Real-term cuts of 23 per cent to the research councils' administrative budgets will present a "challenge", according to Alan Thorpe, chief executive of the Natural Environment Research Council.
Each council will have to make administrative cuts rising to 14 per cent in cash terms by the final year of the Comprehensive Spending Review period in 2014-15, according to indicative figures released last month. The Treasury expects inflation to have risen by about 9 per cent over the same period.
The figure is less than the 40 per cent cut previously mooted by David Willetts, the universities and science minister, but Professor Thorpe, who is also chairman of Research Councils UK's executive group, said it was still a "significant figure" that would "pose difficulties" and entail job losses at Nerc.
This is the first time that the councils have been assigned an administrative budget separate from their research allocations, but Professor Thorpe emphasised that administration was vital to the distribution of funding.
"It is not just a matter of having money in the bank for spending on research: we have to commission it, deliver grant peer review and all the other things we do," he said.
David Delpy, chief executive of the Engineering and Physical Sciences Research Council, said the cut would not affect the EPSRC's ability to deliver on what it had promised, but would entail significant cuts in non-frontline functions, such as communication and analysis. He was confident it would not have to make redundancies.
Professor Delpy added that the councils' Shared Services Centre would contribute significantly to the savings. He said the centre's 18-month delay and £50 million cost overrun had been caused by inadequate initial specifications, but pointed out that it had already saved the councils £35 million, even though their migration to it will not be complete until March. Independent estimates put the savings it will permit at about £400 million over the next decade, he added.
Sir John Savill, chief executive of the Medical Research Council, said that pre-planning for administration cuts meant he did not "foresee any major disruption to our activity over the next year or two".