The sum of our ‘worst fears’: UUK chief says prepare for cuts of £4.2bn

The president of Universities UK has told vice-chancellors to expect cuts of £4.2 billion in the government’s spending review – and warned that a huge funding gap is a “terrible danger”.

October 15, 2010

Steve Smith writes in an email to all vice-chancellors that Lord Browne of Madingley’s review of higher education funding and student support, published this week, forecasts a teaching grant of £700 million.

Such a sum would be a huge reduction from the current Higher Education Funding Council for England teaching grant of £3.9 billion – a cut of £3.2 billion, or 82 per cent.

“Cuts in the order of £1 billion for research also appear to be proposed,” Professor Smith says.

This gives a total cut of £4.2 billion to higher education budgets.

The exact amount of the reduction will be revealed by the government on 20 October, when it announces its Comprehensive Spending Review.

Lord Browne’s figures “confirm our worst fears”, Professor Smith writes.

“In that light, our primary response to Browne has been framed by trying to do all we can to replace as much of this lost funding as possible, and to do it in a way that matches increased graduate contributions to decreasing Hefce funding,” he says.

“We fear that this may not be possible, and that 2011-12 could see major cuts imposed before any income from Browne (or a replacement) comes in.”

He says the sector must “evaluate Browne against other proposed ways of how to deal with the massive CSR cut coming our way”.

He adds: “The biggest worry is simple to state: if Browne fails to get through the Commons, or gets unpicked, or gets accepted but only after major changes are made, we will simply not be able to replace the unprecedented reductions in state funding that are coming in the spending review. My judgement is that UUK’s primary role is to protect the level of investment in universities.”

Professor Smith has previously used the metaphor of a “valley of death” to illustrate the predicament higher education would be in if it suffers huge cuts in government funding but receives no substitute cash from increased student tuition fees because the Browne review’s recommendations founder in the House of Commons.

His email concludes: “There remains a terrible danger of the valley of death becoming a reality for all institutions, and avoiding that is our core concern.”

Sally Hunt, general secretary of the University and College Union, said: “The UCU is now calling for an urgent review of the impact of these unimaginable cuts in public investment on local, regional and national provision before the charge into the valley of death talked of by Steve Smith becomes a reality.”

john.morgan@tsleducation.com

Steve Smith’s email to vice-chancellors

To: Principal

Subject: Message from Steve Smith Universities UK

Dear Colleague

I wanted to write personally to each of you to let you know what we've been doing today since the launch of the Browne Review and to inform you of the key lines we have been following in all the interviews we have undertaken.

The first point to stress is that we have been concentrating on the CSR more than Browne over the last few weeks, because the potential cuts have been getting worse and worse. You can see from para 6.2 on page 47 of Browne what awaits us in the Spending Review next week. Browne explicitly says that HEFCE will have T funding of £700m; the current sum is £3.9bn. This implies a cut of around £3.2bn of state funding. I hope many of you picked up the clear warnings in my Cranfield speech about this potential level of cuts. We have never broken any embargoes on confidential figures, nor have we leaked to the press, but Browne's figures confirm our worst fears. Cuts in the order of £1bn for research also appear to be proposed.

In that light, our primary response to Browne has been framed by trying to do all we can to replace as much of this lost funding as possible, and to do it in a way that matches increased graduate contributions to decreasing HEFCE funding. We fear that this may not be possible, and that 2011/12 could see major cuts imposed before any income from Browne (or a replacement) comes in.

In everything we've said and done with the press, and in all the briefings, we have insisted that Browne has to be seen in the light of what is coming on 20 October, and that it is one way of replacing in a large part the removal of band C and D HEFCE funding, though we are extremely aware of the differential impact on universities. We have always (as far as I can remember) said that we are open to other ways of filling this massive gap, and that we would judge all proposals against the principles agreed unanimously by the UUK Board in May 2010 (see page 10 of our second submission to Browne). There are 9 of these, and Browne and other proposals need to be assessed in terms of these principles, and that is precisely the points we are making. This does not mean that every member will approve of Browne, but we have to evaluate Browne against other proposed ways of how to deal with the massive CSR cut coming our way.

The biggest worry is simple to state: if Browne fails to get through the Commons, or gets un-picked, or gets accepted but only after major changes are made, we will simply not be able to replace the unprecedented reductions in state funding that are coming in the Spending Review. My judgement is that UUK's primary role is to protect the level of investment in universities. I am trying to do that, and that is what is in my mind every time I speak to the media or to politicians of all parties.

Do let me know if any of this reasoning is wrong in your view. I know there are lots of very different views (and several of you have e mailed or phoned me with what are, taken together, literally incompatible responses).

I hope this gives you a clear view of how we see things today. There remains is a terrible danger of the valley of death becoming a reality for all institutions, and avoiding that is our core concern.

With best wishes

Steve

Professor Steve Smith

President, Universities UK

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