The letter, sent by David Willetts and Vince Cable to England’s funding council, scraps the dedicated £37 million Access to Learning Fund, which gave discretionary grants to the poorest students.
There is no specific figure given for the Student Opportunity fund, allocated to universities on the basis of how many of the poorest students they recruit.
This fund totalled £322 million in 2013-14, and now appears to have merged with the scrapped Access to Learning Fund.
Total funding for the sector from the Higher Education Funding Council for England will stand at £4.091 billion. That is down £125 million from the indicative funding of £4.216 billion for 2014-15 set out in last year’s grant letter.
In the letter, Mr Willetts and Mr Cable tell Hefce: “It is for you to take decisions on how you allocate your budgets. But you should deliver savings in ways that protect as far as possible high cost subjects (including STEM), widening participation and small and specialist institutions.”
Research resource spending is maintained at £4.6 billion.
In a section on social mobility, Mr Willetts and Mr Cable tell Hefce to “simplify funding streams where they seek to deliver a similar objective”.
They add: “We therefore want you to bring together funding which supports student retention and success, specifically the Student Opportunity fund and the Access to Learning Fund. As you continue to support institutions to improve access for students with disabilities we want you to work with the department in 2014-15 to review the way in which they use disability funding.”
On vice-chancellors’ pay, the ministers say: “We are very concerned about the substantial upward drift of salaries of some top management. We want to see leaders in the sector exercise much greater restraint as part of continuing to hold down increases in pay generally.”
Reacting to the grant letter, Libby Hackett, chief executive of the University Alliance, said: “We applaud the government’s commitment to protect direct funding for high-cost students, not just high-cost subjects. It shows a government that understands the hard work that goes into achieving real social mobility for the many, not just the few, and is willing to step up and put its money where its mouth is.”
Michael Gunn, vice-chancellor of Staffordshire University and chair of the university group Million+, described the retention of the student opportunity fund as a “victory for common sense”. But he said it was “still disappointing that the overall grant is being cut”.
Sally Hunt, the University and College Union general secretary, said the Department for Business, Innovation and Skill “has to make up a huge shortfall in funding because of an overspend on student loans, largely caused by unchecked recruitment by private providers”.
She added: “Ministers are right to rebuke greedy vice-chancellors for their unjustified big pay rises, not least when according to the government’s own figures average academic pay has flatlined since 2010. Unlike those at the top, all staff want is fair pay and we hope ministers will recognise this distinction.”