated 4 and 3a.