Academics are bracing themselves for cuts to research programmes after the Government ordered the research councils to deliver £106 million in savings from within the science budget - money that is to be "reinvested" to "support key areas of economic potential".
This redistribution is detailed in the small print of a Budget that has been described as "extremely disappointing" for the sector, with no extra money for either science or additional student places.
In an open letter, John Denham, the Universities Secretary, said the 2009 Budget represented a "good settlement" in a tough economic environment.
But despite the decision to protect the "ring-fence" around the science budget, researchers will be left reeling by the news that not only is there no trace of the extra £1 billion for science that ministers were reportedly seeking to stimulate the economy, but there will be an internal raid on funding pots to finance more directed programmes.
"The councils will be developing plans over the next few months to refocus their research programmes for 2010-11 into new priority areas, such as the green economy, life sciences, the digital economy, high-value manufacturing systems and services, and cultural and creative industries," Mr Denham wrote, areas "that the research community has identified as being the most promising ... for the future economy."
He continued: "These savings will be reinvested as part of the detailed plans expected from research councils and will fund a range of new opportunities for staff exchanges with industry, postgraduate research studentships and collaborative research."
Research Councils UK told Times Higher Education that the "bulk" of the £106 million would be found by reprioritising research funding.
The rest would come through greater co-funding of research with business and charities, efficiency savings in research council institutes, and cuts to administration.
Specific decisions have yet to be made on which programmes will be hit, and the councils have not been allocated specific savings targets.
"The savings are being made across the research councils as a whole," RCUK said.
The Government's demand that money be redirected to the areas it considers to have the best economic potential has gone down like a lead balloon in some quarters.
Nick Dusic, director of the Campaign for Science & Engineering, called for an "urgent review" of the decision as it "destroys" the notion that the research councils operate at arm's length from Government. And Evan Harris, the Liberal Democrat Science and Innovation Spokesman, branded the consultation to define the priorities as a "sham".
Adam Afriyie, Shadow Minister for Innovation, Universities and Skills, went further: "The (£1 billion) shopping list for science projects was the worst-kept secret in Whitehall, but the rejection in the Budget is a humiliation for the Science Minister (Lord Drayson)."
He added that he would be tabling questions in Parliament about why ministers were interfering with the details of research council decisions.
Ian Diamond, the chair of RCUK, insisted that the "research councils would decide" on how the £106 million was redirected.
"The ring-fence remains, that is a huge positive message," he said.
Only three of the seven councils - the Economic and Social Research Council, the Biotechnology and Biological Sciences Research Council and the Natural Environment Research Council - gave assurances that there would be no cuts to existing grants and contracts.
The Arts and Humanities Research Council said it had "no intention" of cutting existing grants and contracts, the Engineering and Physical Sciences Research Council said it had "no plans" to do so and the Medical Research Council said it "was confident" it could honour what was in place.
'THE OPPOSITE OF WHAT THE COUNTRY NEEDS'
The Department for Innovation, Universities and Skills must make a further £400 million in savings following the Budget, and many believe higher education will bear the brunt.
It is unclear whether the cuts will be made next academic year or in the next "Governmental year", which runs from April 2010 to April 2011.
Vice-chancellors have speculated that the Higher Education Funding Council for England could cut grants for museums and specialist buildings or the widening-participation retention premium, slash funding by 5 per cent across the board or reduce student numbers or the unit of resource.
Savings will also be delivered through a new element of "contestability" for some funding.
Paul Wellings, chairman-elect of the 1994 Group, said: "Cutting higher education funding during a recession is the complete opposite of what the country needs."
OPINION: MARTIN REES, PRESIDENT OF THE ROYAL SOCIETY
It was too much to hope that Chancellor Alistair Darling would have offered a boost for science to match the Obama Administration's initiatives in the US.
We now have a harder job to attract and retain mobile talent in the face of the enhanced allure of the US, and the research councils' hard-pressed "ring-fenced" funds must be optimally deployed to this end.
Hidden in the small print of the Budget is something that could impede this goal - the requirement to refocus research funding on new priority areas.
Such prioritisation is inevitable outside the ring-fence, and we should welcome the commitment to new investment in clean-energy technologies and high-tech start-ups.
But it is surely topsy-turvy that a Government that is rightly reluctant to pick winners in its industrial policy should aspire to do this in the intrinsically less predictable arena of academic research.
As a scientific nation, the UK is, by most indicators, second only to the US. It is important to recognise why this is so. It is largely because of our strong research universities. Their value lies in the transformative discoveries that emerge unpredictably and unplanned, and in the students they educate who permeate all sectors of society.
To remain healthy, they must attract and retain outstanding scientists and engineers. There is an implicit contract that academics have with their institution: relative autonomy, and the prospect, without undue hassle, of gaining "responsive-mode" funding for the research to which they are prepared to dedicate their lives.
Imposing administrative constraints that erode the availability of responsive-mode funding from research councils - not just in areas favoured by Government, but across the board - would be a serious own goal in these challenging times.