Next year's funding safety net will come with strings attached following a decision by the Higher Education Funding Council for England.
Meeting last week for their preliminary post-budget discussions on the allocations for the academic year 1996/97, the council decided that: "transitional ("safety net") funding should in future be provided only in response to an agreed plan for its use, which might in some cases include a wider look at the nature and extent of an institution's provision."
Bahram Bekhradnia, head of policy at HEFCE, said an extremely tough settlement was anticipated - the safety net is expected to total Pounds 15 to Pounds 20 million - and the council wanted to make sure that all money was used as effectively as possible.
The net level is also likely to be set well below zero in cash terms - recurrent cash resources for the entire sector will fall by Pounds 95 million to Pounds 4,091 million.
Calculations will be complicated by the funding council's decision - following the swingeing cuts in capital funding announced after the budget - to combine the capital and recurrent grants in a single allocation.
The decision was taken to continue the "equality of misery" policy adopted by the council in response to budget squeezes in earlier years. Research funding and the unit of resource for teaching will both be cut by 2.75 per cent in real terms.
But there are hints of a shift following the review of teaching funding. The circular issued to institutions this week warns that: "Student numbers in 1997/98 should be reviewed in institutions where quality may be at risk through financial or recruitment difficulties."
And those wishing to repair a declining unit of resource will have the chance to do so, at a cost, in this year's allocations. Institutions have been invited to propose reductions in numbers, while retaining a proportion of the grant. This will reduce cash allocations.
The council also decided to drop its second round of libraries allocations, due in 1996/97, and will reconsider computer network funding for the coming two years at its next meeting on January 25. Final allocations will be agreed on February 21. Institutions will be informed a week later.