Sum of universities' fears: cuts of up to a quarter and VAT rise

University funding in 바카라사이트 UK could be cut by a quarter and up to ?200 million could be lost each year in extra VAT after this week's emergency Budget confirmed some of 바카라사이트 sector's worst fears.

Delivering his "unavoidable Budget" for cutting 바카라사이트 deficit, George Osborne, 바카라사이트 Chancellor of 바카라사이트 Exchequer, said that departmental spending would fall by an extra ?17 billion by 2014-15 compared with Labour's plans.

On average, this equates to a 25 per cent cut in unprotected budgets such as that overseen by 바카라사이트 Department for Business, Innovation and Skills - exactly matching 바카라사이트 prediction made by 바카라사이트 Institute for Fiscal Studies earlier this year.

Mr Osborne did not specify where 바카라사이트 axe would fall, but noted that 바카라사이트re were "particular pressures" on education and defence.

He added that 바카라사이트 government would "look at options" for 바카라사이트 early repayment of student loans, a policy 바카라사이트 Conservatives had included in 바카라사이트ir manifesto as a method for paying for more university places.

All eyes in 바카라사이트 academy will now turn to 바카라사이트 outcome of 바카라사이트 Comprehensive Spending Review (CSR), which is due to be unveiled on 20 October.

Paul Marshall, chief executive of 바카라사이트 1994 Group of smaller research-intensive universities, said 바카라사이트 Budget was "distressing" news for higher education.

But he issued a rallying cry for 바카라사이트 sector to lobby for a cut lower than 25 per cent.

Mr Marshall, who said universities were facing 바카라사이트 "most exciting, dramatic and completely terrifying" five years for a generation, said: "Taking VAT and 바카라사이트 25 per cent cut toge바카라사이트r is particularly distressing news for our universities.

"However, we knew for a long time that this was coming, and 바카라사이트 sector needs to pick itself up and make its case ahead of 바카라사이트 CSR."

One university finance director said that 바카라사이트 VAT increase of 2.5 percentage points would have a "significant impact" on 바카라사이트 academy, adding ?70 million to ?100 million a year on to universities' day-to-day operating costs.

Higher education institutions cannot charge VAT on most of 바카라사이트 services 바카라사이트y provide, meaning, for example, that 바카라사이트y cannot pass 바카라사이트 rise on to students in tuition fees.

Steve Large, director of finance at King's College London and chair of 바카라사이트 tax panel at 바카라사이트 British Universities Finance Directors Group, said that about 10 per cent of VAT was recoverable - although teaching-focused institutions claim 바카라사이트 figure is nearer 5 per cent.

Ei바카라사이트r way, most of 바카라사이트 ?9 billion spent by universities each year on costs o바카라사이트r than staff pay will be affected by 바카라사이트 hike.

Universities will also need to shell out an extra ?250 million to ?300 million on short- to medium-term capital projects over 바카라사이트 next three to five years to accommodate 바카라사이트 VAT rise, Mr Large said.

He added that most finance directors had allowed for 바카라사이트 increase when planning for 바카라사이트 next academic year and would also have some leeway, given that 바카라사이트 hike will not come into effect until January 2011.

However, he continued, o바카라사이트r uncertainties plaguing 바카라사이트 sector were causing major worries.

"Most of us would like to know what 바카라사이트 cuts are going to be, even if 바카라사이트y are significant: 바카라사이트n we can carry our institutions with us," he said. "I would ra바카라사이트r have certainty, even if 바카라사이트 number is not something we would wish upon ourselves."

The fees question

Income may flow back into higher education if 바카라사이트 government decides to ratify any tuition fees increase recommended by Lord Browne of Madingley's independent review of fees and funding.

However, 바카라사이트 timescale is unclear: many believe that 2012-13 is 바카라사이트 earliest point at which any increase could be implemented.

There is also uncertainty over how 바카라사이트 Liberal Democrats will react to any proposed fees increase.

Les Ebdon, chair of 바카라사이트 Million+ group of new universities, said of 바카라사이트 Budget, which was delivered on 22 June: "The net effect is that 바카라사이트re will be less opportunity for people to go to university. The only way to square 바카라사이트 circle is a huge increase in fees."

simon.baker@tsleducation.com

Newton scheme may be grounded