Welsh universities and colleges will receive a real-terms increase of less than 1 per cent next year, threatening to cast them further adrift from their English and Scottish counterparts.
The 0.85 per cent increase is less than a quarter of the 3.75 per cent real-terms increase in funding for English universities and less than a third of the Scottish increase of 2.75 per cent. The Welsh settlement works out at £41 more per full-time equivalent student.
Total recurrent funding will rise by £10 million, the Higher Education Funding Council for Wales announced this week. This is an overall increase of 3.1 per cent. The £10 million figure includes supplementary resources of £6 million for restructuring the sector and £2 million for widening access. There was no increase in the premium for recruiting poorer students.
Vice-chancellors described the allocations as "disappointing" and warned that they would leave Welsh institutions financially handicapped compared with their English competitors. The increases leave most institutions with barely enough money to cover inflation and other costs.
They pointed out that most of the extra money was tied up with "something for something" conditions set by the Welsh Assembly for reconfiguration - mergers and strategic alliances that all institutions must have firmed up by March next year.
A decision not to increase the funding premium for underprivileged and disabled students or to add resources for staff development was also criticised.
Derec Llwyd Morgan, vice-chancellor of the University of Wales Aberystwyth, whose grant has increased by 0.23 per cent in real terms, said: "We will have to tighten our belts again."
There was worse news for further education colleges delivering higher education courses, half of which received cuts in higher education funding due to falling numbers. Overall, further education institutions will lose 3.65 per cent in real terms next year.
Roger Williams, funding council chair, said that managing within a tight funding baseline would present a "real challenge".
He said: "The supplementary funding is gratifying, although, given that there is now more activity on reconfiguration in Wales than in any region of England or Scotland, ensuring that funding is used to maximum effect will test us even further."