Universities to get £2bn more from Government by 2008

The Government will increase its spending on higher education by £2 billion between 2004 and 2008, according to official figures.

The Department for Education and Skills released information on its spending plans that suggest that universities will share a total of £9.5 billion by 2008.

While repeating its commitment to maintain the value of student funding in real terms, the Government says that universities will have to wait until November, when it issues its higher education grant letter, to find out exactly how much will be available per student.

Extra fee income from top-up fees beyond 2006 will "reach a steady state" of £1.2 billion a year for universities by the end of the decade, the DFES report adds.

It also confirms that research funding will rise by 9 per cent in real terms between 2005 and 2008, from £1.2 billion to £1.4 billion.

The DFES says: "This builds on the significant commitment to stand by higher education in future spending reviews made in the White Paper and repeated during discussions on the Higher Education Bill."

But Liz Allen of the lecturers' union Natfhe said: "There is no real increase in funding for teaching - fee income may bring in extra money for some institutions but not for all, and there are no guarantees on how it will be spent. Guaranteeing the unit of resource for extra places is welcome, but we need to see the detail - and this still does nothing to address current underfunding and the scandal of low pay."

A report this week by the Bow Group, a centre-right think-tank, attacks the Government's longer-term funding plans as "expensive and inflexible". And it says that the Conservative Party's plan to raise the interest rate on student loans is little better.

It rubbishes the Government's policy of expanding student numbers, warning that a glut of graduates is reducing the value of a degree to employers.

Instead, it says that only the brightest students should get grants and loans.

Andrew Lilico, the report's author and a visiting economics lecturer at University College London, proposes a three-tier scholarship and loans system.

In the first tier, scholarships will cover tuition fees and maintenance for the top 10 to 12 per cent of the population according to their academic achievement.

The next 23 to 25 per cent of the population will be eligible for student loans with a nought per cent real interest rate to sit "government-approved" courses in "socially important" subjects such as medicine or engineering.

All other students will pay the full cost of their higher education.

* Ministers want to recruit an eminent academic to advise the Government on science and intelligence in the wake of the Butler Inquiry into the Iraq War.

Lord Butler - former Cabinet Secretary and now master of University College, Oxford - recommended in July that the Government appoint a distinguished academic to work part time in the Cabinet Office to challenge "conventional wisdom" in Whitehall.

The Cabinet Office said the Government was working to implement all of Lord Butler's recommendations. It is unclear how the new adviser will work with Sir David King, the Government's existing chief scientific adviser.