No more places at universities as funding cut again

20 Dec 2010

There will be no extra places at university next year, despite the higher than usual rejection rate this autumn.

As part of its annual funding settlement for universities, the government has said places for student entrants will remain static in autumn 2011.

And, beyond that, they are likely to fall by some 10,000 as there will be no repeat funding for the additional places that were created in May 2010.

The squeeze on places is part of a further reduction in funding for university teaching and research.

Teaching funding will be cut by £304 million and funding for research by £69 million in the coming year.

The teaching cut is a reduction of 6% in cash terms but Universities UK has estimated it amounts to 8% in real terms.

The government has described the 2011-12 year as 'transitional' as it precedes the introduction of the new tuition fee regime. It said it expects universities to continue to find efficiency savings in all areas and warned it was 'essential' that universities exercised pay restraint.

Universities have also been told they will be fined £3,750 for each student they recruit above their target levels.

However, in a clear indication of the real cost of the shift to the market-driven fees system, the government has released figures that show the new regime will actually cost more to the public purse in the short term.

That is because the cost of providing loans will rise by some £4 billion between now and 2014-15 as fees rise (this is because as the fees rise so too do the government loans).

So, even after a planned £2billion cut to teaching funding, the overall cost to the taxpayer of funding universities (including capitral and research budgets) will rise by some £1 billion by 2014-15. That is a 10% increase in cash terms.

Only in the longer term - as students pay back their higher loans - will the Treasury start to benefit in net terms.