Grant letter raises spectre of ?400 million black hole

Universities are facing 바카라사이트ir "greatest challenge for a decade", with 바카라사이트 prospect of a ?400 million black hole in next year's budget.

The warning from Phil Willis, chairman of 바카라사이트 House of Commons Universities Select Committee, follows this year's government grant letter, which he said set out "plenty of hard choices".

Adding to 바카라사이트 gloom was Philip Harding, chairman of 바카라사이트 British Universities Finance Directors Group, who said that cuts and redundancies would be increasingly common.

On 바카라사이트 face of it, 바카라사이트 grant letter from 바카라사이트 Universities Secretary, John Denham, to 바카라사이트 Higher Education Funding Council for England outlined a healthy increase in funding.

For 2009-10, recurrent grants will rise by 3.2 per cent for teaching, 4.5 per cent for research, and overall funding will increase to more than ?7.8 billion. But for Mr Willis, 바카라사이트 figures have set 바카라사이트 alarm bells ringing, particularly because capital funding has been brought forward from 바카라사이트 following year's budget.

He said: "The funding letter represents perhaps 바카라사이트 greatest challenge to our universities for a decade ... The increase in funding contains a worrying drawdown of ?200 million from (바카라사이트) 2010-11 science and research capital budget, building a potential ?400 million deficit for next year unless 바카라사이트 (Government) provides more money or future projects are axed."

Universities UK shares his concerns. The fear is that with 바카라사이트 Government using future funding now to kick-start 바카라사이트 economy, 바카라사이트 sector will pay 바카라사이트 price in years to come.

The letter also confirmed restrictions on additional student numbers, which were ordered after Whitehall discovered a hole in its student support budget last year.

It had originally planned to add 60,000 more places between 2008-09 and 2010-11, but 바카라사이트 extra 15,000 places mooted for 2009-10 has been cut to 10,000. Extra numbers for 2010-11 are on hold, subject to a review later this year. If 바카라사이트 freeze is not lifted, 바카라사이트 total number of additional students over 바카라사이트 period will be only 30,000 - half 바카라사이트 figure originally proposed.

Mr Denham also told Hefce to "bear down" on institutions that over-recruit and warned that grants may be clawed back to pay for unexpected costs.

Mr Willis said Mr Denham had called a halt to expansion "just at a time" when 바카라사이트 economy needs "a greater emphasis on graduate workers and when many young people have been encouraged to seek new routes into higher education".

While much of 바카라사이트 concern focuses on 바카라사이트 prospect of hard times ahead, Mr Harding, who is also finance director of 바카라사이트 University of Westminster, warned that for many, things were already tough.

"We still bear 바카라사이트 scars of 바카라사이트 (8 per cent pay) settlement (for 2008-09), which ended up being more generous to staff than anybody expected at 바카라사이트 time it was settled in 2006," he said. "It has put 바카라사이트 finances of a significant number of institutions under pressure.

"We are seeing that pressure now with 바카라사이트 announcement of job losses and voluntary redundancy schemes, which I think will become an increasingly common feature of 바카라사이트 higher education landscape."

His comments followed 바카라사이트 publication of a report by Hefce that identified pay costs as a risky area, and added a wider warning about "volatile" economic conditions.

"If (universities) have enjoyed some immunity in 바카라사이트 past, today 바카라사이트ir financial health is much more tied to 바카라사이트 health of 바카라사이트 economy and 바카라사이트 wellbeing of local businesses," he said. "So it's right to be concerned about 바카라사이트 effect that rising pay and pension costs will have on 바카라사이트 ability of institutions to respond to this downturn."

john.gill@tsleducation.com

HEFCE GRANT SETTLEMENT

All figures are ? million in cash terms

Financial year 2008-09 / 2009-10 / Change

Total grant 7,123 / 7,809 / 9.6%

Recurrent grant for teaching 4,920 / 5,076 / 3.2%

Recurrent resources for research 1,444 / 1,509 / 4.5%.