Universities will have £247 million less to spend on teaching than they expected for 2010-11 and will also have 20,000 fewer students to teach, Times Higher Education has learnt.
John Denham, the Universities Secretary, told the Higher Education Funding Council for England earlier this month that he expected the sector to save £180 million by 2010-11. The cuts are higher education's share of £400 million in savings demanded from the Department for Innovation, Universities and Skills in the Budget last month.
Some £16 million will come from research budgets and £164 million from teaching funds for 2010-11.
But higher education will also lose out because of a fall in additional student numbers. In the 2007 Comprehensive Spending Review, the Government said it would raise student numbers by 60,000 between 2008-09 and 2010-11. Since then, it has slashed the figure to 40,000.
Universities are paid more than £4,000 for each student they teach. They will receive £83 million less than they would have if the extra student numbers initially promised had materialised, in addition to the Budget reductions. Vice-chancellors had feared that the sector would bear the brunt of the £400 million cuts asked of DIUS, so they may be relieved that the figure is not higher.
In a message to staff, Malcolm Grant, president and provost of University College London, said the £247 million reduction was relatively small. "However, we do not know what will happen in 2011-12 and later years as the incoming Government following a general election will need to adjust public expenditure to reflect Treasury resources," he said. "Moreover, we anticipate that there will be other financial pressures on universities as a result of reductions in spending in the National Health Service, research councils and other departments."
At its 7 May board meeting, Hefce said it would seek £65 million in efficiency savings during the 2009-10 academic year. The details will be agreed at its July board meeting.
Hefce added that of 10,000 additional student numbers allocated by Mr Denham for 2010-11, 4,000 had already been committed and that it would review the priorities for allocating the remaining numbers by the end of September this year.
Alice Hynes, GuildHE's chief executive, said: "Hefce's decision to reduce this year's teaching grant by £65 million may spread the pain of cuts, but it will present problems to institutions that have begun approving budgets if details of how the cuts will fall are not provided quickly."
Rick Trainor, president of Universities UK, has expressed concern that Mr Denham has made no explicit commitment to maintaining the unit of funding for teaching.
No more cash, just don't forget us, Scots say
A representative of the Scottish higher education sector did not ask for extra cash for universities when he addressed the Scottish Parliament Finance Committee.
David Caldwell, director of Universities Scotland, told the committee last week that the sector recognised that public finance would be extremely tight for at least five years, but that the Government should seek to preserve existing levels of funding where possible.
A Universities Scotland report submitted to the committee before the meeting says universities accept that investment targets set in recent years will be unachievable in 2010-11.
But it adds: "We want to make it clear the extent to which recovery from the recession would be ... hampered if the human and intellectual capital emerging from universities is reduced in volume or quality."
Mr Caldwell said that the skilled graduates produced by universities, and the new knowledge generated by research, were "essential rungs in the ladder out of recession".